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Garnished - When a certain amount of money can be taken out of a borrower's wages.

Bankrupt - When a person is judged by the court to be insolvent, e.g. unable to pay debts.

Credit Bureau - An organization that keeps on file the credit records of consumers.

Creditor - A person who is owed money

Debtor - A person who owes money.

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

- Pay the amount owing (clear the debt)

- Negotiate a change in your repayments (seek assistance from a financial counselor)

- Apply for hardship variation (you may be eligible even if the lender doesn't want to negotiate)

- Negotiate a postponement of repossession (postpone the repossession while negotiating)

- Refinance the loan (try to get a better deal on a new loan)

- Sell your goods to pay back the loan (you will need the lender's approval)

- Voluntary surrender (give goods to the lender so they can sell them for money)

- Apply for bankruptcy (use this only as a last resort as there are serious consequences)

If you manage your finances poorly you may find you:

- Are bankrupt

- Cannot afford luxury items

- Have to sacrifice things in order to be able to afford essentials.

Consequences of Poor Finance Management

Repaying Loans

Social Consequences

Financial Consequences

Why is it difficult to manage finances?

- Financial pressures created from being over committed can have a number of social consequences.

- The pressure of debt may cause stress had home and at work.

- As debts build up a person can feel like they can't get out of it and this can seriously effect their well being.

- Debt pressures are seen has the cause of domestic violence, physical and emotional illness, family breakdown and even suicide.

People can find it difficult to manage their finances if:

- They don't have a budget

- Don't keep a record of purchases

- They spend more than the are making.

- When taking out a loan it is sometimes necessary to mortgage goods if the lender wants security.

- If you do not have enough money to pay back the loan you can be deemed bankrupt.

- If you do not pay back this loan the lender will repossess the good provided during the loan.

- In addition to the repossession you may have to pay the price of the repossession to the lender.

Legal

Consequences

- Any money you owe is a debt, the person owes the money is called a debtor, the person who is owed money is called a creditor.

- As a debtor you have liabilities or obligations to the creditor which must be fulfilled.

- Failure to do so will result in the creditor taking legal action against you to recover their money.

Problems caused by poor financial management

Types of Consequences

- Legal

- Financial

- Social

Important Words to know:

Definitions

Credit Bureau and Financial Counselor

Mortgage: I put down a hundred thousand dollars in cash a took out a mortgage for the rest.

Mortgagee: The bank became our mortgagee when it accepted our mortgage on our new home.

Mortgagor: We became mortgagors when the bank accepted our mortgage and loaned us money.

Repossession: The bank repossessed our car when we couldn't pay back our debt.

Interesting Video:

Credit Bureau: an organization that is responsible for keeping files on the credit records of customers. It also helps its members to decide whether to accept or reject credit applications.

Financial Counselor: they are voluntary organizations that aim to assist people in managing their finances, they offer free advice on dealing with financial issues.

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