Credit Problems Garnishment of wages Garnishment of wages Creditor takes all or part of paycheck to satisfy a debt Repossession Repossession Taking back the pledged collateral by the creditor

Bankruptcy Chapter 7—debts discharged after liquid assets are used to repay some of the debt Chapter 13—repay all or part of debt in a 3- to 5-year repayment plan; once payment plan is completed, any remaining debt is discharged

Credit Counseling Helps consumers revise budgets, contact creditors to arrange new payment plans, or help find other sources of income

Consolidating Debts Combines all debts into one loan with lower payments High interest rate due to risk May entice debtor to take on new debt

Credit Services—Be Wary of Some Some companies charge a fee to “clean up” your credit rating—they are NOT able to restore a bad credit rating

Consumer Credit Rights Consumer Credit Protection Act Equal Credit Opportunity Act Fair Credit Reporting Act Fair Credit Billing Act Fair Debt Collection Practices Act Right to know costs and terms of credit Right to fair opportunity to obtain credit Right to know what’s in your credit file Right to have billing mistakes resolved Right to be protected from collection agencies