As consumers, we spend billions of dollars each year on goods and services, both online and in traditional stores. An increasing number of those purchases are made with some type of credit. As debt has increased, the need to protect consumers against credit fraud and unfair or deceptive trade practices has also increased. The Federal Trade Commission (FTC) is the federal agency that enforces consumer protection laws. Below are descriptions of the three most well known consumer protection laws and details about how each one is designed to protect you against unfair creditor practices.
Fair Credit Reporting Act (FCRA)
The FCRA protects consumers by requiring that credit reporting agencies reflect accurate information in their credit reports. Under the FCRA, you have the right to a full disclosure of the contents of your credit file and the right to dispute incomplete or inaccurate information. You have the right to have incorrect or incomplete information corrected or removed from your report and to receive notice when you are denied credit or employment based on the contents of your credit report.
By law, you are entitled to a copy of your credit report every 12 months from each of the three main credit reporting agencies, free of charge. When preparing to file a bankruptcy, you should check your credit reports to make sure that you list all creditors and collection agencies in your bankruptcy.
After filing a bankruptcy it is important to request your credit report every 12 months to monitor them for accurate and complete information to help rebuild your credit.
Fair Debt Collection Practices Act (FDCPA)
The FDCPA was enacted to protect consumers against creditor harassment and prevent collection agencies from using unfair, deceptive or abusive practices to collect debts. In trying to collect a debt, collection agencies are prohibited from making false or misleading statements, threatening arrest or stating that a lawsuit has been filed when one has not been filed. They are also prohibited from threatening to seize property or garnish wages without a court order. Collection agents may not use obscenity or profanity, contact your employer or call you at inconvenient times to collect a debt. You have the right to receive written notice providing the amount you owe, the name of the original creditor and instructions on how to dispute the debt.
While the FDCPA does provide these protections, it may be difficult to stop collection calls even when you follow all of the rules. Often, the only way to stop collection calls and letters is to file a bankruptcy case. The automatic stay provisions of the Bankruptcy Code prohibit creditors or collection agents from contacting you once the bankruptcy is filed (plus, creditors are typically more fearful of the Bankruptcy Court than the FDCPA).
Fair Credit Billing Act (FCBA)
The FCBA sets forth the procedures consumers have for challenging disputed items on a credit card statement. Credit cards are one of the top reasons many people are forced into filing bankruptcy. High interest rates combined with over-the-limit fees and late fees make it impossible for consumers to pay off credit card debt. The FCBA requires that credit card companies promptly investigate any charges that you dispute on your billing statements and correct valid errors without damage to your credit score.
The law only applies to open-ended or revolving lines of credit, such as credit cards. This protects the consumer against unauthorized charges, errors in calculating charges and interest and failure to post payments or returns among other billing errors. To dispute a charge you must send a written notice of the billing error to the address provided on your credit card statement providing your name, address, account number and details of the error such as the date, type and amount of the error.
In a bankruptcy filing, you may also dispute a debt if you feel that the debt was not valid and that you should not be held responsible for the repayment of any portion of that debt (in a Chapter 13 case). Furthermore, creditors in a bankruptcy case must file an accurate accounting of the debt owed when they file their Proof of Claim. Debtors have the ability to object to claims that are incorrect or not valid.
Just as the consumer protection laws are designed to protect consumers from unfair trade practices, the Bankruptcy Code is designed to provide relief for debtors who are unable to pay their debts in addition to their livings expenses. The provisions of the Bankruptcy Code are designed to protect debtors from creditor harassment and give individuals a fresh start, to recover and rebuild after a financial crisis. Contact our office today for a free bankruptcy consultation to discuss how filing a bankruptcy can protect you and your assets.
