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Ted Gets a Credit Card
Ted is just starting College and gets a credit card to help pay for purchases while he is not working. He knows little about how they work but knows that he can use it whenever he wants. -
Rachel Gets a Credit Card
Rachel is fresh out college and just got her first job. Now that she feels more financially stable she decides to get a credit card to make small purchases. She knows that when she buys something she must pay it off in full on or before the payment is due. -
Ted's First Purchase
Ted decides to buy a $2,000 dollar flat screen for his dorm room. He puts the whole purchase on this new credit card. When the bill comes he pays the minimum payment of $30 dollars. The ARP on the card is 17%. -
Rachel's First Purchase
Rachel needs a new phone to replace her broke one. The cost is $700 dollars. Rachel knows when her next pay she can pay it off all at once and puts it on her card. The bill comes and she pays the $700 dollars off. -
Ted Birthday gifts
Ted's parents both have a birthday in the very start of November. He knows exactly what to get them! He buys a 400 dollar pair of gold earrings for his mother. And a 500 dollar watch for his father. The only way he could pay for it was with his credit card. At least his parents loved the gifts! -
Rachel Birthday Gifts
Rachel parents also have birthdays in the start of November. Money has been tight ever since she bought her new phone so she can't buy extravagant gifts. After some thinking Rachel decides to make something for her parents instead of buying something. She is able to put all the supply's on her debt card. -
Mothers Day
Ted gets a new Apple laptop for his mother he charged all 1,200 dollars on his credit card. He figured that he can figure out how to pay it of later. Rachel has some money saved up and gets her mother a nice bracelet for 200 dollars. -
Teds Debt
Ted has been putting everything on his card for the past 10 months. He still dose not have a job and continues to only make the minimum payment. He missed 5 payments as he is browning the money from his parents. Over the past 10 months he has racked up 10,000 dollars of debt. -
Rachel's Debt
Rachel has made some small purchases with her card but is sure to pay it all off. If she dose not have enough money in her bank account or her next pay check then she does not buy it. With this simple rule she is able to stay debt free! -
Teds in Trouble
Ted can no longer afford to make even the minimum payment, his parents told him that they can no longer support him. Also,they don't know that he is in so much debt. He has no other choice but try to get a second credit card. -
Rachel's in Trouble
Rachel gets laid off from her job. She luckily has some savings put aside but only about 5,000 dollars. She starts looking and inverting for jobs but it takes her about 5 months to find one. In this time she went through the 5,000 dollars and had to start using her credit card. She now is in 2,000 dollars of debt. -
Ted Gets Help
Ted goes home for thanksgiving and tells his parents that he is now 15,000 dollars in debt and doesn't have any money to make payments so he continues to miss them. His parents tell him that he is going to have to declare bankruptcy as they can't help pay off the debt as they barely have enough to make it by. -
Rachel Gets Help
Now that Rachel has a job she can start to pay off her debt. Her minimum payment is only $50 dollars but she knows that the more she pays every period, the less interest she will have. She decides to pay $500 dollar at a time. By February she will have payed off all her debt! -
Ted Declares bankruptcy Pt.2
To declare himself bankrupt, Ted needs to go through credit counselling, which is about six months. After that he will need to file different forms discussing his income, expenses, property and exemptions, it determines assets he gets to keep and what the trustee can sell. Finally, at some point there will be the meeting of creditors, where he will answer different questions to determine if he is eligible for bankruptcy, if so, they will take whatever he didn’t claim in his property exemptions. -
Ted Declares Bankruptcy
Ted is confused as to what Bankruptcy is and goes to a accountant to help him manage the situation. He learns that when you declare Bankruptcy he will go to court and a judge will examine his case to asses the liabilities. Ted could be discharged from the debt and no longer required to pay the bills. He decides that declaring Bankruptcy is his only choice to get a second chance. A month later Ted goes to court and is found no longer labile for the debt. -
Ted's Credit Score
After filing for bankruptcy,Ted finds out that his credit score went from 750 to 500. He did not realize that when you declare for bankruptcy it effects your credit score so much.He consults with someone and learns that through a few steps he will be able to recover, though it may take sometime. He starts by just making sure he pays his student loans on time,getting a job,and then works his way up to taking out small personal loans to show lenders he is capable. Soon Ted's score will be great!
