Chapter 22 Business Law and Ethics – Flashcards
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Credit
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an arrangement through which you may receive cash, goods, or services now and pay for them in the future
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Interest
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the cost of using someone else's money
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Creditor
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the party who sells the goods on credit or lends the money
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Debtor
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the party who buys the goods on credit or borrows the money
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Open-end Credit
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credit that can be increased by the debtor by continuing to purchase goods or services on credit, up to a certain limit
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Line of Credit
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a maximum amount of money made available to you in open-end credit
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Closed-end Credit
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credit given for a specific amount of money and cannot be increased by making additional purchases
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Family Farmer
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one who receives more than one-half of their total income from the farm
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Secured Loan
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one in which creditors obtain an interest in something of value from which they can secure payment if you do not pay
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Collateral
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something of value
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Security Interest
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the interest that is given to creditors
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Secured Party
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the lender or seller who holds the security interest
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Repossess
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take back
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Smart Card
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a new kind of card with a computer chip that can store a large amount of data
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Equal Credit Opportunity Act
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ensures that both businesses and consumers are given an equal chance to obtain credit
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Fair Credit Reporting Act
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prohibits the abuse of a valuable consumer asset-credit
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Fair Credit Billing Act
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helps when errors are made in bills sent by credit card companies and businesses that give credit
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Fair Debt Collection Practices Act
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under this act, it is illegal for debt collectors to threaten consumers with violence, use obscene language, or contact by telephone at inconvenient times or places
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Bankruptcy
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the legal process by which a debtor can make a fresh start through the sale of assets to pay off creditors
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Chapter 7 bankruptcy
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may be brought either voluntarily by the debtor or involuntarily by creditors
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Chapter 11 bankruptcy
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offers a method for a business to reorganize their financial affairs and still remain in business
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Chapter 12 bankruptcy
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helps family farmers create a plan for debt repayment that allows them to keep their farm running
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Chapter 13 bankruptcy
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permits an individual debtor to develop a repayment plan
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Homestead Exemption
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debtors can keep a maximum of $17,425 in equity in personal residence
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Why should you shop around before borrowing money on credit?
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lenders charge different rates of interest
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Truth in Lending Act requires that lenders tell you what?
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the finance charge and the annual percentage rate
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Repossession must be done without doing what?
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breaching the peace
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What is the average amount of debt individuals have?
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$8,000
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What is the average credit card interest rate?
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17%
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What do you do if you have a dispute with a credit card purchase?
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avoid paying the item and instead notify the credit card issuer by telephone immediately
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How much money are you responsible for of unauthorized charges made before you notified the credit card issuer?
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$50
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Why are blocks used?
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to make sure you don't exceed your credit
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What are some warning signs of debt problems?
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you make the minimum monthly payment, you often pay late, and you exceed the credit limits on your cards
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Who can you contact if you're having problems paying your bills?
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You can contact your creditors or you can contact a nonprofit financial counseling program
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What debts cannot be discharged?
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debts caused by fraud, back taxes, and student loans
