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Szumny v. American General Finance, 246 F.3d 1065 (7th Cir. 2001)

Plaintiff borrower filed a putative class action complaint against VBLH&C’s client alleging, among other things:  that the lender took a security interest in certain personal property to secure its loan to borrower; that the lender’s description of the collateral was insufficient to create a security interest under state law; and that the lender violated the Truth in Lending Act (TILA) by describing a security interest that consequently does not exist.  The district court dismissed the borrower’s complaint for failure to state a claim under TILA.  The Seventh Circuit affirmed, explaining that TILA does not require perfect congruence between the description of security interests required by state law and that required by TILA.  TILA requires only a general disclosure that a security interest is being taken.  The TILA disclosure, itself, need not be sufficiently detailed to create a security interest under state law.  An adequate TILA disclosure may even disclose a security interest in goods that may not be ultimately enforceable due to other state or federal restrictions.