Chapter 22 Business Law
disputed purchases
don't pay bill, call credit card issuer by telephone. Company must put pay on hold and send you form explaining dispute.
credit card blocking
estimated bill of transaction approved, available credit is reduced by amount of transaction immediately until you pay. Then final charge replaces block.
closed end credit
given for a specific amt of $ and can't be increased by making additional purchases
Disputed purchases act for defense of unsatisfactory purchase only applies if:
initial transaction must have taken place in your state or within 100 miles of mailing address
security interest
interest given to creditors
What must be used to obtain goods a debtor refuses to return?
legal process
Bankruptcy
legal process by which a debtor can make a fresh start through the sale of assets to pay off creditors; laws are named after the chapters where they are found in the federal bankruptcy code
secured party
lender or seller who holds security interest
line of credit
max amt of $ made available to you
Consumer Credit Counseling Service
nonprofit organization affiliated with the National Foundation for Consumer Credit; local branches provide debt counseling services
family farmer
one who receives more than one half of his or her total income from the farm
Fair Credit Reporting Act
prohibits abuse of consumer credit. You have right to: -know all info in credit report -sources of info of report -know name of anyone receiving copy of credit report within the past year, or two years if report relates to job application -may correct errors -your version of facts may be inserted in file
Truth in Lending Act
requires lenders to tell you finance charge and annual percentage rate (APR) of loans
Respossess
take back
Fair Credit Billing Act
when errors are made in bills sent by credit card companies, you can notify them of error. Don't have to pay amount in dispute.
credit
An arrangement to receive cash, goods, or services now and pay for them in the future.
smart cards
Credit card sized card containing a microchip for data storage and processing. can hold debit and credit balances, ID info, more. New data can be downloaded w/out having to issue new card.
open-end credit
Credit that can be increased by debtor by continuing to purchase goods and services on credit, up to a limit set by creditor
warning signs of debt problems
- You make only the minimum monthly payment on credit cards (or have trouble paying that) - Total balance on your credit card increases every month - You miss loan payments or often pay late - You receive second or third payment due notices from creditors - You borrow money to pay off old debts - You exceed the credit limits on your credit cards - You've been denied credit because of a bad credit report
Exemptions
- can keep a max of $17,425 in equity in personal residence (homestead exemption) - max of $925 for individual item of furniture, household good, clothes, appliances, books, crops, animals, or musical instruments (total cant exceed $9,300) - allowed to exempt $1,150 in jewelry - may keep any other property not exceeding value of $925 plus up to $8,725 of any unused amount of the $17,425 homestead exemption - may keep necessary items -max of $1,750 in professional tools, instruments, books -max $2,775 in motor vehicle -any medical supplies that have been prescribed for health of the debtor -child support and alimony can be excluded -social security and benefits received under a disability program and certain life insurance policies are also exempt
how to contact CCCS
- check white pages of phone book - internet - call # in book
if having trouble paying your bills, options are
- contact your creditors and work out an adjusted repayment plan - contact a nonprofit financial counseling program
Chapter 12 bankruptcy
- helps family farmers create a plan for debt repayment that allows them to keep their farms running - 80% of debt must result from farm expenses
Chapter 11 bankruptcy
- offers a method for business to reorganize their financial affairs and still remain in business - petition filed, a reorganization plan for the business is developed, approved by a certain # of creditors and court, will go into operation - successful = business continues - fails = businesses forced to close
Chapter 13 bankruptcy
- permits individual debtor to develop a repayment plan - repayment period is usually 3 years
"fresh start" policy
- some assets may be kept by debtor - can be doubled for married couples filing jointly - debtors can elect to use either their state exemptions or federal ones
Chapter 7 bankruptcy
- voluntarily by debtor or involuntarily by creditors - 3 creditors must file the petition for bankruptcy if the debtor has 12 or more creditors - the combined debt owed to the 3 must exceed $11,625 - a single creditor who is owed a debt of more than $11,625 can file if the debtor has fewer than 12 creditors
interest
A fixed charge for borrowing money
debtor
A party who buys on credit or borrows money
creditor
A party who sells goods on credit or lends money
T/F creditor can't repossess goods of debtor who can't pay
F
T/F debtor is not required to be notified or entitled to receive any surplus of sale after debts and expenses were paid
F
T/F you aren't responsible for any cost of unauthorized charges made before you notify credit card issuer of loss or theft
F
T or F Congress doesn't have the authority to help people with bankruptcy issues.
False
T or F: Debts associated with fraud or wrongdoing are not revived after they have been discharged in bankruptcy.
False
T or F: During the repayment period, creditors may continue collection activities
False
T/F Creditors may not report you as delinquent because of disputed charge
T
T/F creditor must investigate and fix errors or explain why amount is correct within 90 days
T
T/F creditors can't give you poor credit score for excercising rights under disputed purchases act
T
T/F repossessing must be done w/out disturbance
T
T/F shop around before borrowing or buying $ on credit because lenders have many different interest rates
T
T/F under disputed purchases, you may use defense that unsatisfactory goods or services were received if credit card issuer brings suit
T
T/F you aren't responsible for any unauthorized charges after you notify credit card issuer
T
T/f secured party may sell or keep repossessed goods in public auction or private sale, except they must sell if debtor had paid 60%+++ of price
T
T or F All your information is kept confidential when working with the CCCS
True
T or F: A person hopelessly in debt may be relieved of further obligation on contracts if the court grants that person relief.
True
T or F: Some debts cant be discharged such as debtor's fraud, back taxes, and student loans that do not impose a hardship on the debtor
True
examples of closed end credit
bank loans, monthly car installments
Equal Credit Opportunity Act
both businesses and consumers are given equal chance to obtain credit. Illegal for banks and businesses to discriminate against applicants based on age, race, marital status, national origin, sex, religion, or public assistance income.
Examples of open-end credit
charge accounts, credit cards
secured loan
creditors obtain interest in something of value (collateral, from which they can secure payment if you don't pay
Credit cards are offered through
department stores and gas companies, banks,