Credit

Credit in the United States

Credit Definition

The word “credit” is derived from the Latin word “credere.”  (this definition of Credit is based on The Cyclopedic Law Dictionary.):

  • The confidence reposed in the ability and intention of a purchaser or borrower to make payment at some future time, either specified or indefinite. …. The ability to borrow, on the opinion conceived by the lender that he will be repaid.
  • A debt due in consequence of a contract of hire or borrowing of money.
  • The time allowed by the creditor for the pajrment of goods sold by him to the debtor.
  • That which is due to a merchant, as distinguished from “debit,” that which is due by him.
  • That influence connected with certain social positions.

Background

For most consumers, credit provides a means of purchasing goods or services and
spreading the cost of repayment over time. This is true of the three largest consumer credit
markets: the market for mortgages ($9.99 trillion in outstanding balances), for student loans
($1.3 trillion), and for auto loans ($1 trillion). This is also one way in which certain types of
open-end credit—including home equity loans ($0.14 trillion) and lines of credit ($0.51
trillion)—and at least some credit cards and revolving credit ($0.9 trillion)—can be used.6
Consumers living paycheck to paycheck and with little to no savings have also used
credit as a means of coping with shortfalls. These shortfalls can arise from mismatched timing
between income and expenses, misaligned cash flows, income volatility, unexpected expenses or income shocks, or expenses that simply exceed income. Whatever the cause of the shortfall,
consumers in these situations sometimes seek what may broadly be termed a “liquidity loan.”

There are a variety of loans and products that consumers use for these purposes including credit cards, deposit account overdraft, pawn loans, payday loans, vehicle title loans, and installment loans. Credit cards and deposit account overdraft services are each already subject to specific Federal consumer protection regulations and requirements.

Pawn Lending

Another liquidity option—pawn—generally involves non-recourse loans made against the value of whatever item a consumer chooses to give the lender in return for the funds. Pawn lending, also known as pledge lending, has existed for centuries, with references to it in the Old Testament; pawn lending in the United States began in the 17th century.

The consumer has the option to either repay the loan or permit the pawnbroker to retain and sell the pawned property at the end of the loan term, relieving the borrower from any
additional financial obligation. This feature distinguishes pawn loans from most other types of
liquidity loans.

Regulation

Credit in Foreign Legal Encyclopedias

For starting research in the law of a foreign country:

Link Description
Credit Credit in the World Legal Encyclopedia.
Credit Credit in the European Legal Encyclopedia.
Credit Credit in the Asian Legal Encyclopedia.
Credit Credit in the UK Legal Encyclopedia.
Credit Credit in the Australian Legal Encyclopedia.

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Credit and Tax Law

There are more details about Credit in the tax compilation of the legal Encyclopedia.

Resources

Further Reading

Credit: Open and Free Legal Research of US Law

Federal Primary Materials

The U.S. federal government system consists of executive, legislative, and judicial branches, each of which creates information that can be the subject of legal research about Credit. This part provides references, in relation to Credit, to the legislative process, the federal judiciary, and the primary sources of federal law (cases, statutes, and regulations).

Federal primary materials about Credit by content types:

Laws and Regulations

US Constitution
Federal Statutory Codes and Legislation

Federal Case Law and Court Materials

U.S. Courts of Appeals
United States courts of appeals, inclouding bankruptcy courts and bankcruptcy appellate panels:

Federal Administrative Materials and Resources

Presidential Materials

Materials that emanate from the President’s lawmaking function include executive orders for officers in departments and agencies and proclamations for announcing ceremonial or commemorative policies. Presidential materials available include:

Executive Materials

Federal Legislative History Materials

Legislative history traces the legislative process of a particular bill (about Credit and other subjects) for the main purpose of determining the legislators’ intent behind the enactment of a law to explain or clarify ambiguities in the language or the perceived meaning of that law (about Credit or other topics), or locating the current status of a bill and monitoring its progress.

State Administrative Materials and Resources

State regulations are rules and procedures promulgated by state agencies (which may apply to Credit and other topics); they are a binding source of law. In addition to promulgating regulations, state administrative boards and agencies often have judicial or quasi-judicial authority and may issue administrative decisions affecting Credit. Finding these decisions can be challenging. In many cases, researchers about Credit should check state agency web sites for their regulations, decisions, forms, and other information of interest.

State rules and regulations are found in codes of regulations and administrative codes (official compilation of all rules and regulations, organized by subject matter). Search here:

State opinions of the Attorney General (official written advisory opinions on issues of state law related to Credit when formerly requested by a designated government officer):

Tools and Forms

Law in Other Regions

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