Credit Agreements & Law
A credit agreement is an oral, Internet-based or signed contract between a lender and a consumer, according to credit reporting agency Experian. Federal and state laws govern such agreements as well as the potential consequences if a consumer refuses to pay the debt as promised.
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Financial Consequences
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If you break a credit contract such as refusing to pay an installment loan or credit card, the lender can sue you, according to the book "How to File for Chapter 7 Bankruptcy." If the contract was secured by property such as a vehicle or home, the lender also can legally repossess the car or foreclose on the house.
Other Consequences
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Some employers may deny jobs or promotions based on an applicant's history of not paying credit cards on time, according to U.S. News and World Report. Also, if you break a credit contract the lender can legally issue that information to your credit reports for seven years from the date of the contract violation, according to Experian.
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Asserting Your Rights
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If you have been a victim of identity theft, collector harassment or unscrupulous lending practices, you can legally dispute the situation with the creditor, any credit reporting agencies involved and, if necessary, the Federal Trade Commission.
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