Your Rights

Understanding Your Credit Protection and Rebuilding Rights

When it comes to your credit records, credit grades and credit repair options, you have rights.

In fact, three pieces of federal legislation provided the foundation for consumer credit rights:

  • Consumer Credit Protection Act (1968)
  • Fair Credit Reporting Act (1970)
  • Fair Debt Collection Practices Act (1978)

Consumer Credit Protection Act

Enacted in 1968, the Consumer Credit Protection Act actually consists of several portions, or “titles,” designed to protect consumers from predatory and abusive credit practices.

Title III of the Consumer Credit Protection Act, in particular, dealt with wage garnishments for unpaid debts. For starters, this law prohibits employers from firing an employee because of a wage garnishment order.

Federal laws also restrict wage garnishment to only 25% of wages earned, after exempt deductions (such as income tax withholdings and social security contributions). Exempt from this restriction are debts owed to the IRS, federally guaranteed student loans and other exempted debt obligations.

The main force of the Consumer Credit Protection Act, however, came from Title I, commonly called the Truth-in-Lending (TiL) Act. The TiL Act requires lenders and creditors to provide detailed disclosures to loan and credit applicants. This disclosure must be provided at the time of application, or within three days, and must be re-provided if any terms change.

Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) established protection for consumer credit records and was added as Title VI of the Consumer Credit Protection Act.

FCRA was amended in 2003 by the Fair and Accurate Credit Transaction Act (FACTA) — which entitled consumers to receive one (1) FREE credit report each year from the credit reporting agencies.

This free report must be requested and does NOT include credit scores. It just provides the raw credit data. Nevertheless, it’s a great place start for consumers who need to repair their credit but are short on cash.

FCRA also helps consumers remove erroneous credit entries… and keep them off. Finally, this law limits how long credit bureaus and reporting agencies can keep consumer information. Most consumer credit information may only be maintained for seven (7) years. Bankruptcies and legal judgments may remain on record for up to ten (10) years.

Fair Debt Collection Practices Act

Nearly a decade after it was first enacted, the Consumer Credit Protection Act was amended by Congress to add Title VIII — the Fair Debt Collection Practices Act. The purpose of this new law was to protect consumers from abusive debt collection practices, used by many debt collection agencies and debt buyers.

Through this act, debt collectors can no longer use any of these abusive practices:

  • Call outside of 8:00 AM to 9:00 PM
  • Try to contact debtors (except with legal notices) after the debtor has instructed them to cease
  • Communicate with the debtor’s employer or co-workers
  • Contact debtors known to be represented by an attorney
  • Use misrepresentation or deceit in any communication with the debtor
  • Publish the debtor’s name or credit information
  • Threaten arrest or legal action that is clearly not permitted by the debt
  • Use profane, obscene or abusive language
  • Harass the debtor with excessive calls or letters
  • Communicate with debtors at their employment (if they’ve been requested not to do so)
  • Report false information on a person’s credit report
  • Use embarrassing media to communicate (such as a postcard)

Consumers can get more information about their debt collection rights by contacting the Federal Trade Commission (FTC) or vising their website at FTC.gov.

State Consumer Credit Protection Laws

In addition to federal regulations, states have also enacted their own consumer credit protection laws — most of which are actually tighter than federal laws.

For example, Pennsylvania, North Carolina, South Carolina and Texas do not allow any creditor to garnish wages of employees in those states, except for taxes, federally guaranteed student loans, child support and court-ordered fines or liens.

Contact your state consumer protection agency to learn more about your additional rights and resources in your state.

 

Bottom Line: You Have Rights

The bottom line is that you have legally protected rights and plenty of resources at your disposal as you seek to repair or rebuild credit after a personal disaster.

You just need to know where to look.