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Credit Bureau - an organisation that keeps on file the credit history of customers

The credit bureau provides credit information to organisations for a fee. Organisations use this information to decide whether they accept or reject a credit application

Strategies

Proactive Strategies

Consolidate loans - means to put multiple loans into a single form of debt. All repayments then go into one form of debt

Use credit sensibly

Budget, monitor expenses, save money

Bankruptcy

What if I can't repay my loan?

Get legal advice from:

What if I can't repay my loan?

Bankrupt - A person who is unable to meet all of their debts

Revision

Legal Consequences

Individuals have certain obligations that they must fulfill, failure to meet these obligations will often result in legal action in order to recover the money that you owe.

  • Lawyer
  • Financial counsellor (e.g. the Financial Counsellors' Association of NSW)
  • Organisation e.g. Consumer Legal Centre

What are the features of responsible financial management?

Advise your lenders. Hopefully, you and the lenders can work out a new repayment plan. If it is a short-term financial issue, maybe the lenders will defer your payments

Debt - Is the money that you owe

Debtor - The person who owes the money

Creditor - The person who is owed the money

Consequences of being declared bankrupt: If you are declared bankrupt at an early age, it will make it much harder to get a loan in the future and affect your financial independence.

Default Notice

Social Consequences

The main features of responsible financial management are:

  • budgeting
  • saving
  • avoiding over-commitment
  • monitoring and recording expenditure

Default notice: a document from a lender stating that a person has failed to carry out the terms of the contract

What are some social consequences faced by Rebecca Bloomwood?

If you are given a default notice, these are your options:

1. Pay money owing

2. Negotiate a change in your repayments

3. Apply for a hardship variation

4. Negotiate a postponement of repossession

5. Refinance the loan

6. Sell your goods and repay the loan

7. Voluntary surrender (give the goods to the lender and ask them to sell them)

8. Apply for bankruptcy

Three Consequences of Financial Mismanagement

Financial

Social

Consequences of

Financial Mismanagement

Legal

Credit history

Financial Consequences

Repossesion

Garnished

Garnished - When a certain amount of money is taken out of the borrower's wages, until the full amount of the loan is paid back.

Repossession means to take back something. It is often the goods you bought on credit if repayments have not been made.

Additional costs you might also have to pay back the lender the difference between what they sell the goods for and the amount of debt, as well as what it costs the lender to repossess the item

People who can't manage money:

1. end up losing goods

2. being sued

3. declared bankrupt

What is contained in your credit file?

  • previous overdue accounts which have been settled
  • court judgements or bankruptcy orders
  • records of any previous applications for credit
  • any previous defaults
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