TOPIC 12 Consumer Protection Laws
TOPIC 12: CONSUMER PROTECTION LAWS
Learning Objectives Describe consumer laws that impact clients,
including bankruptcy, banking, credit, privacy regulations, and other relevant laws.
TOPIC 12: CONSUMER PROTECTION LAWS
Topics Covered Bankruptcy Fair credit reporting laws Privacy policies Identity theft protection
TOPIC 12: BANKRUPTCY – EXEMPT PROPERTY
Life insurance Qualified retirement plans Homestead Limited equity in car or personal property
TOPIC 12: BANKRUPTCY NONDISCHARGEABLE DEBTS
Taxes Alimony Child support Student and government loans Crimes, fines, penalties, etc.
TOPIC 12: BANKRUPTCY REFORM ACT OF 2005
Requires individuals who file for bankruptcy: To receive a briefing that outlines the opportunities for
credit counseling Must receive within 180 days before the bankruptcy filing
To receive information to help the individual perform a budget analysis
To complete a financial management instructional course before discharge
TOPIC 12: CHAPTER 7 BANKRUPTCY
Chapter 7 Voluntary or involuntary Allows the person to keep certain assets, but all other
assets are liquidated to satisfy claims of creditors Subject to a “means test” which determines whether the
individual has a level of income that allows for repayment of debts Creditors can object to bankruptcy if the individual has income
exceeding median income for the state Court decides whether the case should proceed
TOPIC 12: CHAPTER 13 BANKRUPTCY
Voluntary only A plan of restructuring of the person’s debt is
created The restructuring might include reducing the
amount of some debts or lengthening the original payment period
The creditor may not foreclose on any assets or harass the debtor
TOPIC 12: FAIR CREDIT REPORTING ACT
Gives the consumer the right to see and correct errors in his or her credit file The file is confidential for all other persons
except those who have a legitimate need for credit information, such as lenders, prospective creditors, creditors, prospective employers and life insurance underwriters
TOPIC 12: CONSUMER CREDIT PROTECTION ACT
The “Truth in Lending” Act provides A lender must inform borrowers of the “true”
interest rate, the APR (Annual Percentage Rate) The cost of any credit life insurance must be
disclosed A 3-day right of rescission must be included in
any contract in which the borrower’s home is used for collateral
The maximum amount that may be garnished for unpaid debts is 25% of take-home pay
The maximum liability for lost or stolen credit cards is $50
TOPIC 12: GRAMM-LEACH-BLILEY ACT OF 1999
Provides customers with the right to not have their information shared with unrelated third parties Financial planners should not share any client
information with any other person or business unless specifically requested to do so by the client
TOPIC 12: IDENTITY THEFT PROTECTION
To help protect clients from identity theft, financial planners should recommend that clients shred all documents containing Social Security numbers Credit card numbers Birth dates Usernames Passwords
Financial planners should warn clients about providing this type of information over the phone or on websites unless the client is the one who initiated the contact with the company requesting the information
END OF TOPIC 12