Violations of the Truth in Lending Act (TILA)
In Chicago, personal injury attorneys who specialize in consumer law often represent individuals who have been harmed by predatory lenders and unfair debt collection practices.
The Truth In Lending Act (TILA) requires the disclosure of credit terms prior to entry into a consumer credit contract. These disclosures which include the annual percentage rate, amount financed, finance charge, amount and timing of payments, etc. must be in writing in a form the consumer may keep. In cases where a lender or consumer credit issuer fails to comply with the TILA, borrowers now have legal recourse and may consider seeking the aid of an Illinois personal injury lawyer.
In Chicago, personal injury attorneys point out common violations of the TILA which include:
- The Two Note Case
The two-note case is where the consumer is required to sign a contract which does not give the TILA disclosures, either containing no terms of financing or only partial, incomplete disclosures. At a later date, the consumer is required to sign a contract containing all of the required information. But the TILA information comes too late; the consumer is already bound. Common areas of this violation are car sales and home improvements. The seller will have the consumer sign a contract without the TILA disclosures and later have the consumer sign another contract containing the TILA disclosures.
- Spiking
A contract which imposes a security interest in the consumer’s residence (other than the first mortgage) must provide a three-day right of rescission. Sometimes in home improvement contracts the contractor will begin work before the expiration of the rescission period. This practice is called “spiking” and violates the TILA. Also, the failure to give the proper notice including the correct number of forms violates the TILA.
- Hidden Finance Charges
The inflation of the purchase price in a credit transaction in excess of the price in a cash transaction is a hidden finance charge. An example is where the seller charges a lower purchase price when the item is purchased for cash ($100.00) but charges a greater amount when the item is financed ($120.00) We have seen this practice in the sale of health club memberships, the sales of motor vehicles, etc.
If you believe you or someone you know are a victim of a violation of TILA, and you live in or around Chicago, personal injury attorneys can help you seek just compensation as permitted by law.
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