Federal and state laws provide certain protections and rights to debtors. A great place to learn about these laws is by going to www.ftc.gov the website of the Federal Trade Commission. Once you land on the home page, click on the Consumer Information tab; there click on Credit & Loans and a menu will open up on a variety of topics covering your rights as a debtor.
Federal laws can generally be divided into acts that cover:
- Applications, denial, disclosure of terms and conditions when you attempt to obtain credit;
- The reporting of your credit history; and
- Debt collection.
A thorough discussion of each these laws are beyond the scope of this article. But a brief summary of the laws will give you an idea of what the laws cover and what protections are available to you as a debtor.
Applications, denial, disclosure of terms and conditions
- The Equal Credit Opportunity Act prohibits discrimination and requires written notification if credit is denied.
- The Truth in Lending Act requires disclosure of the interest rate charged and other costs; limits cardholder’s liability in the case of lost or stolen credit cards.
- The Fair Credit and Charge Card Disclosure Act also requires specific disclosures by financial institutions (and retailers) issuing credit cards regarding annual fees, interest rates and credit insurance (if offered).
- Gramm-Leach-Bliley Act requires financial institutions to develop and give notice of privacy policies at least annually to their customers.
Credit Reporting
- Fair and Accurate Credit Transactions Act (FACT Act) improves the quality of credit information and gives consumers the right to his or her credit report free of charge every year.
- Fair Credit Reporting Act protects creditors regarding the accuracy, fairness and privacy of information in the files of consumer reporting agencies. Included is your right to be told if the information in the file was used against you, your right to know what is in the file, your right to dispute incomplete or inaccurate information and the reporting agency’s responsibility to correct or delete inaccurate information.
Debt Collection Practices
- The Fair Debt Collection Practices Act prohibits third party debt collectors from using deceptive or abusive conduct in the collection of consumer debts. For example, debt collectors may not call at odd hours.
- Fair Credit Billing Act requires creditors to promptly acknowledge consumer billing complaints and investigate billing errors.
Finally, a Federal law applies to credit repair organizations – Credit Repair Organizations Act requires disclosure when selling “credit repair” services and prohibits these companies from demanding advance payment. Contracts must be in writing and provide you with certain contract cancellation rights. |
