2Chapter 9 ObjectivesExplain how to dispute errors on billing statements2. Explain the purposes and types of bankruptcy and list strategies for avoiding bankruptcy3. Recognize credit scams and ways to protect yourself..
3Credit Cards: Error and Fraud Disputing a charge: the process of informing a credit company of an error on your bill- pagesFirst: _____! Then, document all steps of your dispute and send a letter to the credit companyCredit card fraud: when someone uses your credit account to steal money or goodsNotify creditor as soon as possibleTime limit: 60 days from receiving statement
4Prevent Credit Card Fraud Carry only the cards you needVerify all purchasesClose inactive accountsKeep a list of credit cardsand phone #’sDo not loan your credit card to othersUse only secure websites to buy online – https:Monitor your credit activity onlineDo not give your information over the phone or
5Credit ScamsCredit repair scams: when someone offers to “fix” your credit ratingIdentity theft: when someone uses your personal information to commit fraud or other crimes.
6Focus On . . . Telemarketing Fraud To protect yourself, know the danger signsExamples: upfront fees, pressure to act immediately, no written documentationUse a credit card in case you need to dispute the charge laterBe cautious when dealing with unknown companiesUse caller ID to avoid unwanted callsWhy 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?
7What Help Is Available? Federal agencies State agencies Federal Trade Commission (FTC) Bureau of Consumer ProtectionU.S. government (www.usa.gov)Consumer Action HandbookConsumer Financial Protection BureauFederal Bureau of Investigation (FBI)State agenciesConsumer Advocacy GroupsBetter Business Bureau Consumers UnionConsumer Action National Consumers LeagueConsumer Federation of America Public CitizenW
9What Problems Arise from Debt? Credit delinquencyCollection agencies*Judgment*Garnishment*Repossession and foreclosure
10Reflection QuestionsWhat 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?Slide 10
11Activity: 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?Slide 11
12Chapter 9 ObjectivesExplain how to dispute errors on billing statements2. Explain the purposes and types of bankruptcy and list strategies for avoiding bankruptcy3. Recognize credit scams and ways to protect yourself..
13What is Bankruptcy?Bankruptcy: a legal procedure to relieve a person of excessive debt (gives immediate protection)It can be voluntary or involuntaryIt gives debtors a fresh startIt helps ensure fair treatment for creditorsIt should be a last resort because it damages your credit rating….for 10 years!What is Bankruptcy Fraud?
14Avoiding Bankruptcy Call and keep creditors informed, make agreements, follow through Credit counselingSets up a budget and arranges a payment planFree service by financial institutionsDebt managementCreates a plan to pay off debtDebtor must turn over checking account and give up credit cardsMost charge a fee (adds to your debt)Debt consolidationProcess of getting one loan to pay off all debtsCan reduce the monthly payments and interest paid*If you own a home, you can take out a home equity loan
15Types 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 debtsAllows for exemptions, or property that a debtor does not have to forfeit, such as tools of trade –See page 293 Figure 9-2.1
16Types of Bankruptcy Chapter 11 – for businesses Also called a reorganizationIt is the reorganization of debt as decided by the court.Allows a business to remain viableChapter 13 – for individualsAlso called individual debt adjustmentInvolves a 3- to 5-year repayment plan for some of the debt (Debt repayment plan)
17Additional Info:Automatic Stay: For all 3 types of bankruptcy. This provides immediate protection from anyfurther action by creditors(no new fees, etc.)Some debts cannot be dischargedthrough bankruptcy proceedings:taxes due the IRSstudent loanschild supportgovernment fines for criminal chargesSlide 17
18Success 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.
19Reflection Questions What are some ways to avoid bankruptcy? Credit counseling, debt management, debt consolidationWhat are the 3 types of bankruptcy and what makes them different?Slide 19
20Exit Ticket: Question 4 of 4: Name the 3 types of Bankruptcy and whether they apply to an individual or businessSlide 20