CHAPTER 9 CREDIT PROBLEMS AND LAWS LESSON 9-1: RESOLVING CREDIT PROBLEMS Learning Goals -Explain how to dispute errors on billing statements and list ways to prevent credit card fraud. -Describe the purpose of consumer advocacy groups and government consumer protection agencies -Recognize how to avoid collection, garnishment, and foreclosure procedures

HOW CAN YOU PROTECT AGAINST CREDIT ERRORS AND FRAUD Student Responses

DISPUTING CHARGES  When you receive a credit account statement, compare the charges to your receipts.  Disputing a charge is the process of informing a credit company of an error on your bill.  Disputing a charge usually begins with a telephone call. Whenever you talk to a person about the charge, write down the date, the person’s name, the phone number, and the details discussed.  Follow-up with a written letter.  Keep all documentation – receipts, statements, copies of correspondence, and written details you have taken.  A dispute letter is a letter written to inform a credit company of an incorrect change on your account. (Example on pg. 281).

PREVENTING CREDIT CARD FRAUD.,  Credit Card Fraud is intentionally using consumer’s credit account to steal money or goods.  Steps such as the following to help prevent credit card fraud:  Carry only the cards you need.  Keep a list of credit card account numbers and phone numbers to call so that you can rapidly report a card that is lost or stolen  Verify purchases and account balances when you receive a statement.  Shred old receipts and statements containing you account numbers when you no longer need them.  Do not loan your credit card to others.  Know where your credit cards are at all times.  Close inactive accounts because they are often targeted by thieves.  Have mail delivered to a post office box or a secure mailbox.  Use only secure websites an buy online only from reputable companies.  Do not give out credit card or other private information over the telephone or by to people who say they are calling from your bank or credit card company.  Monitor your credit activity online if possible, verifying purchase dates and amount.

HELP AVAILABLE TO CONSUMERS  Consumer Advocacy Groups help consumers resolve problems with creditors and others.  Mostly nonprofit organizations that promote consumer rights.  Consumer Advocacy Groups  Better Business Bureau, Consumer Action, consumer Federation of America, Consumers Union, National Consumers League, Public Citizen  Government Consumer Protection Services  Federal Agencies help protect and help consumers. They provide valuable information and/or assist with the filing of complaints.  Federal Trade Commission, Bureau of Consumer Protection, Consumer Financial Protection Bureau, The Federal Bureau of Investigation  State Agencies also provide consumer protection services.  State agencies provide information and services to residents, including websites where they can file complaints that will be investigated.

PROBLEMS CAN ARISE FROM DEBT  Warning signs that debt has become a problem:  Your credit card balances are at or near your credit limit.  You are making only minimum payments.  You may skip some payments in order to make other payments.  You often pay one credit card by shifting the balance to another credit card.  Credit card companies are reducing your credit limit.  Your credit companies are reducing you credit limit.  You are receiving phone calls from creditors and/or collectors.  You are unable to save or invest money because of debt obligations.  You are feeling stressed because your monthly payments are to high that you have little or no money left to meet basic needs.

PROBLEMS CAN ARISE FROM DEBT  Credit Delinquency is failure to pay debts as required by agreement or by law.  A credit contract requires that you make payment on time.  When you do not make payments on time, your account is in delinquency.  Your credit rating and credit score will drop dramatically and you will find it difficult to get credit when you need it.

ACTIONS TO PRESERVE YOUR CREDIT RATING AND MINIMIZE COSTS  Call each of your creditors as soon as you are having problems.  Negotiate lower payments or other ways to meet your obligations.  Loan modification is a new loan arrangement that allows you to make reduced payments usually on a temporary basis.  Follow up with a letter confirming your agreement.  Meet your new agreement duties. Make payments according to new agreement.  Keep your creditors informed of your situation.

CONSEQUENCES TO CREDIT PROBLEMS  If your payments on your credit account are overdue, your account may be turned over to a collection agency.  Garnishment is a legal process that allows part of an employee’s paycheck to be withheld for payment of a debt.  Repossession is the act of taking an asset used as collateral and selling it to pay the debt.  Foreclosure is the legal process of taking possession of house (or property) when a borrower does not make mortgage payments as agreed.

ASSIGNMENT  Pg. 288 – do problems 1-10, 12, 14-18