1. Chapter 9 Credit Problems and Laws

2. Chapter 9 Objectives
Explain how to dispute errors on billing statements
2. Explain the purposes and types of bankruptcy and list strategies for avoiding bankruptcy
3. Recognize credit scams and ways to protect yourself. .

3. Credit Cards: Error and Fraud
Disputing a charge: the process of informing a credit company of an error on your bill- pages
First: _____! Then, document all steps of your dispute and send a letter to the credit company
Credit card fraud: when someone uses your credit account to steal money or goods
Notify creditor as soon as possible
Time limit: 60 days from receiving statement

4. Prevent Credit Card Fraud
Carry only the cards you need
Verify all purchases
Close inactive accounts
Keep a list of credit cards
and phone #’s
Do not loan your credit card to others
Use only secure websites to buy online – https:
Monitor your credit activity online
Do not give your information over the phone or

5. Credit Scams
Credit repair scams: when someone offers to “fix” your credit rating
Identity theft: when someone uses your personal information to commit fraud or other crimes.

6. Focus On . . . Telemarketing Fraud
To protect yourself, know the danger signs
Examples: upfront fees, pressure to act immediately, no written documentation
Use a credit card in case you need to dispute the charge later
Be cautious when dealing with unknown companies
Use caller ID to avoid unwanted calls
Why are some sonsumers easy targets for telemarketers? Do you have a way of dealing with callers who interupt your time at home and try to sell you something that wasn’t on your list?

7. What Help Is Available? Federal agencies State agencies
Federal Trade Commission (FTC) Bureau of Consumer Protection
U.S. government (
Consumer Action Handbook
Consumer Financial Protection Bureau
Federal Bureau of Investigation (FBI)
State agencies
Consumer Advocacy Groups
Better Business Bureau Consumers Union
Consumer Action National Consumers League
Consumer Federation of America Public Citizen W

8. Consumer Protection Laws-pgs. 298-301
Fair Credit Reporting Act
Truth-in-Lending Act
Credit Card Act of 2009
Fair Credit Billing Act
Equal Credit Opportunity Act
Fair Debt Collection Practices Act

9. What Problems Arise from Debt?
Credit delinquency
Collection agencies
*Judgment
*Garnishment
*Repossession and foreclosure

10. Reflection Questions
What are some steps to disputing a charge on a credit card?
What does a consumer advocacy group do?
What can you do to avoid bankruptcy or having your accounts turned over to a collection agency?
Explain what a judgment and garnishing of wages is…
Think, Pair, Share: Discuss in small groups what you might say to convince a creditor to work with you when you are delinquent in some way.
Why should you avoid delinquencies, repossessions and foreclosures?
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11. Activity: Net Article Vehicles are among the most frequently repossessed assets.
Go to my website and click on Assignments: ‘Repossesion article and Questions’
Read eHow article about reposession process and answer these questions:
Does a borrower have to be present when a vehicle is repossessed?
What happens to the personal belongings left inside a repossessed vehicle?
How can a borrower get the repossessed vehicle back?
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12. Chapter 9 Objectives
Explain how to dispute errors on billing statements
2. Explain the purposes and types of bankruptcy and list strategies for avoiding bankruptcy
3. Recognize credit scams and ways to protect yourself. .

13. What is Bankruptcy?
Bankruptcy: a legal procedure to relieve a person of excessive debt (gives immediate protection)
It can be voluntary or involuntary
It gives debtors a fresh start
It helps ensure fair treatment for creditors
It should be a last resort because it damages your credit rating….for 10 years!
What is Bankruptcy Fraud?

14. Avoiding Bankruptcy Call and keep creditors informed, make agreements, follow through
Credit counseling
Sets up a budget and arranges a payment plan
Free service by financial institutions
Debt management
Creates a plan to pay off debt
Debtor must turn over checking account and give up credit cards
Most charge a fee (adds to your debt)
Debt consolidation
Process of getting one loan to pay off all debts
Can reduce the monthly payments and interest paid
*If you own a home, you can take out a home equity loan

15. Types of Bankruptcy Chapter 7- for individuals
Also called straight or liquidation bankruptcy (income must qualify)
Involves the forfeiture of assets in exchange for discharge of debts
Allows for exemptions, or property that a debtor does not have to forfeit, such as tools of trade –
See page 293 Figure 9-2.1

16. Types of Bankruptcy Chapter 11 – for businesses
Also called a reorganization
It is the reorganization of debt as decided by the court.
Allows a business to remain viable
Chapter 13 – for individuals
Also called individual debt adjustment
Involves a 3- to 5-year repayment plan for some of the debt (Debt repayment plan)

17. Additional Info:
Automatic Stay: For all 3 types of bankruptcy. This provides immediate protection from any
further action by creditors(no new fees, etc.)
Some debts cannot be discharged
through bankruptcy proceedings:
taxes due the IRS
student loans
child support
government fines for criminal charges
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18. Success Skills Dealing With Difficult People
Deal with the issues head-on.
Meet the person in a private setting.
Ask the person to explain his or her situation.
Listen to what the person is saying and repeat concerns.
Ask for suggestions about how the problem can be resolved. Make suggestions/solutions of your own.
Talk to others affected by the behavior.
Stay calm and rational.

19. Reflection Questions What are some ways to avoid bankruptcy?
Credit counseling, debt management, debt consolidation
What are the 3 types of bankruptcy and what makes them different?
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20. Exit Ticket: Question 4 of 4: Name the 3 types of Bankruptcy and whether they apply to an individual or business
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