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