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NCBLC - National Consumer Bankruptcy Litigation Center

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Consumer Law Overview

The credit and lending industry plays a significant part in the U.S. economy. If you're like most consumers, you use credit, whether it be a major credit card that you pay off each month, an automobile loan, or a mortgage on your house. For many people, these practices are essential, and yet they're also fraught with potential illegal activity-illegal activity that can cost you money.

The ways in which lenders and debt collectors can take advantage of you, overcharge you, and otherwise manipulate you are too numerous to list here. Fortunately, the state and federal governments provide protections against some of the most common injustices perpetrated against consumers.

There is significant overlap among some consumer protection laws. For instance, many actions that violate the Fair Debt Collection Practices Act or the Fair Credit Reporting Act are also bankruptcy discharge violations. Some key areas include:

Fair Debt Collection Practices Act: The Fair Debt Collection Practices Act (FDCPA) was written to protect consumers from deceptive and abusive debt collection practices. The FDCPA applies only to third-party collectors, not to the original creditor. The protections against these third party collectors are extensive, ranging from limitations to prevent fraud and deception to restrictions on the hours of the day during which a collection agent may contact you.

Fair Credit Reporting Act: The Fair Credit Reporting Act (FCRA) imposes restrictions and duties on credit reporting agencies, on the businesses that use credit scores, and on those reporting consumer information to the credit bureaus. The FCRA seeks to ensure that the information contained in your credit report is accurate, and to establish procedures for investigating and verifying those items.

Bankruptcy Violations: The U.S Bankruptcy Code offers consumers extensive protections and remedies if those protections are breached by a creditor. Some of the most common violations occurring during and after a bankruptcy case include:

• Bankruptcy Discharge Violations: Once a debt has been discharged in bankruptcy, you no longer owe that debt. However, unscrupulous lenders, collection agencies and debt purchasing companies will often pursue collection anyway. If a creditor or collection agent is attempting to collect a debt that was discharged in bankruptcy, or if discharged items are appearing on your credit report, fill out our free case evaluation form and find out how NCBLC can help you fight back.
• Automatic Stay Violations: In most bankruptcy cases, a stay order is entered immediately upon filing. This stay prohibits your creditors from taking any collection action against you for as long as the order is in effect. If a creditor does pursue collection activity outside the bankruptcy court in violation of the automatic stay, the bankruptcy court can compel the creditor to return any property repossessed, and you may also be able to recover damages.
• Proof of Claim Violations: A proof of claim is simply a form submitted by a creditor in a bankruptcy case to show how much money he's owed. Unfortunately, many creditors falsify proofs of claim in a variety of ways, including the addition of unauthorized fees, charges for services not performed, and misapplication of payments received. Falsification of a proof of claim is a crime, and your creditors could face serious sanctions if the claims submitted in your bankruptcy case are not accurate.

Debt Purchasing: Debt purchasing companies often build their business models around the collection of debts that can no longer be collected legally. If these debts have been discharged in bankruptcy, those collection efforts are discharge violations and NCBLC may be able to help. But sometimes the debts are simply too old to be legally collected, or the account has already been settled with the original creditor or a collection agency. In those cases, provisions of other laws may protect you, including the FDCPA, the FCRA, and various state consumer protection statutes.

Truth in Lending Act: The Truth in Lending Act (TILA), as its title implies, seeks to ensure honesty and full disclosure in the lending process. The TILA protects only consumers and does not apply to commercial borrowers. Its key provisions require disclosure of interest rates, finance charges and total loan costs.

Predatory Lending: Of course, TILA violations are common among predatory lenders. However, predatory lending encompasses more than just TILA violations, and you are protected from these practices by a variety of state and federal statutes. Some of the most common predatory lending practices include misleading borrowers about fees, interest rates and long-term costs, building unnecessary or unauthorized fees into the loan, and failing to disclose the impact of adjustable rate or interest-loans.

Mortgage Servicing: Mortgage loans, particularly non-traditional loans like adjustable rate mortgages, interest-only loans and 50-year mortgages, are a particularly ripe area for predatory lending practices. In addition, many mortgage lenders build in unnecessary fees, roll single-premium insurance into the loan without offering the buyer other options, and hold payments in violation of the mortgage terms so as to generate additional interest and late charges.

State Consumer Protection Statutes: Many state consumer protection statutes mirror the federal protections, but in some cases they provide more extensive protection. These statutes are typically overseen by the state Attorney General's office or another designated agency, and may also provide a private cause of action.

Lemon Law: One example of state consumer protection laws that provide protections not afforded by federal law is the body of state laws known as "lemon laws". Every state offers some statutory protection for consumers who have purchased faulty motor vehicles. Depending on your state, these statutes may also cover other big-ticket items.

If your debts have been discharged in bankruptcy, NCBLC can help you enforce your discharge and reclaim the fresh start that the U.S. bankruptcy law intended to provide. Fill out our free case evaluation form now! If you haven't filed for bankruptcy, but your rights have been violated in any of these areas, you still have recourse available. Contact an attorney in your area, your state Attorney General's office, or the appropriate federal agency for more information about how you can fight back!