Legal and Consumer Rights — Credit Glossary Hub

Federal law gives consumers powerful tools when a credit bureau, furnisher, or collector violates the rules. These terms cover the statutes — FCRA, FDCPA, ECOA, TCPA, and others — that frame every dispute, every demand letter, and every lawsuit our attorney network files on behalf of clients.

This hub gathers every term in the Credit1Solutions glossary that falls under the Legal category. 56 terms appear below in alphabetical order, each with a plain-English definition you can cite when reviewing a credit report, drafting a dispute letter, or comparing what a lender, bureau, or attorney is telling you about your file.

The vocabulary here is the same vocabulary our attorney network uses when investigating FCRA accuracy claims, FDCPA collection-conduct claims, and ECOA discrimination claims. We refresh definitions as case law evolves — most recently for the 2022 CFPB medical-debt rule, the post-Spokeo standing requirements for FCRA litigation, and the 2023 NIST guidance on synthetic-identity fraud.

If a term you are looking for is not in this hub, check one of the eight sibling hubs below or the master glossary index. Every term in the Credit1Solutions glossary is reachable from one of the nine category hubs.

Legal terms (56)

• Ability to Repay. A legal requirement under the Dodd-Frank Act that lenders must verify a borrower's ability to repay a mortgage before approving the loan. Considers income, assets, and existing debts.
• Adverse Action. A decision by a lender to deny credit, reduce a credit limit, or change the terms of credit based on information in a credit report. Lenders must provide an adverse action notice explaining the reasons for the decision.
• Alternative Minimum Tax. A parallel tax system designed to ensure high-income earners pay a minimum amount of tax. Can affect financial planning and debt decisions for high-income borrowers.
• Anti-Deficiency Laws. State laws that prevent lenders from pursuing borrowers for deficiency balances after foreclosure or repossession of certain types of property.
• Application Disclosure. Documents provided when applying for credit that explain the terms, costs, and conditions of the loan. Required by various federal and state laws.
• Arbitration. A method of resolving disputes outside of court. Many credit agreements include mandatory arbitration clauses that limit your right to sue.
• Arbitration Clause. A provision in a credit agreement requiring disputes to be resolved through arbitration rather than court. This clause limits your ability to participate in class action lawsuits.
• Automatic Stay. A court order in bankruptcy that immediately stops creditors from collecting debts, including lawsuits, wage garnishments, and foreclosure proceedings.
• Bankruptcy. A legal process where individuals or businesses who cannot repay their debts seek relief from some or all of their obligations. Chapter 7 and Chapter 13 are the most common types for individuals. Bankruptcy stays on credit reports for 7-10 years.
• Bankruptcy Discharge. A court order that releases a debtor from personal liability for certain debts. After discharge, creditors cannot legally pursue collection of discharged debts.
• Bankruptcy Trustee. A court-appointed official who administers a bankruptcy case. The trustee reviews assets, manages the estate, and distributes funds to creditors.
• Bona Fide Error Defense. A legal defense debt collectors can use if they made an unintentional error despite having procedures to avoid such errors. Protects against liability under FDCPA.
• CFPB Complaint. A formal complaint filed with the Consumer Financial Protection Bureau about a financial product or service. The CFPB forwards complaints to companies and tracks responses.
• Chapter 11 Bankruptcy. A type of bankruptcy primarily used by businesses to reorganize debts while continuing operations. Allows the company to propose a plan to repay creditors over time.
• Chapter 13 Bankruptcy. A type of bankruptcy that creates a repayment plan to pay back debts over 3-5 years. Allows debtors to keep their property. Remains on credit reports for 7 years from the filing date.
• Chapter 7 Bankruptcy. A type of bankruptcy that discharges most unsecured debts. The debtor's non-exempt assets are sold to pay creditors. Remains on credit reports for 10 years from the filing date.
• Class Action Lawsuit. A lawsuit filed by a group of people with similar claims against a company. Credit-related class actions often involve violations of consumer protection laws.
• Community Property State. A state where married couples share equal ownership of assets and debts acquired during marriage. Can affect how debts are handled in divorce or death.
• Compliance. Adherence to laws, regulations, and internal policies governing financial transactions and credit reporting. Essential for legal lending operations.
• Consent Order. A regulatory agreement between a government agency and a company that resolves allegations of wrongdoing. Often includes fines and requirements for changed practices.
• Constructive Notice. Legal notice presumed by law due to public records, such as recorded liens or judgments. Affects property rights and credit obligations.
• Consumer Financial Protection Bureau (CFPB). A U.S. government agency responsible for consumer protection in the financial sector. The CFPB enforces federal consumer financial laws and handles complaints about financial products and services.
• Consumer Rights. Legal rights that protect individuals in financial transactions. Key laws include FCRA, FDCPA, ECOA, and TILA that regulate credit and lending practices.
• Credit Opportunity. The availability of credit products to consumers. The Equal Credit Opportunity Act ensures fair access to credit.
• CROA. The Credit Repair Organizations Act, a federal law that regulates credit education companies. Prohibits upfront fees and requires written contracts.
• Default Judgment. A court ruling in favor of a creditor when the debtor fails to respond to a lawsuit. Can result in wage garnishment or liens on property.
• Discharge. The legal release from the obligation to pay a debt, typically through bankruptcy. Discharged debts cannot be collected but may still affect credit.
• Dischargeable Debt. Debt that can be eliminated through bankruptcy. Most unsecured debts are dischargeable, but student loans, child support, and some taxes typically are not.
• Discharged Debt. Debt that has been legally eliminated through bankruptcy. The debtor is no longer responsible for paying discharged debts, though the bankruptcy record remains on credit reports.
• Disclosure Statement. A document required by law that outlines the terms and costs of a loan or credit product. Includes APR, fees, and other important information.
• Dodd-Frank Act. A federal law passed in 2010 that reformed financial regulation after the 2008 crisis. Created the CFPB and increased consumer protections in lending.
• Equal Credit Opportunity Act (ECOA). A federal law that prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.
• Exempt Assets. Property protected from seizure by creditors or in bankruptcy. Exemption laws vary by state and may include home equity, retirement accounts, and personal property.
• Exemption. Property or income protected from creditors under federal or state law. In bankruptcy, exemptions determine what you can keep versus what must be surrendered.
• Fair Credit Billing Act. A federal law that protects consumers from unfair billing practices. It gives you the right to dispute billing errors and limits your liability for unauthorized charges.
• Fair Credit Reporting Act (FCRA). A federal law that regulates how credit information is collected, shared, and used. It gives consumers the right to access their credit reports and dispute inaccurate information.
• Fair Debt Collection Practices Act (FDCPA). A federal law that protects consumers from abusive debt collection practices. It limits when and how collectors can contact you and prohibits harassment and false statements.
• Federal Trade Commission (FTC). A federal agency that protects consumers and promotes competition. Enforces laws against deceptive practices and handles identity theft reports.
• Homestead Exemption. A legal protection that prevents creditors from forcing the sale of your primary residence to pay debts. Amount and availability vary by state.
• Judgment. A court decision that a debtor owes money to a creditor. Judgments can lead to wage garnishment or liens on property. They no longer appear on credit reports but can still affect creditworthiness.
• Lien. A legal claim against property as security for a debt. Tax liens and judgment liens can affect your ability to sell or refinance property. Tax liens no longer appear on credit reports.
• Lien Priority. The order in which creditors are paid when property is sold. First mortgage holders are paid before second mortgages, which are paid before unsecured creditors.
• Means Test. A calculation used in bankruptcy to determine eligibility for Chapter 7. Compares income to state median and evaluates ability to pay debts through Chapter 13.
• Mechanic's Lien. A claim against property by contractors or suppliers who haven't been paid for work or materials. Can affect a property's title and ability to sell or refinance.
• Non-Dischargeable Debt. Debts that cannot be eliminated through bankruptcy, including most student loans, child support, alimony, and certain taxes.
• Office of the Comptroller of the Currency (OCC). A federal agency that charters, regulates, and supervises national banks. Enforces consumer protection laws for banks under its jurisdiction.
• Reaffirmation. An agreement to continue paying a debt that would otherwise be discharged in bankruptcy. Allows keeping collateral like a car or home.
• Regulation Z. The regulation that implements the Truth in Lending Act, requiring clear disclosure of credit terms and costs. Covers most consumer credit products.
• RESPA. Real Estate Settlement Procedures Act is a federal law requiring disclosure of settlement costs and prohibiting certain practices like kickbacks in real estate transactions.
• Spousal Liability. The responsibility of a spouse for the other's debts, which varies by state and type of debt. Important consideration for married couples' credit management.
• Statute of Limitations. The time limit for filing a lawsuit to collect a debt. Varies by state and debt type, ranging from 3-10 years. Expired debts are time-barred but not erased.
• Stay of Execution. A court order temporarily stopping enforcement of a judgment. Can provide time to appeal or negotiate with creditors.
• Tax Lien. A claim by the government on property for unpaid taxes. Tax liens no longer appear on credit reports but can still affect your ability to sell or refinance property.
• TILA. The Truth in Lending Act is a federal law requiring lenders to disclose credit terms and costs in a standardized format so consumers can compare offers.
• TRID. TILA-RESPA Integrated Disclosure rule that combined mortgage disclosures into the Loan Estimate and Closing Disclosure forms. Effective since 2015.
• Truth in Lending Act (TILA). A federal law requiring lenders to disclose the terms and costs of credit in a clear, standardized format. Helps consumers compare credit offers.

Other glossary categories

• Credit Basics — Basics
• Credit Reports — Reports
• Credit Scores — Scores
• Debt and Repayment — Debt
• Loans and Mortgages — Loans
• Credit Cards — Cards
• Collections and Recovery — Collections
• Identity Protection — Identity
• Master glossary index (all categories)

Cross-references

• Credit help center — how-to guides organized by topic
• FCRA / FDCPA violation types we monitor and dispute
• Furnisher directory — companies that report data to the bureaus
• Free credit tools (simulator, calculators, dispute letter builder)

Reviewed by Hemminger Law Firm, Consumer Rights Attorneys | Last reviewed: January 1, 2026