Opinion ID: 1668648
Heading Depth: 1
Heading Rank: 4

Heading: Iowa Consumer Credit Code.

Text: Fischer asserts defendants violated the Iowa Consumer Credit Code when they continued to contact him about his loan delinquency by telephone and by mail notwithstanding repeated written requests to communicate through his attorney. The court ruled that federal regulations governing debt collection efforts on federally insured loans pre-empted conflicting state law. We agree. Article 7 of the Iowa Consumer Credit Code places certain restrictions on debt collection practices. See generally Iowa Code §§ 537.7101-.7103 (1991). Fischer argues that UNIPAC's direct contacts violated several prohibited practices. See, e.g., Iowa Code § 537.7103(5)(e) (communication with debtor represented by attorney). By contrast, federal regulations require lenders in the collection of delinquent guarantee agency loans to exercise due diligence. See 51 Fed.Reg. 40,886 (1986) (codified at 34 C.F.R. § 682.411). To meet the standard of due diligence lenders are required, among other things, to complete a particular sequence of written and oral contacts with the borrower demanding repayment of delinquent or defaulted loan obligations. 34 C.F.R. § 682.411. Because the federal regulations in this area clearly conflict with restrictions on debt collection efforts under Iowa law, we believe state law is pre-empted to the extent it is inconsistent. Pre-emption [of state law] may be either express or implied, and is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose. FMC Corp. v. Holliday, 498 U.S. 52, 57, 111 S.Ct. 403, 407, 112 L.Ed.2d 356, 363 (1990) (citation omitted). Moreover, we find support for our conclusion in an interpretive statement issued by the Secretary of Education (Secretary) on October 1, 1990. See 55 Fed.Reg. 40,120 (1990). The Secretary explained that at the time the regulations were promulgated in 1986 the Secretary did not believe there was any need to articulate his intention to pre-empt inconsistent state laws.... Id. at 40,120. However, a number of borrowers later invoked State law to attempt to prevent the holder of the loan from commencing or completing the sequence of collection actions prescribed in these regulations.... Id. It therefore became necessary to immediately clarify the Secretary's intention to pre-empt inconsistent state law to the extent necessary to permit compliance with the federal regulations. Id. at 40,121; see also 34 C.F.R. § 682.411(n) (1993). The Secretary concluded that the public interest outweighed any competing state interests. 55 Fed.Reg. at 40,121. In any event, Fischer claims the due diligence requirements do not apply to his loans because they were promulgated two years after he signed the loan agreements. This argument is without merit. Section 682.411 of the Code of Federal Regulations became effective for loans on which the first day of delinquency occurs on or after March 10, 1987. 51 Fed.Reg. 40,886 (1986). Fischer's loans became delinquent in 1988. Because Fischer makes no claim that defendants violated other debt collection practices not prescribed by federal law we hold that the court did not err in ruling for defendants on this count.