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Consumer Credit Laws

Consumer Credit Laws

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Consumer Credit Laws

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  1. Consumer Credit Laws

  2. Fair Credit Reporting ACT • Provides rules for accessing/correcting credit reports • Requires lenders to tell you why you were denied credit.

  3. Fair Credit Billing Act Provides rules for correcting billing errors • Creditor must respond within 30 days • 90 days to correct your account or tell you why they think the bill is correct • Can withhold payment on damaged or shoddy goods or poor services if purchased with a credit card

  4. Fair Debt Collections Act Prohibits debt collection agencies from using abusive practices.

  5. Equal Credit Opportunity Act Credit can not be denied based on: • Race • Gender • Religion • Age • Country of Origin

  6. Truth-in-Lending Act • Requires disclosure of the cost of credit (APR) • Annual Percentage Rate (APR) • Percentage cost of credit on a yearly basis • Key to comparing costs when shopping for rates It is important to shop around for credit

  7. CARD Act of 2008 • 45 daysnotice before key changes in account terms (up from previous 15 days) • Minimum payment illustrations on credit card bill • “Universal default” practice was banned • “Teaser rates” must last at least 6 months • Bills must be mailed 21 days before due date

  8. CARD Act of 2008 for College Students • Prohibited from offering free merchandise in exchange for credit card applications (on campus, campus events) • No credit cards under age 21 unless cosigner or proof of income to make payments • Limits amount of credit given to those under 21

  9. Co-signing a Loan Co-signing meansguaranteeing a debt for someone else • If borrower doesn’t pay, cosigner is liable for the full amount plus any late or collection fees • If payment is missed, creditor can collect from the cosigner first • Unpaid debts will appear on the cosigners credit report 5-9

  10. Declaring Personal Bankruptcy U.S. Bankruptcy Act of 1978 Chapter 7 = straight bankruptcy Chapter 13 = wage earner plan Personal bankruptcy is a legal process to distribute some or all assets among a person’s creditors due to an inability to repay debts. Bankruptcy should be the last resort, because of the damage to your credit rating; stays in a person’s credit report 10 years. 5-10

  11. After Chapter 7 You May No Longer Owe: • Retail store charges • Bank credit card charges • Unsecured loans • Unpaid hospital or physician bills You Still May Owe... • Certain taxes and fines • Child support and alimony • Educational loans http://www.youtube.com/watch?v=qXUXxM5XujE 5-11