The billing error is any possible mistake in the invoice resulting from a vendor error. For instance, the company could incorrectly add a debt amount or overlook a credit it should have included by accident. In such a case, the consumer does not have to pay for the company’s mistakes on the billing. However, it might be a time-consuming process of resolving the issue for both the company and the client. Most importantly, the company has to choose whether it approaches the situation ethically or tries to cover up its billing mistake. The first step one should take is to report the error to the organization in question. The client, in turn, should let the company take control of the situation and fix all the mistakes.
Debt Collection Practices
There are multiple laws responsible for regulating practices after consumer credit transactions. For example, a Federal Trade Commission (FTC) regulation provides cancellation rights for the clients within three days for some in-home sales so that buyers can cancel the sale. The Truth in Lending Act (TILA) advocates for consumer interests in a similar vein through cancellation provisions. The billing mistakes are generally addressed by the Fair Credit Billing Act (FCBA) by granting clients specific rights (Magnier, 2017). Debt collection practices, including garnishment, wage assignments, and confessions of judgment, are regulated on the federal and state levels.
Garnishment is a legislative procedure through which the debtor’s employer is obliged by the court to directly pay the creditor a fixed part of the employee’s salary until the debt is paid. A wage assignment is a legal agreement by an employee that a creditor can use future wages to secure a loan or pay a current debt. A confession of judgment is a written document expressing the debtor’s consent to the automatic issuance of a court order against him in the event of default. Such practices are contingent on federal legislation, together with methods of collection agencies under the FDCPA.
Consumer Credit Transactions
The FCBA is a federal law designed in 1974 to protect customers from unjust credit billing actions. After a credit transaction is executed, a client is given special cancellation rights and can use a procedure mandated by the FCBA to correct billing mistakes. The increased accessibility of credit is a crucial concern in the United States economy (Magnier, 2017). For this reason, several statutes regulate and protect consumer rights before and after signing credit agreements. These laws typically apply to three broad categories, the first of which refers to the statutes that are imperative when a consumer enters into a credit transaction. The second group implies laws on the part when a consumer has entered into a credit agreement, giving the rights to cancel the contract and correct errors in billing. The third category involves laws that provide specific traditional means of debt collection for the creditor strictly controlled by the government.
Secured Transactions/Suretyship, Mortgages, and Nonconsensual Liens
A creditor may demand different kinds of security, including secured transactions, mortgages, and nonconsensual liens. The secured transactions are based on five key components that aim to avoid costly and long-term litigation. To establish an enforceable security interest, the creditor and borrower have to form an agreement and take measures to ensure that the security interest attaches, and then it is improved (Magnier, 2017). Suretyship entails a legal relationship established when one person enters into a contract to be accountable for the proper performance of another individual’s obligation in a case when the latter fails to comply with it. A mortgage is a legal way of securing a debt with real estate. Nonconsensual liens are security interests established by the statute.
Bankruptcy
Both debtors and creditors have certain rights under bankruptcy law. Any person or organization pursuing liquidation can file a voluntary bankruptcy petition. Nevertheless, it is possible to prevent wage garnishment without bankruptcy by taking the following steps:
- reply to the creditor’s demand letter;
- use remedies by state;
- receive debt counseling;
- appeal against the seizure;
- challenge the judgment;
- keep negotiating.
Reference
Magnier, V. (2017). Comparative corporate governance: Legal perspectives. Edward Elgar Publishing.