Personal Finance Chapter 7

4 Ways to reduce lender risk and explain each part

Provide a collateral Have a bigger down payment Have shorter loan terms Accept a variable interest rate

Other Fees/features-

Services or goods offered by a credit card company for owning a certain credit card

Chapter 7

Starting over, have to sell basically all assets. Worst type of bankruptcy. Stays on credit report for 10 years. Have to hire a lawyer, write a letter. Have to pay money to declare bankruptcy. Many, but not all debts are forgiven. Forgiven hospital bills and credit card bills, anything without collateral. If you owe taxes and fines or child support, student loan, you will still have to pay that. Anything that you owe the government, you still have to pay.

Annual Fee

-an amount charged to you on a yearly basis

What percentage has personal bankruptcy increased over the last decade? Why?

20% because it was seen as acceptable

5 Things to look at when applying for a credit card?

APR Annual Fee Other Fees/Features Credit Limit Rewards

Define Amortization.

Banks pay themselves first by having more interest taken out of your monthly payment than the principal, but as time goes on, this flip flops

Of the two bankruptcies, under which one may it be easier to obtain future credit

Chapter 13

Where can you obtain medium-priced loans

Commercial banks, savings and loan associations, and credit unions

What organization provides financial counseling

Consumer Credit Counseling Service

What should you do if you have problems paying your bills

Contact your creditors at once and try to work out a modified payment plan with them

Who offers the least expensive loans, but why should you avoid doing this

Family members Probably won't feel like you have to pay it back Doesn't do anything for your credit score

Who offers the most expensive types of loans?

Finance and check cashing companies Retailers (car and appliance dealers) Bank credit cards and cash advances

Types of ways to get credit

Inexpensive-family Expensive-finance company Medium-his bank

2 things you can do to help protect against identity theft

Make secure passwords Shred important documents

Is buying on credit cheaper than paying cash?

No, because you will have to pay interest on it or a fee if you miss a payment

Chapter 13

ONLY IF YOU HAVE A JOB. This is when you reorganize your debt so that you end up paying less. pay money to a trustee and they give it to everyone that you are in debt under, basically adding all your payments up into one

Credit Limit-

The maximum amount you can charge on a credit card between a given time frame

Rewards-

Things that the credit card company offers you in a way that makes you feel like you're getting a deal

Is paying the minimum balance on your credit card a sign of potential debt problems?

Yes, because you are not going above and beyond so that these debts go away faster.

revolver

always have a balance(most important to you:APR)

What are your 2 choices for bankruptcy? What are the characteristics of each?

ch 7 and ch 13

typical

combination of the first 2 (most important: low annual fee and low APR)

convenience

pay it off in full every month (most important: annual fee and rewards)

Are there costs involved in filing bankruptcy

paying for a lawyer pay a filing fee

Know the signs (signals) of potential debt problems

paying only the minimum balance each month increasing the total balance due each month missing or alternating payments or paying late

2 Parts of every loan payment?

principal and interest

Name the 3 types of credit card users

revolver, convenience, typical

APR-

the annual rate of borrowing or earning interest

What is our nation's #2 financial problem

too much debt

What is the disadvantage to a collateralize loan

you cannot sell whatever you collateralize if the object is not all paid off. There is a lien on it