1. Handling Debt

2. Managing Debt
The quicker you pay off your debt, the less interest you’ll have to pay
Most types of credit utilize an amortization system of payment
What TWO things do you have to pay when you use credit?
Interest payments are high at the beginning; principal payments are low
Interest payments decrease as time goes by; principal payments increase

3. Warning Signs of Debt Problems
Maxing out your credit cards
Skipping payments on some bills so that you can pay off others
Charging more to your credit card than what you own
Your credit score is dropping rapidly

4. Going Into Default Default What can the creditors do?
Failure to pay off your debt
What can the creditors do?
Repossess your purchases
Use a collection agency to get their money back
Force a garnishment
Portion of your paycheck given directly to your creditors

5. Getting Out of Debt Create a plan with your creditors
Adjust payment terms/payment schedule
Stop using credit cards!
Use debit card instead (spend only what you have)
Get a credit counselor
Professional who will help you set up a plan to pay back your debt

6. Bankruptcy A legal process to relieve you of some of your debts
Requires a court-approved debt management plan
LAST RESORT!
Ruins your credit score for up to 10 years

7. Quick Review
How can you decrease how much interest you pay on your debt?
If a creditor has a court order a garnishment, what are they getting?
What should you do with your credit cards if you are trying to get out of debt?
When should bankruptcy be used in the process of getting out of debt?
Pay the debt off quicker
A portion of your paycheck to help pay off your debt
Stop using them!
Last resort!