Getting Into Debt – Consumer Credit Transactions

If you obtain credit from a creditor, certain laws protect your rights regarding the credit transaction, including: billing you for payments, fees and finance charges, reporting transactions to credit reporting agencies, and collecting on debt if you fail to make your payments. The Truth in Lending Act (TILA) covers your consumer credit transaction when: (1) you are an individual person and the credit is being used primarily for personal, family or household purposes; (2) the transaction involves repayment in more than four installments; and (3) you will incur finance charges.

Under the TILA, you must receive full disclosure of all the terms of any credit offer, such as payment dates, annual interest rates, overdue payment charges, and finance charges.  These disclosures must occur before the loan is processed or credit is extended.  The TILA also prohibits the issuing of a credit card unless it is in response to an oral or written application, or as a card renewal.  However, creditors can send out applications for credit that you have not requested and can also renew your credit card.

The TILA applies to most types of credit, but the disclosures are different depending on whether it is a closed-end credit or an open-ended credit.  Closed-end credit is where you borrow a fixed amount of money to purchase a specific item, like a car or a house.  Open-ended credit is where you have a certain amount of money that you can borrow against to purchase whatever items you want, like a credit card or a line of credit.  All disclosures must be made clearly, conspicuously and in writing.  Keep in mind that some transactions are not covered by TILA, such as credit transactions of over $25,000 that do not involve a security interest.

Legal Editors: Marshal Coleman and Steven Bennett, July 2015

Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.

Back to top

Our Lawyers

Our lawyers are screened and approved – they have all gone through an application and interview process. Each lawyer we recommend has been screened for significant experience, knowledge of ethics codes and rules, and law office practices, including customer service skills and handling of fees and billing.

Learn More

About Us

When you call us, you will be speaking with an attorney. One of our attorney referral counselors takes your call and talks with you about your legal question, or reviews your online referral request. There is no charge to speak with one of our attorney referral counselors — we’re here to help.

Learn More