Chapter 9
Credit Problems and Laws
How Can Consumers Protect
against Errors and Fraud?
• Disputing a charge is the process of
informing a credit company of an error on
your bill.
o Document all steps of your dispute and send a
letter to the credit company.
• Credit card fraud is when someone uses
your credit account to steal money or
goods.
o Notify creditor as soon as possible.
9-1 Resolving Credit Problems
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What Help Is Available to
Consumers?
Better Business
Bureau
Promotes responsible business practices in the
marketplace to build trust between buyers and sellers
Consumer Action
Promotes consumer rights, publishes educational
materials, and advocates for consumers in the media and
before lawmakers
Consumer
Federation of
America
Works to advance pro-consumer policies on a variety of
issues before state and federal legislatures, regulatory
agencies, and the courts
Consumers Union
Provides advice about products and services in its
publication Consumer Reports
National
Consumers League
Sponsors the Fraud Center and addresses a wide range
of issues in the marketplace
Public Citizen
Addresses issues such as the consumers’ right to seek
redress; clean and safe energy sources; and strong
health, safety, and environmental laws
9-1 Resolving Credit Problems
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What Help Is Available to
Consumers?
• Federal agencies
o Federal Trade Commission (FTC) Bureau
of Consumer Protection
o U.S. government (www.usa.gov)
o Consumer Action Handbook
o Consumer Financial Protection Bureau
o Federal Bureau of Investigation (FBI)
• State agencies
9-1 Resolving Credit Problems
Slide 4
What Problems Can Arise from
Debt?
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•
•
•
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Credit delinquency
Collection agencies
Judgment
Garnishment
Repossession and
foreclosure
9-1 Resolving Credit Problems
Slide 5
Focus On . . .
Telemarketing Fraud
• To protect yourself, know the danger signs.
o Examples: upfront fees, pressure to act
immediately, no written documentation
• Use a credit card in case you need to dispute
the charge later.
• Be cautious when dealing with unknown
companies.
• Use caller ID to avoid unwanted calls.
9-1 Resolving Credit Problems
Slide 6
When Is Bankruptcy a Good
Choice?
• Bankruptcy is a legal procedure to
relieve a person of excessive debt.
• It can be voluntary or involuntary.
• It gives debtors a fresh start.
• It helps ensure fair treatment for
creditors.
• It should be a last resort because it
damages your credit rating.
9-2 Bankruptcy Choices
Slide 7
Avoiding Bankruptcy
• Credit counseling
o Sets up a budget and arranges
a payment plan
• Debt management
o Creates a plan to pay off debt
o Debtor must turn over checking
account and give up credit cards
• Debt consolidation
o Process of getting one loan to
pay off all debts
9-2 Bankruptcy Choices
Slide 8
What Are the Types of
Bankruptcy?
• Chapter 7
o Also called straight or
liquidation bankruptcy
o Involves the forfeiture
of assets in exchange
for discharge of debts
o Allows for exemptions, or property that a
debtor does not have to forfeit, such as
tools of trade
9-2 Bankruptcy Choices
Slide 9
What Are the Types of
Bankruptcy?
• Chapter 11
o Also called a reorganization
o It is the reorganization of debt as decided
by the court.
o Allows a business to remain viable
• Chapter 13
o Also called individual debt adjustment
o Involves a 3- to 5-year repayment plan for
some of the debt
9-2 Bankruptcy Choices
Slide 10
Building Communications Skills
Persuasive Speaking
• Open with attention-getting remarks.
• Clearly state the position or action you want
listeners to support.
• Give supporting data or quotes to strengthen
your position.
• Prepare for negative reactions or questions.
• Listen to campaign speeches and apply
techniques to your speech.
9-2 Bankruptcy Choices
Slide 11
Consumer Protection Laws
• Fair Credit Reporting
Act
• Truth-in-Lending Act
• Credit Card Act of
2009
• Fair Credit Billing Act
• Equal Credit Opportunity Act
• Fair Debt Collection Practices Act
9-3 Consumer Protection Laws
Slide 12
Credit Card Company Error
Correction Policy
1. Write description of the error.
2. Mail your letter as soon as possible.
3. Letter must be acknowledged in 30 days. Error
must be corrected or explained in 90 days.
4. No collection letters will be sent or action taken
while the charge is being disputed.
5. You are still responsible for other items on your
bill.
6. You will not be charged a finance charge on
disputed amount unless there is no error.
9-3 Consumer Protection Laws
Slide 13
What Methods Can Be Used to
Resolve Credit Disputes?
• Alternative dispute
resolution (ADR) uses a
neutral third party.
o Negotiation
o Mediation
o Arbitration
• Filing a lawsuit
o Small claims court
o Class action lawsuit
9-3 Consumer Protection Laws
Slide 14
How Can You Protect Against
Credit Scams?
• Credit repair scams
occur when someone
offers to “fix” your credit
rating.
• Identity theft occurs
when someone uses
your personal
information to commit
fraud or other crimes.
9-3 Consumer Protection Laws
Slide 15
Success Skills
Dealing With Difficult People
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Deal with the issues head-on.
Meet the person in a private setting.
Ask the person to explain his or her situation.
Listen to what the person is saying and repeat
concerns.
• Ask for suggestions about how the problem
can be resolved.
• Talk to others affected by the behavior.
9-3 Consumer Protection Laws
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