Protection of Credit Rights

1. Protection of Credit Rights 18-4

2. Credit Applications regulations • Truth-in-Lending Law of 1968 • Was the first series of credit laws • Requires you be told of the true cost of credit before signing an agreement. • Must be notified of APR and total finance charges. • Protects against unauthorized credit use of credit cards • Limits your liability to $50 prior to notifying the card issuer. • You are not liable for any purchases after that. • Notify by phone but also document in writing.

3. Credit Applications regulations cont. • Equal Credit Opportunity Act • Prohibits creditors from denying a person credit based on age, race, sex, or marital status. • Young people who just enter the labor market cannot be denied credit based only on age. • Older/retired people have the same special protection. • Married women who previously found it difficult to establish credit in their own names now have a legal right to do so. • Can still have their own credit • Some states the legal age to sign a contract is 21 not 18

4. Credit Use Regulations • Fair Credit Billing Act • Requires prompt correction of billing mistakes. • You must notify in writing within 60 days after your statement was mailed • After you report an error remember the following: • While waiting for an answer, you are not required to pay an amount in question • The creditor must acknowledge your complaint within 30 days unless your statement is corrected before that time • You do not pay finance charges on any amount in error • If no error is found, the creditor must bill you again. The bill may include finance charges that have accumulated plus any minimum payments that were missed while the statement was being questioned. • It also provides that you may withhold payment on defective merchandise.

5. Credit Use Regulations • Fair Credit Reporting Act • A law that gives consumers the right to know what information credit bureaus are giving to potential creditors, employers and insurers. • This law provides that if you are denied credit based on information from a credit report you must be given the name address and phone number of the credit bureau that provided the report. • Credit records for both husband and wife are kept if both are responsible for the debt • This allows a credit history to be developed for each spouse. • The credit bureau must delete personal bankruptcy after 10 years.

6. Credit Use Regulations cont • Consumer Reporting Reform Act • Unfavorable credit reports can increase the interest rate you have to pay • This act places the burden of proof for accurate credit information on the credit reporting agency not you. • The creditor must certify that disputed data is accurate. • If a credit bureau verifies incorrect data, you can sue for damages. • Fair Debt Collections Act • Attempts to obtain money that is past due. • The agency may contact people who are overdue on payments • This act bans various debt collection actions. • They may contact you in person, by mail, telephone, telegram, or fax. • They may not contact you at inconvenient times such as before 8:00 A.M. or after 9:00 P.M. • They may also not contact you at work.

7. Credit Problems and Assistance • If you cannot pay your bills you might take these 4 steps • Contact creditors and explain the situation • Make a realistic proposal for when and what you can pay. Don’t just say “I cant pay” • Keep any promises you make • Make a written copy of your agreement to avoid disagreements later. • You may work out a debt repayment plan. • You and the creditor make a plan reducing payments to a manageable level. • You will still need to pay your debt

8. Credit Counseling • Discusses and suggests actions to take to reduce spending and eliminate credit difficulties. • Various nonprofit counseling services are available • The National Foundation of Consumer credit and the Consumer Credit Counseling Service (CCCS) can direct you to an assistance program.

9. Bankruptcy • One extreme options is bankruptcy • is a legal process of reducing or eliminating money owed. • This process is costly and requires legal assistance. • You should avoid this at all costs • It ruins your credit.