22 terms

Financial Pitfalls

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Auto Title Loan
A small high interest loan, offered through a business, in which the debtor's car is used as collateral and can be taken if loan payments are not made
Bankruptcy
A legal process that relieves debtors of the responsibility of paying their debts or protects them while they try to repay
Chapter 13 Bankruptcy
Type of bankruptcy in which the debtor is put on a repayment plan of 3-5 years, during which they repay creditors and then afterwards remaining debts are discharged
Chapter 7 Bankruptcy
Type of bankruptcy in which most of debtor's possessions are sold to repay creditors and then any remaining debts are discharged
Credit Card Fraud
The crime of intentionally using someone else's credit account to steal money, goods, or services
Creditor
A person or institution who lends money and expects to be repaid
Debtor
A person or institution who borrows and owes money
Financial Adviser
Trained professional planners who give overall investment advice based on your goals, age, lifestyle, and other factors
Identity Theft
The crime of obtaining someone else's personal data and using it for financial gain or to defraud or deceive
Opportunity Cost
The best alternative that we give up when we make a choice or decision
Pawn Loan
A small, high interest loan, offered through a pawnshop, in which the debtor hands over a possession as collateral, and if the loan is not repaid, the creditor may sell the possession to recoup the money
Payday Loan
A small loan, offered through a business, lent at a high interest rate, and meant to be paid as soon as you receive your next paycheck
Personal Loan
Loan granted from one individual to another, where usually the people know one another and jointly decide on loan terms
Predatory Lending
The act of lending money at an unreasonably high interest rate, making repayment excessively difficult, or charging excessive fees such that the debtor is trapped in a cycle of debt
Regressive Tax
A tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes
Rent-To-Own
A business that rents household items at extremely high interest rates with no down payment and no credit check; completing all the payments on time allows the consumer to eventually own the item
Scam
A fraudulent activity that results in a quick or easy profit for one person and a financial loss for the other person
Restitution
The act of restoring someone or something to the rightful owner or to a former state or position; making good on a loss or damage
Secured debt
A debt that is guaranteed by a form of collateral
Unsecured debt
A debt that is not secured or backed by any form of collateral
Exempt Property
Property that may not be seized by creditors and does not have to be forfeited in Chapter 7 bankruptcy
Property Lien
A notice attached to your property telling the world that a creditor claims you owe it some money.
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