Bankruptcy/Getting Out of
Debt
By Brandon Stressman
Toren Sanchez
Jay Carrick
Jalen Zavala
Christina Coyle
Signs of debt problems/overspending
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Using credit cards to pay for necessities when you have no cash.
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Borrowing money to pay for other debts.
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Needing a co-signer because you’re a high credit risk.
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Depending on parents and friends to bail you out.
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Only paying minimum payment on credit cards.
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Unsure how much you owe or what may be on your credit reports.
Bankruptcy
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Chapter 7- For individuals it is also called straight bankruptcy or liquidation.
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Chapter 11- occasionally used by individuals but is primarily used by large corporations.
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Chapter 12- a type of bankruptcy available for family farmers.
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Chapter 13- For individuals this bankruptcy lasts for the duration of a debt repayment plan, from three to
five years.
Debt Collection
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Some Debt Collectors are debt buyers.
These companies purchase debt at a fraction of its face value
and then attempt to recover the full amount of the debt.
Debt collectors include collection agencies or lawyers who
collect debts as part of their business.
Debt Collectors allowed to do
● Any debt collector who contacts you claiming you owe
payment on a debt is required by law to tell you certain
information about the debt.
● Debt Collectors can conclude information such as the name of
the creditor, the amount owed, and how you can dispute the
debt or seek verification of the debt.
Debt Collectors NOT allowed to do
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Debt collectors may not harass, oppress, or abuse you or any third parties
they contact.
Debt collectors may not lie when they are trying to collect a debt.
Give false credit information about you to anyone, including a credit
reporting company
Debt collectors may not engage in unfair practices when they try to collect
a debt.
Couple of Other things…
They cannot contact you before 8:00a.m or after 9:00p.m unless you ask
them to.
How To Avoid Bankruptcy
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Get Help From Family and Friends
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Sell Some of Your Assets
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Ask Creditors to Help You Avoid Bankruptcy
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Seek Consumer Credit Counseling
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Restructure your mortgage
Life events: How they affect your finances and credit
Marriage:
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Pool money
New responsibilities
Divorce:
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Protect credit report
Protect mail
Closing joints/Paying off balances
Buying a home:
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Having a baby:
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Many expenses on credit
Death of a spouse:
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Creditor cannot change the terms on the account
Maintain some form of independent in your
name
Name change/ Joint Credit:
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Notify creditors
Builds equity/ Adds to net worth
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Could lose your credit history
Mortgage debt on credit report
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Keep individual credit in your own names
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You are responsible for all of his or her bills as
well as yours
Methods or Strategies to Pay Off Debt
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• Pay more than the minimum
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Cash out your savings account
Borrow Against your life insurance
Friends and Family loan?
Borrow from your 401K
Last Resort: File Bankruptcy
After Debt… Close Accounts or Leave open with
zero balance?
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Ask yourself what you are trying or wanting to accomplish.
Do you want to manage your credit and want to get rid of the
temptation of excess credit?
Do you want to manage and have a better credit score?
Keep In Mind...
A big part of your score is the age of your accounts. Closing an
old account can lower the average age of your accounts and, in
turn, lower your credit score.
Financial/Credit Counseling
What is Credit Counseling?
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Offering education to consumers about how to avoid incurring debts that cannot be repaid
Where can you find a credit counselor?
1.
Many universities
2.
Military bases
3.
Credit unions
4.
Housing authorities
5.
Branches of the U.S. Cooperative Extension Service operate nonprofit credit
Work Cited
"5 Ways to Avoid Bankruptcy." MSNMoney. Web. 11 Apr. 2014. <http://money.msn.com/credit-rating/5-ways-to-avoid-bankruptcy-
usnews.aspx?page=2>.
"Consumer Information." Choosing a Credit Counselor. Web. 11 Apr. 2014. <http://www.consumer.ftc.gov/articles/0153-choosing-creditcounselor>.
"Credit Counseling." Wikipedia. Wikimedia Foundation, 04 Aug. 2014. Web. 11 Apr. 2014.
<http://en.wikipedia.org/wiki/Credit_counseling>.
"Six Ways to Avoid Bankruptcy." About.com Credit / Debt Management. Web. 11 Apr. 2014.
<http://credit.about.com/od/debtmanagementsolutions/tp/how-to-avoid-bankruptcy.htm>.
"Closing Paid-off Card May Hurt Credit Score." Is Closing Card worth Crimped Credit Score? N.p., n.d. Web. 14 Apr. 2014.
http://www.bankrate.com/finance/debt/closing-paid-off-card-may-hurt-credit-score.aspx
"Reader Q&A: Should I Close My Old Credit Card Account That Has a Zero Balance?" The Debt Movement. N.p., n.d. Web. 14 Apr. 2014.
http://debtmovement.com/should-i-close-my-old-credit-card-account/