31 July 2019

Learn These Consumer Credit Protection Tips Will Save Your Life

If we speak honestly, money has the ultimate control over the world. Sometimes we face unfortunate events in life where our disposable income doesn’t fit the bills of our requirements.

Asking your relatives or friends for short-term financial support can be embarrassing. In such a situation, a credit card or a personal loan can help us avoid all the hassle.

Most of the people avoid getting involved with creditors thinking that it could lead you to more trouble. If you are among one of those people, then you must read this article. It will give you some new perspective and insight.

Our Federal Government has given us some rights which protects us from unlawful extortion and harassment from creditors. The rights are drafted in the Consumer Credit Protection Act.

The Consumer Credit Protection Act (CCPA) was enacted in 1968, ensuring fair and honest credit practices to consumers by the lending industry. The law made it mandatory for a lender to explain the customer regarding the actual cost of borrowing money.

The CCPA includes three Acts:

✓ Truth in Lending Act
✓ Fair Credit Reporting Act
✓ Fair Debt Collection Practices Act

Truth in Lending Act (TILA):

TILA is a federal law that made it mandatory for a creditor to provide specific information to you regarding your instalment credit contract.

So, while entering into a consumer credit contract, a lender is legally enforced to disclose you about your:

✓ Total financed amount
✓ Total amount set for a minimum monthly payment
✓ Total number of monthly payments a consumer has to pay
✓ Annual Percentage Rate (APR)

To be precise, the Truth in Lending Act facilitates a better comparison platform for you by regulating all credit-related advertisings. It allows you to compare the offers from different creditors and make a better decision.
The TILA also set some rules for sellers to include some mandatory information before selling their credit products to you.

According to law, the lender must ensure that you as a debtor are completely aware of the following information:

✓ Total amount financed to you
✓ Annual Percentage Rate
✓ All financial charges including additional fees and penalties
✓ Total repayable amount over the loan’s duration
✓ Payment Schedule

Note: Lenders are free to charge any interest on a credit card or loan to their customers but they must inform you about the rate of interest.

Fair Credit Reporting Act (FCRA)

The Act illustrates the right ways to collect your credit information and use them within legal boundaries. FCRA directs all major credit bureaus like Transunion, Experian and Equifax to provide a free credit report to customers without charging any money.

The law allows you the rights to review the credit report and ensure its credibility. If any error is detected, you can file a report and raise a dispute with the credit bureaus. All reported errors are investigated and all the confirmed errors are further rectified or deleted by the credit bureau.

The FCRA also set up information for companies when it comes to reporting information to credit bureaus and relevant agencies. Also, it is illegal for a company to report any kind of inaccurate information.

All companies are legally bound to inform you about any discovery of negative information. If the information is inaccurate, you can update them as soon as possible. If a company receive an identity theft notice about your account, they the company is not allowed to report it to the bureaus or any other agencies. So, don’t worry, it won’t affect your credit scores.

Fair Debt Collection Practices Act (FDCPA)

You must have seen on TV about people getting harassed from collection agencies when they are late in their payment. That’s a half-baked truth which you must avoid listening.

As a customer, you can enforce this Act to save yourselves from unnecessary harassment from a third-party debt collection agency.

THE FDCPA sets some debt collection rules for all third-party debt collectors when it comes to collect debts from the customers on behalf of another party. The amendment in 2010, introduce some new changes. According to the changes, the collector can only contact you only within the specified time limit provided to them.

If the debt company or debt collector violates the FDCPA, then you can file a suit for damages and attorney fees.

However, the law is not enforceable to collectors attempting to collect personal debts. The act is only applicable to third party debt collectors acting on behalf of a collection agency.

FDCPA applies to collection agencies dealing with credit card debt, student loans, mortgages, medical bills including other household debts. If you owe money to a local store, then you are not protected under this act.

THE FDCPA set rules for a collector about when, how and how frequently they can contact a debtor. In some situation, a debt collector can also help you with the bill pay by drafting a payment plan.

If you experience any violation, you have the right to sue a debt collector in state or federal court for damages and legal fee within a violation period of one year.

How can a debt collector contact you?

Under the act, a debt collector is prohibited to contact a debtor at an inconvenient time.

The collectors can only call after 8.am or before 9 pm. Also, a collector can only call you if you gave him/her permission. However, debt collectors are allowed to send emails, letters and text messages to you for collecting debts.

A debt collector must send a written ‘validation notice’ to you within five days after initiating the contact. The notice must include the money you owe to the creditor, the name of the creditor, and what steps you should take if the debt doesn’t belong to you.

Where can a debt collector contact you?

Ideally, debt collectors can contact you in your house and office but only if you allow them. If you don’t like the constant visits of the debt collectors, you have the right to stop them from contacting you.

You can also ask debt collectors to stop calling in your home phone or at work, but you must put the request in a letter and send it to the debt collectors. It's a good idea to send the letter by certified mail and pay for a return receipt to have proof that the collector received the request.

Conclusion

The Consumer Credit Protection Act empowers you by safeguarding you from the unfair, abusive deceptive practices of creditors. Rules and regulations regarding credit reporting and banking are evolving over the years.

Consequently, the federal government is also employing significant improvements to safeguard the rights of American Citizens.

Hope this article helps you gain some confidence. So if you think a credit card or a personal loan can solve your temporary cash crunch, then don’t hold as you are backed with The Consumer Credit Protection Act.

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Tag: Creditors' Rights, Personal Debt
Jonathan B. Vivona

Jonathan B. Vivona

Jonathan B. Vivona is the founder of our firm and is based in Alexandria, VA. He has represented bankruptcy clients in the Northern Virginia area for his entire professional career.

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