06 Debt Management Free Online FlashCards

What details belong in a debt inventory?

List each debt’s balance, APR, minimum payment, due date, and whether it is secured by property such as a car or home.

How should extra debt payments be directed?

Make at least the required minimum payment on each debt when possible. Put any extra toward one target debt, then roll its former payment into the next target after it is paid off.

How does the avalanche method prioritize debts?

The avalanche method directs extra payments to the debt with the highest APR first. With comparable terms and payments, this generally reduces total interest.

What should you compare when evaluating a loan’s cost?

Compare the total cost of borrowing, including APR, fees, repayment schedule, and consequences of missed payments—not just the payment amount.

What APR can a common payday-loan fee represent?

A common payday-loan example charges $15 per $100 borrowed for two weeks, equivalent to an APR near 400%.

Why might a lower consolidation-loan payment be misleading?

A lower monthly payment may come from a longer repayment period, added fees, or collateral requirements. Compare the total repaid and understand what happens to existing accounts.

What are warning signs of a questionable debt-relief offer?

Be wary of companies that guarantee to erase debts or demand upfront payment for promised debt-relief results. Review the contract and verify services independently.

What should you do early if you expect to miss a payment?

Contact the lender or service provider promptly and ask about options such as a temporary reduced payment, due-date change, fee waiver, or revised plan.

What should you confirm before accepting a hardship arrangement?

Ask how an arrangement affects interest, fees, credit reporting, and the account, and get its terms in writing. Do not agree to a payment you cannot sustain.

What does a debt management plan do—and not do?

A credit counselor can review a budget and explain options. A debt management plan may combine payments and involve creditors lowering rates or fees, but it does not erase debts; confirm creditors accepted the plan before sending payments.

What should you do if sued over a debt?

Respond by the deadline stated in the court papers. Ignoring a lawsuit can lead to a default judgment; laws and deadlines vary, so seek qualified legal help when needed.

What counseling generally precedes an individual U.S. bankruptcy filing?

In the United States, individuals generally must complete approved credit counseling before filing for bankruptcy, subject to limited exceptions.