Chapter 9 Objectives 1.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..

Credit Cards: Error and Fraud Disputing a charge: the process of informing a credit company of an error on your bill- pages o First: CALL!!! 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 o Notify creditor as soon as possible  Time limit: 60 days from receiving statement

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

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.

Focus On... Telemarketing Fraud To protect yourself, know the danger signs o 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 ADD: sign up with “DO NOT CALL REGISTRY”

What Help Is Available? Federal agencies o Federal Trade Commission (FTC) Bureau of Consumer Protection o U.S. government ( o Consumer Action Handbook o Consumer Financial Protection Bureau o Federal Bureau of Investigation (FBI) State agencies Consumer Advocacy Groups o Better Business BureauConsumers Union o Consumer ActionNational Consumers League o Consumer Federation of AmericaPublic Citizen

Consumer Protection Laws- pgs 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

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

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?

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

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

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

Additional Info: Slide 13 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