DEBTOR AND CREDITOR LAWS

Consumer Credit: Debtor and Creditor Laws

Credit permits individuals to buy/borrow in the present in exchange for a promise to pay in the future. Credit plays a vital role in commerce - used by both businesses and consumers alike. Whether you are the creditor, business owner, entrepreneur, or lender, you must understand the law governing credit to protect your own interests. An experienced attorney at The Kushner Law Firm, PC in Aliso Viejo, California, experienced in debtor and creditor law can answer your questions and help you protect your rights.

Consumer Credit Statitutes

A vast number of credit transactions are made with credit cards generated though banks or other financial institutions. Additionally, many business owners extend credit or provide financing directly to consumers. The following overview outlines the relevant federal statutes.

The Equal Credit Opportunity Act ("ECOA")

The Equal Credit Opportunity Act ("ECOA") is a federal law requiring lenders and creditors to make credit equally available (i.e. not based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs). Pursuant to the ECOA, a lender can only consider "legitimate" factors including, without limitation, future earnings and credit records when making a credit decision.

The ECOA also mandates certain responsibilities for commercial lenders. First, the ECOA requires lenders to notify credit applicants in writing of any negative credit action taken. The ECOA requires written notification that informs applicants of their right to a statement of reasons for any adverse action. Applicants must request this notification within 60 days of such notification. Second, a lender must act upon an application within 30 days of the application's receipt by the commercial lender. Lastly, the ECOA mandates detailed record-retention requirements for lenders.

The Fair Credit Reporting Act ("FCRA")

The Fair Credit Reporting Act ( "FCRA") is a federal consumer protection law regulating disclosures of consumer credit reports by credit bureaus. The FCRA requires credit agencies to investigate disputed items in a credit report. Additionally, the FCRA must establish procedures and guidelines for correcting mistakes in a credit record. The FCRA aims to protect the consumer's credit from incomplete and/or misleading credit report information.

The FCRA grants consumers the right to review their credit report for no charge once per year. Additionally, consumers may also review their credit report if they receive a denied credit application based on information in the credit report. However, consumers must make their requests in writing within the required statutory period.

Upon discovering an inaccuracy, the consumer can then demand that the credit agency correct or delete the inaccuracy. If the credit agency denies this request, the consumer may write an opposition letter disputing the inaccuracy. This letter then becomes part of the credit report.

Additionally, the FCRA regulates and imposes certain duties on businesses that provide consumer credit information to credit bureaus, and on subsequent users of the reports.

The Truth-in-Lending Act ("TILA")

The Truth-in-Lending Act ("TILA") is federal law requiring lenders to provide certain information wherein consumers can compare the terms of various loans. The disclosed information is detailed and highly regulated. Additionally, TILA regulates how lenders can advertise consumer credit.

The Fair Debt Collection Practices Act ("FDCPA")

The Fair Debt Collection Practices Act ("FDCPA") is a federal law addressing abusive debt collection practices. Additionally, the FDCPA aims to promote openness and honesty in the industry itself. The FDCPA outlawed debtor harassment and strictly regulates third-party collectors (including those lawyers who regularly take legal action to collect outstanding legal fees). However, except in certain narrow circumstances, the original creditors are not regulated by the FDCPA.

The Fair Credit Billing Act ("FCBA")

The Fair Credit Billing Act ("FCBA") is a federal law granting consumer borrowers the right to question disputed open-ended credit plan bills from creditors. Under the FCBA, a borrower must notify the creditor within 60 days after the creditor transmission of the disputed bill. Then, within 90 days, the creditor must: (1) correct the bill; or (2) notify the consumer as to why the bill is accurate following a reasonable investigation (and offer supporting evidence to the effect).

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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