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While an experienced debt lawyer knows all the aspects of lending laws, the average citizen may be unaware if they're signing a risky contract. Characterized by unfair fees, above-market interest rates, and hidden penalties, predatory lending often drives consumers deeper into debt. These loans are not always illegal and often target inexperienced borrowers or people in urgent need of funds. Here's what you need to know in order to protect yourself from these kinds of offers. 

Common Predatory Lending Laws

The Equal Credit Opportunity Act (ECOA) is a federal law that covers everyone in the United States. It prohibits lenders from charging higher rates or fees based on a borrower's race, religion, or other protected status. The Truth In Lending Act (TILA) is another federal law that requires lenders to fully disclose the terms of the loans they offer and includes protection against high-cost mortgages. 

There are various forms of predatory lending, such as capping the fees that can be charged through a prepayment penalty clause. A lender may also commit fraud by misrepresenting the loan, or they may refinance it to extend its duration.

How to Avoid Predatory Lending Agreements

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In order to protect yourself against predatory lending agreements, always read the fine print before signing documents. Make sure there are no blank spaces where extra fees or penalties could be added on after you've signed.

Compare multiple offers from various sources before choosing the loan that meets your needs. This helps consumers who are unfamiliar with its agreements to spot aggressive tactics. Before doing business with any lending company, ask to see their state-issued license to ensure you are borrowing from a legitimate business. 

What to Do if You've Been Affected

If you suspect you've been unfairly steered into a predatory lending agreement, seek legal advice. A skilled debt lawyer can evaluate whether the lender broke any laws. Even if the lender's actions are considered legal, an attorney's ability to negotiate could help you reach a more favorable settlement agreement.

 

If you're trying to recover from predatory lending, reach out to Greg Dunn, Bankruptcy and Debt Relief Attorney, in Honolulu, HI. Serving all of Hawaii, this law team offers confidential and comprehensive support for anyone struggling with personal debt. With their experience at drafting achievable debt settlement programs, their solutions can provide quick relief from overdue bills. Call (808) 524-4529 to request a free initial consultation, or learn about this debt lawyer's services online.

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