Have you ever felt that, when it comes to matters of money (credit, debt, loans, etc.), you're at a disadvantage as a consumer? After all, the big banks and credit card companies that lend you money have financial experts working for them to make sure their interests are protected, right? So who's looking out for you?
In theory, the government is. Unfortunately, too many consumers don't know about the legal protections available to them, and end up in financial distress - defaulting on loans, filing for bankruptcy protection or watching their homes foreclosed upon. With a little dose of prevention (in the form of learning the basics of consumer protection laws), you can protect yourself and your finances.
Here's an overview of some important consumer laws in the United States and how they protect you.
Summary: Home lenders have to treat everyone equally.
It also requires lenders to give borrowers a good faith estimate and certain HUD (Housing and Urban Development) disclosures - which allow borrowers to see where their payments are going - at the time of closing. This act also gives borrowers the right to submit a written request for investigation of an account he believes to be in error.
Summary: You're entitled to know how your mortgage will work and where your payments will go.
Summary: Lenders can't target specific audiences with their loan offers.
For loans with fixed interest rates, this law requires lenders to disclose the interest rate and monthly payment amount. For adjustable rate mortgages, lenders must notify borrowers that interest rates and monthly payments may fluctuate and can increase.
Summary: You're entitled to understand any loan you sign - if you don't understand it, don't sign!
Summary: Lenders have to tell you what you're getting into before you sign.
It also outlines the responsibilities of "information furnishers" (i.e. requires creditors to report information accurately) and mandates that anyone who uses credit information to make a negative decision (e.g. an employer not offering someone a job because of a weak credit history) must inform the consumer about the exact information that led to the decision.
Additionally, it gives consumers the right to request corrections and seek damages for any negative action caused by inaccurate reporting.
Summary: You get to know how your credit looks. If wrong information has been reported, you can contest it and seek damages (i.e. sue for money) if appropriate.
Common errors consumers might contest include billing for charges the consumer didn't make, charges made in the wrong amount, charges for goods not received, charges for goods not delivered as agreed, charges for goods damaged on delivery; failure to accurately reflect account payments; calculation errors; statements mailed to the wrong address; charges that cause the consumer to ask for validation and more.
Summary: If you see a mistake in your bill, you can dispute it until it's correct.
Specifically, it prohibits the following: contacting a consumer before 8 am or after 9 pm; making telephone calls intended to annoy, abuse or harass a consumer; contacting consumers at work after being told not to; contacting consumers known to have a lawyer; deceiving a consumer or misrepresenting oneself to collect a debt; using abusive or profane language; contacting a third party about a debt and more.
It requires that creditors follow these terms: identify themselves to consumers and state their purpose; provide the consumer with information he or she requests in writing; notify the consumer of his or her right to dispute the debt, and more.
Summary: Debt collectors can't harass you or lie. You can contest debts, but you must do it in writing.
Summary: Go to annualcreditreport.com to get your free credit report every year!
These are by no means all the laws that protect you as a borrower and user of credit. In fact, these are only a handful of acts passed by the federal government. Each state has its own consumer protection laws as well. If you're interested in learning about more protections available to you, consider talking with a bankruptcy lawyer in your area.
Doing so will allow you to speak with someone who's familiar with consumer protection laws, since consumer protection issues often play into bankruptcy cases. Plus, if your rights have been violated, you may want to take legal action. Many of these laws give consumers the right to seek damages, which can be obtained through legal channels.
To take advantage of your consumer rights, fill out our free evaluation form or call us at 877-349-1309, and we'll put you in contact with a bankruptcy lawyer practicing in your area.
The above summary of laws is by no means all-inclusive and is not legal advice. Laws may have changed since our last update. For the latest information on bankruptcy laws, speak to a local bankruptcy lawyer in your state.