Many consumers use credit to pay for goods and services. When you take out a loan to buy a car or use a credit card to buy a household item or service, you are using credit. Both federal and Maine law provide specific rights and protections for consumers using credit. In Maine, these laws are primarily enforced by the Bureau of Consumer Credit Protection and the Bureau of Financial Institutions. If you have a question or complaint about credit, you may contact these agencies directly. If you would like to file a complaint about a business, please use our online service.
Consumer Credit Rights downloadables
Guide to Consumer Credit Rights
- Maine Consumer Credit Code
Many of the protections for Maine consumers with respect to credit transactions are found in the Maine Consumer Credit Code.
Truth-in-lending
The Maine Consumer Credit Code includes Maine’s truth-in-lending law. This law also includes federal truth-in-lending requirements. Truth-in-lending requires creditors to make specific disclosures to consumers about the cost of credit being offered, including the finance charge and the Annual Percentage Rate (APR). Disclosure requirements, including the timing of the disclosure, vary. The requirements depend on:
- The type of credit,
- The amount of credit, and
- Whether the credit is secured or unsecured.
The law does apply to:
- Consumer credit transactions for $73,400 or less, and
- Home loans regardless of the amount financed.
The law does not apply to
- Consumer credit transactions for more than $73,400 that that are not secured by a residence. (To secure a loan with a residence means that you use your house as collateral for the credit.)
Creditors that do not comply with truth-in-lending requirements may face consequences. These can include paying penalties, voiding loans, and paying damages and legal fees.
Maximum Finance Charges
The Maine Consumer Credit Code sets a maximum finance charge for consumer credit transactions. A finance charge is the total cost of credit to a consumer. It includes the interest rate and any other fees or charges imposed to access credit.[1] It does not include application fees, default charges, closing costs, or late fees. For most transactions other than credit card sales, the maximum finance charge is 18% per year or 1.5% monthly. Maine law does not limit finance charges for credit card sales.
Maine Revised Statutes, Title 9-A, section 1-301(19).
- The Holder Rule
The Federal Trade Commission’s Holder Rule protects consumers when their credit contracts are held by creditors other than the original seller. Under the Holder Rule, if you have claims or defenses based on the conduct of the seller, you can assert them against the current holder of your credit agreement.
The Holder Rule applies to many consumer credit transactions. However, there are some exceptions. For example, the Holder Rule does not apply to real estate transactions or to student loans to attend public or nonprofit schools.
- Credit Cards
Disputing Charges
Truth-in-lending includes Fair Credit Billing laws. These laws protect consumers who have disputed credit charges, including:
- Charges not made by the consumer or an authorized user;
- Incorrect charges for which the wrong amount or date is shown;
- Charges for defective goods or services;
- Computational or similar errors;
- Failure to reflect payment or other credits;
- Not mailing or delivering bills to the consumer’s current address; and
- Charges for which consumers request an explanation or written proof of purchase.
If you want to dispute a charge on your credit card bill, you must provide written notice to the credit card company. This notice must be given within 60 days of the charge’s first appearance on your bill. The notice must be sent to the address provided for billing disputes and include the following:
- Your name and account number,
- The charge and amount you are disputing, and
- The reason you are disputing it.
The credit card company must send written acknowledgement of the dispute within 30 days. After their investigation, they must either:
- Correct the error, including reversing the charge and any related finance charge, or
- Provide a written explanation why the charge is correct within 2 billing cycles (but not more than 90 days).
During the dispute, the creditor cannot report the account to a credit bureau or take any collection action, and the account cannot be closed or restricted. You do not need to pay the disputed amount or related finance charge while the dispute is pending, but you do need to pay all other amounts due.
Finance Charges
Maine law does not limit finance charges for credit card sales. However, finance charges, including changes to finance charges, must be disclosed clearly and conspicuously in writing.
Lost Cards
If you lose a credit card, you should phone the credit card issuer immediately to report it. Your monthly bill will list the phone number for reporting lost cards. The issuer will cancel your card to prevent unauthorized charges. Federal law limits your liability for unauthorized charges to $50 if you provide timely notice to the issuer.[1]
- 12 C.F.R. section 1026.12(b).
Paper and Electronic Billing
Neither federal law nor Maine law currently requires creditors to provide paper billing statements. However, federal law requires that consumers give explicit consent before a creditor switches from paper to electronic statements. Maine law prohibits financial institutions and credit card issuers from penalizing a consumer for opting out of receiving electronic billing statements.[2] This prohibition does not apply to replacement statements, custom date range statements, or other non-routine statements.
2. Maine Revised Statutes, Title 10, section 9420.
Surcharge Prohibited
Maine law prohibits a seller from imposing a surcharge for using a credit or debit card instead of cash or check.[3] However, a seller can offer a discount for paying with cash or check. The government is not subject to this prohibition, but its surcharge must be disclosed and be no greater than the cost directly incurred.
3. Maine Revised Statutes, Title 9-A, section 8-509(1).
- Credit Reports
What is a Credit Report?
A credit report is a detailed record of how you’ve managed your credit over time. It is often used by lenders to determine your creditworthiness. Credit reports are also used by other businesses, including insurers, employers, and landlords. Your credit report includes:
- Details about your credit history, including the number of open and closed credit accounts;
- Your payment history, including late payments;
- Accounts that are in collections;
- The number of times you have applied for credit; and
- Other information.
The information in your credit report is used to generate a credit score. Your credit score is a numerical representation of your creditworthiness. Credit scores range from 300 to 850, with higher scores indicating lower risk to lenders and lower scores indicating higher risk.
Obtaining a Copy of Your Credit Report
You have the right to obtain a free copy of your credit report each year from each of the three major credit reporting companies (Equifax, Experian, and TransUnion). Beyond your free copy, you can request additional copies and cannot be charged more than $14.50. There may be options to view your credit report for free online. Additional information is available on the Bureau of Consumer Credit Protection’s website.
Correcting Your Credit Report
For information on how to dispute errors on your credit report, visit the Federal Trade Commission’s (FTC) website.
Freezing Your Credit Report
Many consumers opt to freeze their credit report to prevent new credit accounts from being opened in their name. If your identity or personal information has been stolen or compromised, freezing your credit report is highly recommended. Credit freezes are free, do not affect your credit score, and can be lifted or removed upon request. For more information on credit freezes, visit the Bureau of Consumer Credit Protection’s website.
Medical Debts Are Not Reportable
Maine law prohibits reporting of medical debt on a credit report. It also prohibits medical debt creditors, collectors, and buyers from reporting a consumer’s medical debt to a credit bureau.[1]
Maine Revised Statutes, Title 10, section 1310-H(4).
- Pawnbrokers
Pawnbrokers are subject to truth-in-lending and must be licensed by a municipality or the Bureau of Consumer Credit Protection. Consumers who pawn items must receive a disclosure form which states:
- The amount financed,
- The finance charge,
- The total of payments, and
- The annual percentage rate.
The finance charge on pawns cannot exceed 25% monthly on the amount that is $500 or less and 20% monthly on the amount that is more than $500. For pawns greater than $8,000, the finance charge may not exceed 18% annually.
- Debt Collection
In Maine, debt collectors must be licensed by the Bureau of Consumer Credit Protection. If you have been contacted by a debt collector, you can check to see if they are licensed by visiting the Nationwide Multistate Licensing System (NMLS). If they are not licensed, or if you have questions or concerns about a debt collector, you should contact the Bureau of Consumer Credit Protection.
Who is a Debt Collector?
A debt collector is any person who regularly attempts to collect debts owed or due to another person. A creditor seeking to collect its own debt is not a debt collector. In Maine, lawyers whose principal activities include collecting debts on behalf of and in the name of clients are considered debt collectors. However, if they are licensed to practice law in Maine, they do not need to also have a debt collector license.
Prohibited Practices
It is illegal for a debt collector to directly or indirectly harass, oppress, or abuse any person in connection with the collection of a debt, including:
- The use or threat of violence or criminal activity;
- The use of obscene or profane language;
- Repeatedly calling a person with the intent to annoy, abuse, or harass them.
Deceptive conduct is illegal, including using deceptive means to obtain information about a consumer.
Maine law also prohibits a debt collector from bringing an action more than 6 years after the date of the consumer’s last activity on the debt.
Maine Revised Statutes, Title 32, sections 11013(7), (8).
Debt Collector Communications
You have the right to make a written request that a debt collector cease communicating with you. Even if you do not make that written request, debt collectors cannot communicate with you at an unusual place or time.
Generally, debt collectors may not communicate with third parties regarding a debt, except to obtain location information for a consumer. Communications with third parties regarding location information are subject to additional requirements and limitations.[2]
2. Maine Revised Statutes, Title 32, section 11011.
Debt Validation
Within 5 days of the initial communication with a consumer regarding a debt, a debt collector must provide the consumer with a written notice. The notice must include the amount of the debt and the name of the creditor to whom the debt is owed.[3]
Within 30 days of that notice, a consumer can choose to notify the debt collector that they dispute the validity of the debt. The consumer may request additional information regarding the debt, including the name of the original creditor.
3. Maine Revised Statutes Title 32, section 11014.
- Debt Management Services
A debt management service provider, sometimes called a debt settlement service provider, is a person who offers to assist a consumer with negotiating or paying down their debts. They may act as an intermediary between a consumer and their creditors. A debt management service provider must register with the Bureau of Consumer Credit Protection and must be bonded.[1] Debt management service provider agreements must be in writing and contain:
- A description of the services and fees, and
- A statement of the right of a party to cancel the agreement upon written notice.
Maine law limits the type and amount of fees that a debt management service provider may charge. Two types of fees are permitted:
- An initial fee which must be reasonable and cannot exceed $75; and
- A service fee which must be either:
- A reasonable monthly fee not to exceed $40 for distributing payments to a consumer’s creditors, or
- A reasonable contingent fee not to exceed 15% of the amount by which the consumer’s debt is reduced as a result of the debt management service provider’s negotiation.
1. Maine Revised Statutes, Title 2, sections 6173, 6174.
- Foreclosures
Maine is a judicial foreclosure state. This means that a mortgage lender must go to court and obtain a judgment to foreclose a home mortgage loan. This process can often take more than one year, and there are several legal requirements that the foreclosing lender must strictly follow. These include a pre-filing notice and cure period, free mandatory mediation, and a statutory right of redemption.
If you are concerned about losing your home to foreclosure, the Bureau of Consumer Credit Protection has a Foreclosure Prevention Hotline that can be reached Monday through Friday, 8:30am to 4:30pm, by calling 1-888-664-2569. Visit the Bureau's website for more information and resources for homeowners.
- Repossessions
Security Interests
Creditors who loan money to consumers for the purchase of goods may take a security interest in the goods. This is called a secured loan, and the creditor is a secured creditor. This means that the goods are used by the creditor as collateral for the loan and that the creditor can take the goods if you default on the loan. For example, if you finance the purchase of a car and default on your loan, the creditor can repossess and sell the car.
Notice of Right to Cure Default
If you default on a secured loan by missing a payment, the creditor can accelerate the loan and seek to repossess and sell the collateral, i.e. the goods you bought with the loan. But the creditor must follow specific requirements.
The creditor must begin the process by sending written notice to you at your last known address. This is called a Notice of Right to Cure Default. It may not be sent until 10 days after non-payment and must conspicuously include:
- The name, address, and telephone number of the creditor to whom payment is to be made,
- A brief identification of the credit transaction, and
- A statement of your right to cure the default, including the amount you must pay and the due date.[1]
If the loan is secured by a motor vehicle, the notice must also include the following statement:
The rights we may exercise under law include repossession of the motor vehicle securing this debt. If the motor vehicle is repossessed, either involuntarily or voluntarily, it may be sold and you may owe the difference between the net proceeds from the sale and the remaining balance due under the contract.
For most secured consumer loans, you will have 14 days after the notice to cure the default by paying the amount due. Only if you fail to cure may a creditor accelerate the loan balance and attempt to repossess.
1. Maine Revised Statutes, Title 9-A, section 5-110.
Does a Creditor Need a Court Order to Repossess?
Not necessarily. As long as the creditor does not enter into a dwelling, use or threaten the use of force, or “breach the peace,” a court order is not required. If the creditor’s access to the goods is blocked, then the creditor will need to get a court order to repossess. This is often accomplished through a proceeding in the District Court. You will get prior notice and have an opportunity to be heard.[2] Even if the creditor prevails, you will not immediately lose the goods. The creditor has to wait at least 7 days before enforcing the judgment.
2. Maine Revised Statutes, Title 14, section 7071.
Sales After Repossession
The Uniform Commercial Code permits a secured creditor to sell repossessed goods.[3] The method, manner, time, place, and other terms of the sale must be commercially reasonable. A sale may be public or private. Regardless of the type of sale, a consumer is entitled to prior notice.[4] The proceeds of the sale must be applied to the balance of the loan. If the goods sell for more than the amount owed by the consumer, the surplus needs to be paid to the consumer. If the goods sell for less than the amount owed, and the amount of the loan was greater than $2,800,[5] a creditor is allowed to ask for a judgment for the balance of what is owed. This is called a deficiency judgment.
3. Maine Revised Statutes, Title 11, section 9-1610.
4. Maine Revised Statutes, Title 11, sections 9-1611, 9-1614.
5. Maine Revised Statutes, Title 9-A, section 5-103(2).
Voluntary Repossessions
If you cannot afford to pay your loan and are willing to surrender your property to the creditor, then you can consider a voluntary repossession. However, you should understand that voluntarily surrendering your property does not automatically satisfy or terminate your loan, because the creditor can still seek a deficiency judgment if the value of the property is less than what you owe. If you want the creditor to waive any deficiency as part of a voluntary repossession, make sure that you ask them to do that and that they agree in writing.