Question

1. Juan Martinez was reviewing his recent bank credit card account statement when he found two charges involving a hotel room rental and a meal, purchased on the same day in a city than Juan knew he had not been to. Their charges totaled $229.99 out of Juan’s $529.99 balance for the month.

a. What payment should Juan make on the account?

b. How should he notify the credit card issuer about the unauthorized use?

c. Once the matter is resolved, what should Juan do to ensure that his credit history is not negatively affected by this error?

2. Explain the conditions that might make bankruptcy necessary. How might you use the services of a credit counselor?

Answer 1

Answer. 1 a

Payment Jaun Should Make = $529.99 - 229.99 i.e $ 300

Answer. 1 b

Jaun can notify Issuer about Unauthorized use either by -

• Emailing issuer about unauthorized use and giving therein details like amount, date/time, place and other such detail as may be required.
• Calling issuer directly or through authorized representative.
• Directly approaching card issuer office to communicate the matter.

Answer. 1 c

Once matter is resolved, Juan can take following measures to ensure credit history is not negatively affected -

• Instruct the issuer to issue fresh statement after incorporating fresh particulars.
• Changing password of credit card to prevent future unauthorized use.
• He can also require issuer to issue new credit card if he feels necessary.

Answer. 2

When people or organization is unable to meet its financial obligation (i.e make payment to its creditors or bank), it can file for bankruptcy. It is legal process for final settlement of debt or seeking some relief by way or renegotiation of debt.

Following condition make it necessary

• Default in repayment to creditors.
• Non-repayment of loan or other amount outstanding to bank.
• Obligations and Liabilities to pay exceeds asset at company's disposal
• Slump in business which might create imbalance in short term, thereby requiring restructuring.
• Death of individual or otherwise dissolution/closure of Business.

We can use services of credit counsellor for following purposes –

• To renegotiate payment obligation with bank or creditors
• To have a professional manage financial matters during bankruptcy exercise.
• He can prepare plans, budgets, etc. for judicious use of funds in future for continued existence of business
• To suggest any matter of financial prudence as may be required