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Bankruptcy Basics: Required Statement About Bankruptcy Assistance Services.

A debt relief agency must also provide the assisted person with the statement about “bankruptcy assistance services” set out in section 527(b), or in substantially similar language to the extent applicable. The required statement must be clear and conspicuous and must be provided in a separate document. (The statement is reproduced on the following page.)

Statement Required by Section 527(b)

IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER

Bankruptcy Basics: Advertisements

Section 528(b)(2) requires that any advertisement directed to the general public indicating that the debt relief agency provides assistance with respect to “credit defaults, mortgage foreclosures, eviction proceedings, excessive debt, debt collection pressure, or inability to pay any consumer debt” shall:

Bankruptcy Basics: Overview

Virtually every consumer debtor has a credit reporting file that contains information about where the debtor lives and works, how the debtor pays their bills, and whether the debtor has filed for bankruptcy. A credit bureau can only report the most accurate negative information for up seven years, and bankruptcy information for ten years.

Bankruptcy Basics: Behind the Numbers.

Free credit reports do not include a credit score. A credit score is a number that summarizes a consumer’s credit history based on a number of different factors and scoring systems. Many businesses, including mortgage lenders, credit card issuers, automobile lenders, and even insurance companies and utilities, base their prices and decisions on the credit score, not the complete report.

Bankruptcy Basics: How to Obtain a Consumer’s Credit Score.

Lenders who use a credit score in connection with a mortgage application must provide the applicant with that credit score and with the associated key factors affecting the score. In addition, consumer reporting agencies are required to provide consumers with their credit scores upon request. The charge for obtaining the score is set by the Federal Trade Commission. Consumers are entitled to receive the following from consumer reporting agencies:

Bankruptcy Basics: How to Dispute Information in the Credit Report

Credit reports often contain inaccurate information. It is a good idea for consumers to check their credit reports regularly, even when they are not experiencing problems. The information in a credit report affects the consumers’ credit scores and whether they can get a loan—and how much they will have to pay to borrow money. It can even affect employment and insurance. It is also helpful for consumers to make sure the information is accurate, complete, and up-to-date before they apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.

Bankruptcy Basics: Who Can Get a Copy of a Consumer’s Credit Report

Only people with a legitimate business need, as recognized by the Fair Credit Reporting Act, can look at a credit report without the consumer’s permission. For example, a company is allowed to get the report of an applicant for purposes of evaluation of credit, insurance, employment, or rental of an apartment.

Bankruptcy Basics: Disputing Fraudulent Charges.

Consumers have a number of rights to dispute identity theft charges. Identity theft victims can get free copies of their credit report, over and above the one free report a year to which consumers are entitled. The consumer, after reviewing the report, should request that the consumer reporting agency delete any fraudulent information.

Bankruptcy Basics: Heading Off New Identity Theft Charges.

To protect against new fraudulent accounts being opened the consumer can place a “security freeze” on the consumer’s files at the three national consumer reporting agencies. A security freeze prevents the consumer’s credit history from being shared with potential creditors. If credit files are frozen, a thief will probably not be able to get new credit in the consumer’s name. Federal law makes security freezes free of charge and they do not require proof that the consumer is a victim of identity theft.

Bankruptcy Basics: Right to Identify the Mortgage Holder.

In this age of securitization, it is helpful to know who actually owns a loan. TILA gives consumers the right to make a written request of the entity receiving the consumer’s payments. The servicer must provide the name, address, and telephone number of the owner of the obligation. 15 U.S.C. § 1641(f)(2). This same information can be obtained by sending a request for information under RESPA to the mortgage servicer. The servicer has ten business days to respond. 12 U.S.C. § 2605(k)(1)(D); 12 C.F.R. § 1024.36(d)(2).

Bankruptcy Basics: Right to Receive Periodic Statements.

TILA requires mortgage creditors and servicers to provide periodic statements to most borrowers. 15 U.S.C. § 1638(f); 12 C.F.R. § 1026.41. The regulation creates some limited exceptions for bankruptcy debtors. See 12 C.F.R. § 1026.41(e). It establishes a two-part test for determining whether a creditor or servicer is exempt from sending periodic statements, and both elements of the test must be satisfied in order for the exemption to apply.

Bankruptcy Basics: The Right to an Accounting and to Obtain the Holder’s Identity.

Whenever an automobile or recreational vehicle (or any other good) is taken as collateral on a loan, Uniform Commercial Code (UCC) section 9-210 provides consumers with the right to get information on the amount due. (The UCC is adopted in a mostly uniform manner in every state, with very few exceptions—states may use a different numbering system than the uniform law citations provided here but are likely to have a substantive provision as described here.) When an automobile title pawn takes a security interest in a vehicle, this UCC protection applies to that transaction as well.

Bankruptcy Basics: Disputes Concerning the Vehicle.

When the dealer extends credit or arranges a car loan, UCC § 2-717 allows consumers, upon notifying the seller of their intent, to deduct damages resulting from a breach of contract from the next payment(s) due. A related right is the consumer’s ability to send a notice revoking acceptance of the vehicle, at which point the consumer’s obligation to pay is eliminated. Both these rights typically continue to apply against the note’s assignee. The consumer should send notices to both the note holder and the dealer.

Bankruptcy Basics: Deficiency Claims.

When a creditor repossesses and sells the consumer’s vehicle, if the sale price does not satisfy the obligation the creditor is likely to seek the difference, called a deficiency. In that case the creditor must provide the consumer with an explanation of the amount of the deficiency it is seeking. The consumer also has the right, at no charge, to obtain this explanation once every six months. UCC § 9-616. This right is helpful if the consumer did not receive or retain the notice provided by the creditor, and also because the deficiency amount being sought may increase over time.

Bankruptcy Basics: Manufactured Home Loans

For loans used to purchase a new manufactured home, the UCC § 9-210 rights described above under “Car Loans and Auto Title Pawns” apply. The consumer also has the rights under RESPA set out above under “Mortgage Loans” to obtain information about the amount due and the identity of the holder of a manufactured home mortgage loan. Consumer Financial Protection Bureau regulations apply RESPA protections when the mortgage covers real property upon which a manufactured home is located or will be located. 12 C.F.R. § 1024.2(b).

Bankruptcy Basics: Overview.

Credit card holders have three sets of rights to dispute a credit card charge under federal law. (These rights do not apply to debit card charges, which instead are subject to a different set of rights, discussed below.) In addition to these three federal rights, state law can help the consumer identify any collateral the credit card company may be claiming.

Bankruptcy Basics: Unauthorized Use of a Credit Card.

This protection shields the consumer against liability for unauthorized use of a credit card, when someone steals, borrows, or otherwise uses a card or card number without permission. Liability for unauthorized use of a credit card is limited to $50 and in some circumstances to $0. 15 U.S.C. § 1643. If someone steals a card, for example, the credit card lender can charge the consumer a maximum of $50 no matter how much the thief has charged on the card. Of course, the card issuer is not required to charge this $50 and frequently will not do so.

Bankruptcy Basics: Billing Error Disputes.

The second type of federal credit card protection involves disputes about a credit card bill, including merchant overcharges or charges for products never received. The Fair Credit Billing Act forces creditors to follow specific “billing error” procedures to resolve the dispute. 15 U.S.C. § 1666.

Under this law the consumer must raise a dispute in writing to the credit card company, usually by sending a letter. The letter must be sent within sixty days after the first bill with the improper charges. The letter must include the following information:

Bankruptcy Basics: Stopping Payment on a Credit Card.

The third important federal credit card dispute protection is the right to stop payment. This strategy can be used if the consumer: has a legitimate complaint about the quality of goods or services bought with the card; first makes a good faith effort to resolve the problem with the merchant directly; and meets the following two prerequisites:

Bankruptcy Basics: Credit Cards Taking Security Interest in Items Purchased.

When a credit card affiliated with a merchant takes a security interest in the products being purchased, complicated issues can arise as to what collateral has been paid off and what items are still being held as security. The right to obtain a listing of this collateral is set out under “Closed-End Small Loans” below.

Bankruptcy Basics: Federal Error Resolution Rights.

The Electronic Fund Transfers Act (EFTA) provides consumers error correction rights applicable to debit card transactions, direct deposits, automatic bill payment plans, and other forms of electronic transfers withdrawn directly out of a consumer’s bank account. 15 U.S.C. § 1693; 12 C.F.R. § 205. The consumer must send a notice within sixty days after receiving a bank statement displaying the error, identifying the consumer and the bank account, and indicating the nature of the error. While this notice can be made orally, the bank can require a confirming notice in writing.

Bankruptcy Basics: Applicability to Checks and Electronic Check Conversion.

In an odd twist, consumers have significant statutory error resolution rights when they pay by credit or debit card or by a direct electronic transfer, but only have such rights in special cases when they pay by check. When the consumer’s check is deposited by the payee, the consumer has no special statutory error resolution rights, except that the federal “Check 21” statute provides certain dispute rights when the problem is confined to the electronic imaging process for the consumer’s check and is not related to the original paper check.