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Truth in Lending: 10.9.3.2 Maximizing Statutory and Actual Damages in Rescission Cases

Practitioners should be sure to evaluate the case carefully to assure that all damages to which the consumer might be entitled are properly calculated. This is especially important if the consumers anticipate financial difficulty in making tender, as damage awards may offset much of the tender amount. Statutory damages are “capable of mathematical calculation,” but the plaintiff should be entitled to a hearing on actual damages.1458

Truth in Lending: 10.9.3.3 Statutory Damages Against Assignees for Rescission Violations

A few courts have held that an assignee who rejects or ignores the consumer’s rescission is not liable for statutory damages unless the disclosure violations on which the rescission is based are apparent on the face of the documents.1467 These courts reason that section 1640(a) only imposes statutory damages liability on “any creditor,” which is defined by section 1602(g) as the entity to which the obligation was originally payable.

Truth in Lending: 10.9.4 Attorney Fees

Attorney fees are available in rescission cases.1476 A few courts have held, however, that attorney fees are available against an assignee in a rescission case only if the underlying violation was apparent on the face of the contract.1477 These courts reason that, while rescission is always available against an assignee by virtue of section 1635(c), the right to attorney fees arises under section 1640(a), which makes them available against a “creditor” who fails to comply with TILA.

Truth in Lending: 10.9.5.3 Equitable Modification

Since negating the consumer’s tender obligation because of the creditor’s noncompliance is inherent in Steps Two and Three in the rescission process, it is clear that courts have the equitable authority to modify it.1504 While the better rule is that the tender obligation should be negated unless the creditor shows some special equities in its favor,1505 courts typically make this remedy an exception rather than the rule, and confine it to cases involving deception, cheating, or overreac

Fair Debt Collection: 1.1.1.2 Organization of the Treatise

This treatise is designed to help lawyers and paralegals representing consumers who are victims of abusive debt collection practices. It may also be useful to debt collection professionals as a part of their legal compliance efforts.

The chapters of the treatise are divided as follows:

Fair Debt Collection: 1.1.1.8 Defining “Debt Collector” in This Treatise

This treatise covers laws applicable to all types of debt collectors—creditors, first-party debt collectors, third-party debt collectors, debt buyers, collection attorneys, and the employees of each that make the phone calls asking for money. Unless the context indicates otherwise, the term “debt collector” or “collector” may be used in this treatise to mean any person collecting a debt.

Fair Debt Collection: 1.1.3 Trainings and Continuing Legal Education

National Consumer Law Center staff participates in a variety of in-person training events on fair debt collection laws. NCLC organizes the annual Consumer Rights Litigation Conference for consumer advocates. This conference generally provides sessions on fair debt collection issues. NCLC and the National Association of Consumer Advocates have sponsored a two-day training on fair debt collection issues annually since 2004.

Fair Debt Collection: 1.2 A Brief History of Debt Collection and Its Regulation in the United States

In the seventeenth and eighteenth centuries, one of the factors that propelled emigration from England to the American colonies was the harsh enforcement of early English bankruptcy laws.4 Fear of debtors’ prison—where debtors were kept without bedding, blankets, coal, or access to medical care until their debts could be paid5—drove “shiploads” of Englishmen to relocate to the colonies.6 At the time, English bankruptcy laws gave the right of action to the cred

Fair Debt Collection: 1.3.1.3 Mental Health and Consumer Debt

Indebtedness is associated with poor mental health.92 This relationship remains significant even after controlling for socioeconomic status and other factors.93 Several studies have shown that debt is a risk factor for depression,94 anxiety,95 substance abuse,96 and mental disorders.97 The psychological burdens of carr

Fair Debt Collection: 1.3.1.6 Older Americans and Debt Collection

Among families headed by older Americans, the percentage who are in debt has increased in recent years.148 Data from the Board of Governors of the Federal Reserve System showed that more than half of families with a reference person age seventy-five or older were in debt in 2019, compared to less than a quarter of similar families in 1989.149 Indebtedness of households with individuals age 65–74 has also increased.150

Fair Debt Collection: 1.3.1.7 Servicemembers, Veterans, and Debt Collection

In 2021, the Military Family Lifestyle Survey found that 51% of active-duty family respondents with credit cards carried a balance from month to month, with 16% reporting credit card balances of more than $20,000.171 Consumer debt can negatively impact the careers of military personnel and some debt collectors attempt to use this to leverage payments from servicemembers.172 The Consumer Financial Protection Bureau has highlighted a variety of abusive debt collect

Fair Debt Collection: 1.3.2 Consumer Attorneys

The “Find an Attorney” feature on the National Association of Consumer Advocates’ website206 lists hundreds of lawyers with “debt collection” as one of their practice areas. The “debt collection” practice area includes both attorneys who specialize in defending consumers who have been sued in a collection action and those who sue debt collectors for violations of the Fair Debt Collection Practices Act and other state and federal consumer protection statutes.

Fair Debt Collection: 1.3.3 Original Creditors

Original creditors are entities that provide extensions of credit such as banks, credit unions, student loan lenders, auto lenders, and payday lenders. Additionally, some original creditors provide goods or services on credit, such as utility companies, medical providers, and cell phone companies.

Original creditors frequently employ people in-house to collect on their delinquent accounts. In a survey of credit card issuers conducted by the CFPB, all respondents conducted at least some collection activity in-house.207