The Rule's prohibition against "confessions of judgment," does not prohibit power-of-attorney provisions that allow you to repossess and sell collateral, as long as these provisions do not interfere with the consumer's right to be heard in court. The Rule also does not prohibit a consumer from acknowledging liability after suit has been filed and the consumer has been duly notified. The Rule is not intended to interfere with whatever rights you have to repossess secured property.

Waivers of Exemption

Previously, some consumer credit contracts contained "waiver of exemption" provisions that permitted creditors to seize (or threaten to seize) specific possessions or possessions of a specified value, even if state law treated them as exempt from seizure. Every state has a law that defines certain property (generally, property considered necessities) that a debtor is allowed to keep even if a creditor sues and obtains a judgment. By signing a waiver of exemption, a debtor made that property available to a creditor who obtained a judgment to satisfy a debt. Clauses such as the following are no longer permissible under the FTC Rule:

Each of us hereby both individually and severally waives any or all benefit or relief from the homestead exemption and all other exemptions or moratoriums to which the signers or any of them may be entitled under laws of this or any other State, now in force or hereafter to be passed, as against this debt or any renewal thereof.

Wage Assignments

Previously, if consumers did not pay as agreed, some consumer credit contracts permitted creditors to go directly to the consumers' employers to have their wages, or some part of them, paid directly to the creditors. Under the Rule's prohibition against "wage assignments," your consumer contracts may not provide for the irrevocable advance assignment to you of any money due consumers because of their personal services (usually through employment) if they do not pay as agreed. The Rule prohibits irrevocable assignments to creditors of salaries, commissions, bonuses, pensions, and disability benefits, as well as wages due to consumers.