Awarding Attorney Fees in Credit Lawsuits

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Awarding Attorney Fees in Credit Lawsuits

Generally, U.S. law does not permit the winner of a lawsuit to collect their attorney’s fees from the loser.  This would preclude too many would-be plaintiffs with valid claims from exercising their right to have their grievance heard in a court of law, through a fear of losing.  However, in many civil rights cases, there are statutes in place which specifically permit attorneys fees and punitive damages, with the purpose of punishing the wrongdoer. 

In the area of credit law, there are several situations that would permit reasonable attorneys’ fees to be awarded.  For example, Equal Credit Opportunity Act (ECOA) proscribes discrimination based on color, race, religion, national origin, sex, form of income, marital status, or age.  Discrimination can happen in two ways – either a certain type of applicant is denied credit, or the applicant (e.g., low to middle income) is targeted for credit at sky-high rates.  In either case, the creditor’s conduct is a public wrong, so that attorney fees will be awarded to the aggrieved plaintiff.  

There is also the federal Consumer Credit Protection Act (CCPA), which includes the Truth in Lending Act, the Consumer Leasing Act, the Fair Credit Reporting Act, and others.  These acts proscribe unfair, fraudulent, predatory, and discriminatory practices of creditors.  Because these acts are like crimes against the public, they are punishable by the payment of the winner’s legal fees. 

State statutes are often largely similar to the above federal statutes, and allow for the recovery of reasonable attorneys fees.  For example, similar provisions can be found in the Massachusetts Civil Rights Act and the California Song-Beverly Credit Card Act. 

Another way attorneys’ fees can be recovered in credit cases is by the signing of a contract that expressly allows so.  In some states, a credit application itself can constitute an enforceable contract for purposes of attorney fees.  However, this is usually of benefit to the lender/seller, and not the borrower/buyer as in credit discrimination cases. 

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Last Modified: 11-25-2013 02:52 PM PST

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