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Learn how a new federal law provides better protection over consumer credit and lending practices, and what it all means for you.
Two years ago, Americans witnessed a financial collapse that almost reached the depths of the Great Depression. Many businesses closed their doors, banks failed and thousands of people lost their jobs. In some cases, people even lost their homes because they couldn't afford to make payments on their ill-conceived mortgage loans.
But in July 2010, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Otherwise known as Financial Regulatory Reform, the legislation is aimed at preventing another hard hit to the U.S. financial system and American taxpayers. Whether it will work remains to be seen, but the goal is to inject some reform into an otherwise broken system by promoting financial stability, and improving accountability and transparency.
What does this all mean to you? Well, the idea behind the legislation is to restore consumer confidence in the U.S. financial system by protecting individuals from abusive financial services practices, overhauling existing rules and creating more oversight.
Let's be clear: There's no bailout of your personal debt
Once again, similar to what happened following passage of the Credit CARD Act, deceitful advertising directed at uninformed consumers implies that the new financial reform legislation bails consumers out of their past financial mistakes. But that belief is far from the truth. Don't be duped into thinking that the U.S. government is going to erase your debt. You are still the best watchdog over your own finances and you are still the person responsible for paying off any debts. The government isn't going to do that for you.
The good news: New protections help consumers
What the government does plan to do for you, however, is make it easier for you to be a smarter consumer, and manage your debt and credit more responsibly. So let's get down to business and share some truth about what the new legislation really does for you:
By enacting these sweeping reforms, the federal government is attempting to rescue the economy and the U.S. financial system, provide better oversight on Wall Street, and create real consumer protections. Whether the legislation puts America on the right path toward reform and restoring consumer confidence remains to be seen, but for many consumers, the new provisions are a step in the right direction.
To learn more, click on the summary report issued by the U.S. Senate Committee on Banking, Housing and Urban Affairs or the White House's Wall Street Reform web page.
Reading the fine print when you apply for credit can be tedious and time consuming. Take your time, though, because understanding the details will allow you to compare your options and make good credit decisions.
Your rights as a consumer are protected under the law. How do you know if you're being treated fairly? What should you do if you believe your rights have been violated?
Worried that your employer can take a look at your credit file whenever they feel like it? Well, you shouldn't be. Yes, employers can request a copy of your credit report. But not whenever they want, and not without your permission. Federal law carefully regulates how information about your credit can be used. The two most important laws for you to know about are the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA).
When struggling to get out of debt, it's likely that you may cross paths with a collection agency at some point - a third party agency hired by your creditor to collect on your debt. Some collectors are more aggressive than others. It's important to know your rights as a consumer so that you don't fall victim to an aggressive collector employing unscrupulous methods. If you have past due accounts, it's important to know how to effectively deal with collectors and what recourse you have when confronted with overly aggressive tactics.
Even if you've fallen behind on a debt, you are entitled to fair and considerate treatment. Find out more about debt collection and what your rights are under the law.
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