THE ACT REQUIRES LENDERS IN CONSUMER CREDIT TRANSACTIONS TO DISCLOSE INFORMATION ABOUT CREDIT TERMS. DEBTORS MAY BRING PRIVATE SUITS IN FEDERAL OR STATE COURT AGAINST CREDITORS WHO FAIL TO PROVIDE THE REQUIRED INFORMATION. WHEN A DEBTOR WHO STILL OWES MONEY UNDER A CREDIT AGREEMENT BRINGS ACTION IN FEDERAL COURT FOR STATUTORY DAMAGES UNDER THE ACT, IT IS LIKELY THAT THE CREDITOR WILL COUNTERCLAIM FOR THE BALANCE DUE ON THE CREDIT AGREEMENT. JUDGES HAVE BEEN UNABLE TO AGREE WHETHER THE DEBT COUNTERCLAIM IS COMPULSORY OR PERMISSIVE (I.E., WHETHER IT WILL BE ACCORDED THE ANCILLARY JURISDICTION OF THE FEDERAL COURT). THE CONFUSION ARISES FROM THE APPARENTLY CONFLICTING POLICIES OF THE ACT AND OF THE FEDERAL RULES OF CIVIL PROCEDURE. HOWEVER, ANALYSIS OF COURT DECISIONS IN LIGHT OF THE POLICIES INVOLVED DEMONSTRATES THAT A CREDITOR'S DEBT COUNTERCLAIM IS MERELY PERMISSIVE AND SHOULD NOT BE INCORPORATED INTO THE TRUTH IN LENDING ACTION. THE POLICIES BEHIND THE ACT AND THE RULES ARE BETTER SERVED IF THE COUNTERCLAIM IS NOT AFFORDED THE ANCILLARY JURISDICTION OF THE FEDERAL COURTS. SUBJECTING PLAINTIFFS WHO ENFORCE THE DISCLOSURE PROVISIONS OF THE ACT TO THE PRIVATE CLAIMS OF CREDITOR DEFENDANTS WOULD IMPAIR THE INCENTIVE FOR CONSUMERS TO BRING SUCH SUITS. (AUTHOR ABSTRACT MODIFIED--LKM)