1. Section 6.4 Managing Your Debts

2. Signs of Debt Problems If you are experiencing 2 or more of the these warning signs it is time for you to rethink your priorities

3. Warning Signs You make only minimum payments on your credit cards You are having trouble making the minimum monthly payments on your cards The total balance on your card increases every month You miss loan payments or often pay them late You use your savings to pay for essentials like food and utilities You receive second and third payment notices from creditors You borrow money to pay off old debts You exceed limits on your cards You have been denied credit because of a bad credit report

4. Debt Collection Practices The Federal Trade Commission enforces the Fair Debt Collection Practice Act. The law prohibits certain practices by debt collectors The law doesn’t erase debts, but it controls the ways debt collection agencies do business

5. Financial Counseling Services The Consumer Credit Counseling Services (CCCS) Provide debt counseling services Not a lending institution, charity, or government agency. Aide families with serious debt problems by helping them manage their money better and setting up realistic budgets Help prevent debt by teaching them the importance of budgeting and education about unwise credit buying

6. Declaring Personal Bankruptcy Bankruptcy: the legal process in which come or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts Should be the last resort because it severely damages you credit rating

7. Bankruptcy In 1994, the U.S Senate passed a bill that reduced the time and cost of bankruptcy proceedings. The bill strengthened creditor rights and enabled more individuals to get through bankruptcy without selling their assets.

8. Chapter 7 Bankruptcy A straight bankruptcy An individual is required to draw up a petition listing his or her assets and liabilities Assets are sold to pay off debts Protected Assets include: Social Security, unemployment, the net value of your home, vehicle, tools used in your work Release from debt does not include child support, alimony, taxes, fines, or debts from illegal activity

9. Chapter 13 Bankruptcy If you have regular income you can propse a plan to the court for using future earnings or assets to eliminate debt over a period of time The debtor makes regular payments to a trustee appointed by the court The approved plan may allow the debtor to keep all property

10. Effects of Bankruptcy Bankruptcy reports are kept on file for 10 years Many find it very difficult to obtain credit after filing bankruptcy Bankruptcy should be used when there is no other option There is no substitute for good financial planning, common sense, and education