Loans are a huge part of American life. It’s estimated that American household debt has reached over ten trillion dollars. Almost every American family has a loan they must pay, and getting one is a massive step in everyone’s lives.
When it comes to getting a loan, there are many things you need to know to make the right decision. The five laws this article outlined will help ensure you’re prepared for what’s to come. By understanding these laws, you can avoid costly mistakes and make the process easier for yourself.
The Truth in Lending Act
The United States government passed the Truth in Lending Act in 1968 in response to the credit crisis of the time. The act was designed to protect consumers from deceptive and unfair lending practices. It requires lenders to disclose all information about a loan in writing, including the interest rate, monthly payments, and total loan cost. By knowing precisely what you’re getting into, you can avoid costly surprises down the road.
The act also established the Consumer Financial Protection Bureau (CFPB), which is responsible for enforcing consumer protection laws and ensuring that lenders treat borrowers fairly.
If you’re considering taking out a loan, familiarize yourself with the Truth in Lending Act. It’s there to protect you and will help ensure that you make the best decision for your financial future.
If ever you did a loan without a lender giving you the necessary information for them or if there are some hidden fees, the Truth in Lending Act would protect you as the consumer.
The Equal Credit Opportunity Act
The Equal Credit Opportunity Act (ECOA) was passed in 1974 to protect consumers from discrimination when trying to get a loan. The act makes it illegal for lenders to discriminate based on race, color, religion, national origin, sex, marital status, or age.
It’s important to note that the ECOA doesn’t prohibit lenders from considering income, employment history, or creditworthiness when making a lending decision. However, they can’t use these factors to discriminate against borrowers.
Unfortunately, many borrowers still face discrimination when trying to get a loan. It can be due to their race, ethnicity, or credit history. If you feel like you’ve been discriminated against when trying to get a loan, you can file a complaint with the CFPB.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) was passed in 1977 to protect consumers from abusive debt collectors. The act prohibits debt collectors from using abusive, deceptive, or unfair practices when collecting a debt.
Some prohibited practices include calling early in the morning or late at night, making repeated phone calls, using offensive language, and threatening to take legal action if they’re not going to do so.
If your lender collects your debt through these practices, you’re getting harassed. One way to end the harassment is by sending a cease and desist letter. This will legally stop the debt collector from contacting you.
The National Credit Reporting Act
The National Credit Reporting Act (NCRA) was passed in 1970 to protect consumer credit information. The act requires credit reporting agencies to follow specific guidelines when collecting, maintaining and sharing consumer credit information.
Under the NCRA, consumers have the right to know what’s in their credit report, and they can dispute any inaccurate information. The act also gives consumers the right to opt-out of having their information shared with third parties.
If you’re concerned about your credit information being shared without your consent, familiarize yourself with the National Credit Reporting Act.
Bankruptcy Laws
Bankruptcy is a big word among Americans, but it’s not as harmful as people think. Bankruptcy is a legal procedure that allows people or businesses to get relief from their debts. You need to know about two most common types of bankruptcies, Chapter 7 and Chapter 13.
When individuals reach a point when they can’t pay their bills, they need an option to save them from their creditors, and that’s where bankruptcy comes in. Bankruptcy gives individuals a chance to start over by discharging their debts. Liquidation bankruptcy offers individuals this chance. The court will appoint a trustee to liquidate your assets to repay your creditors. However, not all your assets will be sold off, as some are exempt from liquidation. These exemptions vary from state to state.
Chapter 13 bankruptcy is for individuals with a regular income who can repay their debts over time. With this type of bankruptcy, you’ll be able to keep your property and repay your creditors through a repayment plan that will last three to five years.
Before anything else, you need a professional to help you out. Bankruptcy attorneys are your best bet when filing for bankruptcy. They can help you settle the legal issues behind it and even help you with the paperwork. However, no matter what type of bankruptcy you choose, it will stay on your credit report for seven to ten years. However, that doesn’t mean you won’t be able to get loans during that time.
Getting a loan can be a lifesaver, or it can be the biggest problem of your life. By knowing these laws, you know your right as a borrower and can make the best decision for your future.
