The government has passes laws to protect consumers against unscrupulous debt consolidation and credit repair companies.  There is also a law to protect consumers from unfair debt collection practices.There are only two forces in the world, the sword and the spirit. In the long run, the sword will always be conquered by the spirit. - Napoleon Bonaparte
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Credit Laws

Credit Laws

In an effort to protect consumers from unfair or deceptive practices of companies offering credit repair, or doing credit reporting or collecting debts, the US government has passed different pieces of legislation.



Credit Repair Services

This law was enacted to:

  1. Ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and
  2. Protect the public from unfair or deceptive advertising and business practices by credit repair organizations.

It prohibits companies offering credit repair services from making false claims or misleading representation about credit repair. It requires them to tell you - in writing

  • about your legal rights
  • what services they will perform
  • how long it will take to get results
  • the total cost for their services
  • any guarantees they offer.

Under the law, this is a contract and it must also explain that you have three days to cancel at no charge.

You also have the right to sue in federal court if they violate the law, if you do so within 5 years of the violation. You can seek either your actual losses or the amount you paid the company — whichever is more. You also can seek “punitive” damages (money to punish the company for violating the law). Class action suits against the company are also legal. This is where groups of individuals join together in one lawsuit.

Many states also have laws regulating credit repair companies which may be helpful if you’ve lost money to credit repair scams. If you’ve had a problem with a credit repair company, report the company. Contact your local Consumer Affairs office or your State Attorney General or the Federal Trade Commission. Many of the State Attorney Generals have toll-free consumer hotlines. Check with your local directory assistance.



Lexington Law

Credit reporting agencies collect information on your debts and provide reports for businesses, including credit card companies, banks, department stores, car dealerships, employers and others to help them determine whether or not to give you credit. The Fair Credit Reporting Act (FCRA) promotes fair and accurate debt reporting practices and promotes privacy of the personal information in your credit report.


You have the right to know what is in your report.

The credit reporting agency is required to tell you everything that is in your report. They will provide a list of every business who has requested your report within the past year or within the past two years when the request is regarding employment.

To obtain a copy of your report, you must request it.

Free Credit Report

Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), each of the consumer reporting companies is required to provide you with free annual credit report . If you request it more than once per year there will be a charge somewhere around $10 per agency. There are three national credit reporting agencies: Experian, TransUnion and Equifax.

  • Equifax Information Services  (800-525-6285)
  • Experian's National Consumer Assistance Center  (888-397-3742)
  • TransUnion Corporation  (800-680-7289)

The only place to get your annual free credit report from the three reporting agencies is You can go to the three reporting agencies and request one, but you will have to sign up for their trial service. If you do not cancel it in the specified amount of time, you will be charged a monthly fee.

When you request a copy of your report, you will need to provide your name, address, social security number, and your date of birth. You may also need to provide a previous address if you have moved in the last two years. To protect your privacy, they will also ask you for one piece of information that only you will know, for example, the amount of your current mortgage payment.

You are entitled to a free report if a company denies you credit, insurance, or employment, and if you ask for a copy of your credit report within 60 days of receiving notice of the denial. The company will send you a notice of the denial and will provide the name, address, and phone number of the credit agency they used to make this decision.

In addition, you are entitled to one free report each year if you're unemployed and you are planning to go job hunting within 60 days; or if you're on welfare; or if your credit report is inaccurate because of fraud or identity theft.

Time Limits When Information is Negative but Accurate:

(From the date the event took place):

10 Years

Negative Debts


7 Years (or until the statute of limitations has run out - whichever is longer)

Unpaid Judgments

No Limit

Criminal Convictions

Information in response to a job application paying over $75,000 per year

When you apply for more than $150,000 worth of credit or life insurance



The Fair Debt Collection Practices Act (FDCP) requires that debt collectors treat you fairly and it prohibits certain methods of debt collection. The type of debts covered by this act include personal, family, and household debts including money owed for the purchase of an automobile, for medical care, or for charge accounts.


“A debt collector is calling me all day long and into the night. Is that legal? Can I request that they only contact me by mail?”

Debt collectors are allowed to contact you in person, by mail, by telephone or by fax. However, they cannot contact you at inconvenient times – earlier than 8 a.m. or after 9 p.m., unless you agree in advance. And they are not allowed to contact you so often that it constitutes harassment.

“Can I stop debt collectors from contacting me?”

Simply write a debt collection letter (sent by certified mail, return receipt requested) to the collection agency and tell them to stop. After they receive your letter, they may not contact you again except to say there will be no further contact or to notify you that they or the creditor intends to take some specific action. Don’t think that sending such a letter makes the debt go away. It doesn’t. You still owe the debt and you can still be sued by the debt collector or by the original creditor.

“Someone from a collection agency kept calling me about a debt they said I owed. I told them it wasn’t mine and I didn’t owe it. But they kept calling anyway. I finally asked them to send me proof that I owed the debt. When the statement arrived, it was for a debt owed by someone with the same name who lived in different city. What should I do?”

Within 30 days after you receive written notice about the debt, you need to send them a letter advising that you do not owe the money and ask them not to contact you. Note that a collector can renew collection activities if you are sent proof of the debt, like a copy of a bill for the amount owed. Don’t do this if you really do owe the money, otherwise, you can get in a lot of trouble and may be subject to imprisonment for mail fraud.

“The collection agency said I owe more than I believe I owe. What can I do?”

Write to you creditor using the address for billing inquires (not where you send your payments). Explain that you are disputing the amount and why. Then send it via certified mail, return receipt requested, so you have proof of what you sent. Include copies (not the originals) of sales slips or other documents that support your position. Be sure to keep a copy of all documents for your files.

Below is an example letter for disputing a debt:



Your Name
City, State, Zip Code

Your Account Number

Name of Creditor
Billing Inquiries
City , State, Zip Code

Dear Sir / Madam:

This letter is to dispute a billing error in the amount of $______ on my account. This amount is in error because [a description of the dispute].

I am requesting that the error be corrected as soon as possible and that any finance or other charges related to this disputed amount be credited to my account and that you send an accurate statement.

Enclosed are copies of [sales slips, payment records, etc.] supporting my position. Please investigate this matter and correct the billing error as soon as possible.

Thank you,
Your name

Enclosures: [List what you are enclosing.]


Also, if you don’t owe the debt, be sure to notify the credit reporting agencies. Request a copy of your credit report and follow their procedures for disputing the debt.

“A debt collector called my neighbors to find out about me and now they are calling my workplace. I’m afraid I’ll get fired.”

They may contact others to find out where you live and work but they cannot reveal your indebtedness to them. They are not allowed to contact you at work if they know that your employer disapproves of personal calls.

“I was surprised when a collection agency called me. I had no idea why they were calling.”

Within five days of their first contact with you, a collection agency must send you written notice of the debt including the amount you owe, the name of the business or lender to whom you owe the debt, and what to do if you believe you don't owe the money.

“When they called they were really rude and harassing.”

Long gone are the days when debt collectors could harass you. That’s over. They can no longer use abusive or threatening language to scare you into paying your debts. For example, their tactics cannot be threats of violence or harm. They cannot publish a list of people who refuse to pay their debts (except to notify a credit bureau). They cannot use obscene or profane language or call you repeatedly on the telephone to annoy you. Also, debt collectors cannot make false statements such as misrepresent the amount you owe or say they are lawyers if they are not.

“I was threatened with prison if I don’t pay my debt. Can they do that?”

Debt collectors cannot try to intimidate you and tell you that you have committed a crime and will be arrested if you don’t pay your debt. There is no debtor’s prison. All debtors' prisons were eliminated in the United States by 1850. However, there are some situations, where you can still be jailed:

  • If you willfully violate a court order, particularly an order to pay child support
  • If you are convicted of deliberately refusing to pay your income taxes
  • If you try to hide or conceal your property so as to avoid paying a debt for which a creditor has a judgment against you


Contact the Federal Trade Commission if any of these tactics are used against you.

Federal Trade Commission
Bureau of Consumer Protection
55 East Monroe Street, #1437
Chicago, IL 60603

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