1. Lesson 19.1 Getting Unstuck
Explain methods for solving credit problems.
Outline bankruptcy laws and choices.
© South-Western Educational Publishing

2. Standard BCS-FL-6
Students will analyze factors that affect the choice of credit, cost of credit, legal aspect of using credit.
© South-Western Educational Publishing

3. Solving Credit Problems
The 20/10 rule
Credit counseling
Debt adjustment
Credit repair
Credit scams
© South-Western Educational Publishing

4. The 20/10 Rule
Your borrowing power should NOT exceed 20% of your yearly take-home pay.
You should not take on monthly payments total more than 10 % of your monthly take home pay (net pay).
Does not apply to mortgage loans
Does apply to all other types of credit. Close and open.

5. 20/10 rule example Yearly take home pay is $21000
Monthly take home is 21000/12= $1750
Your total borrowing power should not exceed $4200 (20%)
Your monthly credit payment should not exceed $175 (10%)
Following the 20/10 rule can help you keep your debt within your means to repay!!!!!!

6. Bankruptcy Bankruptcy laws and their purpose Types of bankruptcy
Legal advice
Reaffirmation of debts
© South-Western Educational Publishing

7. Types of Bankruptcy Involuntary bankruptcy Voluntary bankruptcy
MYPF CHAPTER 19
13-SEPT-2001
Types of Bankruptcy
Involuntary bankruptcy
Voluntary bankruptcy
Chapter 11 bankruptcy
Chapter 7 bankruptcy
Chapter 13 bankruptcy
Chapter 11 bank… is a type
© South-Western Educational Publishing

8. Lesson 19.2 Reconsidering Bankruptcy
Discuss the major causes of bankruptcy.
Describe the advantages and disadvantages of declaring bankruptcy.
© South-Western Educational Publishing

9. Major Causes of Bankruptcy
Job loss
Emotional spending
Failure to budget and plan
Catastrophic injury or illness
© South-Western Educational Publishing

10. Advantages and Disadvantages of Bankruptcy
Debts are erased.
Exempted assets are retained.
Certain incomes are unaffected.
The cost is small.
Disadvantages
Credit is damaged.
Property is lost.
Some obligations remain.
Some debts can be reaffirmed.
Co-signers must pay.
© South-Western Educational Publishing