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Consumer Credit Regulation: 2.2.6 Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA)187 applies to every aspect of a credit transaction, including the application, evaluation of the application, the decision to grant or deny credit, and various activities that follow the granting of credit. It sets out a general rule that creditors cannot discriminate against any applicant in any aspect of a credit transaction on the basis of:

Consumer Credit Regulation: 2.2.7.1 Key Features of the Act

In 2010, Congress dramatically restructured the credit marketplace by enacting the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).191 The Dodd-Frank Act represents the culmination of a series of hearings that documented the dangers, instability, and need for regulation in the credit marketplace.192 Among the major features of the Dodd-Frank Act are:

Consumer Credit Regulation: 2.2.7.1a Constitutionality of the CFPB’s Funding

On October 21, 2022, a three-judge panel of the Fifth Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) funding mechanism is unconstitutional because it violates the Appropriations Clause.200 In addition, the Fifth Circuit held that the CFPB’s Payday Lending Rule is invalid because it was promulgated using the unconstitutional funding mechanism.

Consumer Credit Regulation: 2.3.11.6.1 Wage assignments

Many states have laws restricting wage assignments.356 These laws can be important when evaluating payday-style loans such as earned wage advances that rely on the borrower assigning an upcoming paycheck to the lender or instructing the borrower’s employer to turn all or part of the paycheck over to the lender.

Consumer Credit Regulation: 2.3.12.1 Introduction

A number of states have laws regulating “credit services organizations.”360 These laws typically deal with abuses by credit repair organizations, a topic discussed in another treatise in this series.361 They are relevant for this book because most also apply to organizations that assist or offer to assist consumers in obtaining extensions of credit.

Consumer Credit Regulation: 2.3.12.2 Coverage

The state credit services laws that apply to organizations assisting or offering to assist consumers in obtaining extensions of credit are usually limited to credit for personal, family, or household use. Typically, they apply to an organization only if it provides its services in return for the payment of money or other consideration.

Consumer Credit Regulation: 2.3.12.4 Private Causes of Action

Almost all state credit services statutes provide a private right of action to consumers. Some do so both by making a violation actionable under the state UDAP statute374 and by creating a special cause of action. Many authorize minimum damages, punitive damages, and attorney fees.375 Many set as minimum damages the total amount paid by the consumer.376 In addition, a number of state laws make non-complying contracts void and unenforceable.

Consumer Credit Regulation: 2.3.12.5 High-Rate Lenders’ Use of Credit Services Laws to Evade State Usury Caps

In some states, there is a danger that high-rate fringe lenders will use the state credit services law as a way of evading state usury statutes. In Texas, an organization, CPCWA Co., is registered under the state’s weak credit services organization law. That law did not place any cap on the fee a licensed credit services organization could charge for arranging an extension of credit. CPCWA Co. then, for a $1,500 fee, “arranged” a title pawn loan with proceeds of $500.

Consumer Class Actions: 10.6.2.1 Generally

Efficiency is the primary focus in determining whether the class action is a superior method for resolving the controversy presented. Usually, “[a] class action will . . .

Student Loan Law: 14.1 Overview

Generally, when a student loan or a portion thereof is forgiven or cancelled, the discharged amount is treated as income for tax purposes.1 However, the American Rescue Plan Act of 2021 (American Rescue Plan Act) temporarily removes federal income tax consequences for all federal student loan discharges and cancellations that occur between January 1, 2021 and December 31, 2025.2 This temporary relief is discussed in detail at

Student Loan Law: 14.2 Student Loan Discharges Not Taxable from 2021 Through 2025

The American Rescue Plan Act, enacted in March 2021, temporarily removes federal income tax consequences for all federal student loan discharges and cancellations that occur between January 1, 2021 and December 31, 2025.6 Although many types of federal student loan discharges were already excluded from income tax consequences,7 the American Rescue Plan Act extends the protection from tax liability to any discharge or forgiveness of federal student loan debt, regardless of the reason for the cancellation

Student Loan Law: 14.3 Public Service Loan Forgiveness and Other Profession-Related Loan Forgiveness Not Taxable

The Internal Revenue Code specifically provides that student loan forgiveness is tax exempt when the forgiveness is conditioned up the student working for a certain period of time in certain professions.10 The Department of the Treasury has concluded that Teacher Loan Forgiveness and Public Service Loan Forgiveness satisfy the requirements for income exclusion under this provision because these programs are conditioned on the borrower working for a certain period of time in qualifying public service positions.

Student Loan Law: 14.5 Closed-School, False-Certification, and Unpaid-Refund Discharges Excluded from Income Under the Higher Education Act

Under the Higher Education Act (HEA), federal student loan debts that are cancelled pursuant to the closed-school, false-certification, and unpaid-refund discharge programs are specifically excluded from taxable income.21 Although the Internal Revenue Code does not include a specific exclusion for these discharges—it only excludes student loans cancelled based upon service in certain professions or death or disability22—the HEA cross-references the tax treatment of the employment-related discharges

Student Loan Law: 14.7 Insolvency and Bankruptcy Exceptions to Taxable Income

In general, debt forgiven during a bankruptcy proceeding—or to the extent that the borrower is insolvent—is not income.36 In order for the bankruptcy exception to apply, the discharge must occur as part of the bankruptcy case. Borrowers who use the bankruptcy or insolvency exception must attach an IRS Form 982 to their federal and state income tax returns.

Student Loan Law: 14.8 Disputed Debt Doctrine As an Exception to Taxable Income

Another common law exception to taxability of student loan discharges is the “disputed debt” doctrine, which excludes from income the debt forgiven as the result of a bona fide dispute over its legitimacy.40 For example, if the loan is challenged as a product of fraud or misrepresentation, the loan may be considered reformed to legally valid terms and there may be no debt to discharge.

Fair Debt Collection: 15.2.2 What Constitutes Severe Mental Distress

To be actionable under the tort of intentional infliction of emotional distress, the plaintiff’s distress must be so severe that no reasonable person could be expected to endure it.94 Severe emotional distress is shown when it interferes with the plaintiff’s ability to attend to daily matters, such as working.95 Seeking professional treatment and a manifestation of physical symptoms can weigh in the plaintiff’s favor but are not required in every jurisdiction.96

Consumer Credit Regulation: INTRODUCTION

This set of summaries encompasses state statutes that allow lenders other than depository institutions to extend unsecured open-end consumer credit, by credit card or otherwise, for cash advances. It excludes open-end credit statutes that are limited to:

Student Loan Law: 12.1 Overview

Federal law allows borrowers to discharge their federal student loans in the event of the borrower’s death (or, in the case of PLUS Loans, the death of the student for whom the parent borrowed) or total and permanent disability (TPD).