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Consumer Credit: Debtor and Creditor Laws

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Credit allows people to promise to pay in the future in order to buy or borrow in the present. Credit is vital to our system of commerce and is used every day by businesses and consumers. An understanding of the laws governing consumer credit is vital to protect your own interests, regardless of whether you are the creditor, a business owner, an entrepreneur or a lending agency. If you have questions about debtor and creditor law, contact David, Brody & Dondershine, LLP in Reston, Virginia, today to schedule a consultation with a business attorney to discuss your situation.


Many credit transactions are made through the use of credit cards issued through banks or other financial institutions. However, there are still many business owners who extend credit or provide financing directly to consumers. If a business offers credit, it must comply with the relevant state and/or federal laws and regulations. The laws are intended to protect consumers and provide guidelines that businesses and credit institutions must follow. While this overview will outline the major federal consumer credit laws, it is important to note that state consumer credit laws are increasingly modeled after the federal laws. For specific information regarding your state’s consumer credit laws, schedule a consultation to speak with an attorney.

The Equal Credit Opportunity Act (ECOA) is a federal law that requires lenders and other creditors to make credit equally available regardless of race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs. Under the ECOA a lender can only consider factors such as future earnings and credit records when making a credit decision. Commercial lenders have additional responsibilities under the ECOA, including notifying credit applicants in writing of any adverse credit action taken, acting on credit applications within 30 days, and complying with record-retention requirements. 15 USCA § 1691.

The Fair Credit Reporting Act (FCRA) is a federal consumer protection law that regulates the disclosure of consumer credit reports by credit reporting agencies, also known as credit bureaus. It requires credit agencies to investigate disputed items in credit reports and establishes procedures for correcting mistakes in a credit record. The FCRA is intended to protect consumers from having their credit ruined by incomplete or misleading credit report information. Other provisions of the FCRA (found in 15 USCA § 1681) include:

  • The FCRA gives consumers the right to view their credit report for no charge from each credit agency once per year and also whenever there has been a rejection of a credit application based on information in the report if requested within the required statutory time frame from the date of notice of the adverse action.
  • If a consumer views his file and notices an inaccuracy, he or she can ask the credit agency to correct or delete the inaccurate portion. If the credit agency refuses, the consumer may write a statement describing his or her own perspective regarding the inaccuracy. This statement or a summary of it will then become a part of future credit reports.
  • In addition, the FCRA regulates and imposes certain duties on furnishers of consumer credit information to credit bureaus and on subsequent users of the information in credit reports.

The Truth-in-Lending Act (TILA) is a federal law that requires lenders to provide certain information so consumers can compare the terms of various loans. The information to be disclosed is detailed and highly regulated. TILA also regulates how a lender can advertise consumer credit. 15 USCA § 1601 et seq.

The Fair Debt Collection Practices Act (FDCPA) is a federal law that addresses abusive debt collection practices and promotes openness and honesty in the industry. The FDCPA outlaws debtor harassment and regulates third-party collectors. These include collection agencies and lawyers who regularly take legal action to collect overdue bills. It should be noted that the original creditors are not regulated by the Act, except in certain narrow circumstances. Original creditors are more directly regulated by other laws. 15 USCA § 1692.

The Fair Credit Billing Act (FCBA), part of TILA, is a federal law granting consumer borrowers the right to question disputed open-end credit plan bills from creditors. Under the FCBA, a borrower must notify the creditor of the error within 60 days after the creditor transmitted the disputed bill. Within 90 days, the creditor either must correct the bill or, after conducting a reasonable investigation, notify the consumer why the bill is correct and offer supporting evidence. 15 USCA § 1666.


A consumer, business owner, or credit agency should also be aware of federal statutes, state laws, and common law principles applicable to extending credit and collecting debts in the commercial context. To speak to an attorney about debtor and creditor law and how it affects your situation, contact David, Brody & Dondershine, LLP in Reston, today to schedule a consultation.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.