Consequences of Poor Financial Management - ASAP

Question 1

What are the consequences of poor financial management?

Answer 1

• The accumulation of excessive debt
• Bankruptcy
• Impact on wellbeing: can result in a person feeling upset and stressed

Question 2

What is excessive debt?

Answer 2

Excessive debt occurs when you borrow or spend more than you can comfortably repay after paying for your basic needs.

Question 3

Bankruptcy Definition:

Answer 3

Bankruptcy is a legal process through which people who cannot repay debts to creditors can seek relief from some or all of their debts

Question 4

What main consequences come from excessive debt? (PSL)

Answer 4

Poor management of finances can result in a number of unwelcome personal, social and legal consequences

Question 5

Personal consequences: (BIFSPRAB)

Answer 5

• Being unable to satisfy one’s own needs or wants (eg food or shelter)
• Inability to maintain lifestyle choices (eg entertainment costs or ongoing costs of a smart phone)
• Feelings of self-doubt or regret
• Stress at home, school or work
• Physical, mental and emotional illness
• Repossession of personal property (eg car or home)
• Accumulation of excessive debt (money owing)
• Bankruptcy

Question 6

Social consequences (RIS)

Answer 6

• Relationship tensions or breakdown (eg between friends, family or co-workers)
• Inability to holiday, travel or invest with others
• Social isolation through an inability to afford the cost of social activities (eg going out to dinner or gym membership)

Question 7

Legal Consequences (BGW)

Answer 7

• Consequences of excessive debt in this area may include:
• Bankruptcy
• Garnishee of your wages or bank accounts
• Writ of execution

Question 8

What is Garnishee of your wages or bank accounts?

Answer 8

a court order that allows an employer or bank representative to take money from your wages or accounts and then give it to your creditors (the people that you owe money to)

Question 9

What is Writ of execution?

Answer 9

a court order that allows a court official (the sheriff) to seize and then sell some of your property. This is then used to pay your debts

Question 10

What is Bankruptcy?

Answer 10

where a person gives up control of their assets (items of value such as a car) and finances, either voluntarily or by a court order. In exchange, the bankrupt person is given protection from their creditors. You are not bankrupt until the Federal Court of Australia issues a sequestration order. Only people can become bankrupt. A company is instead liquidated; this is when all its assets are sold in order to pay its debts

Question 11

According to the ACCC, at June 2017, how much percent of consumers were overwhelmed by their credit card debt load?

Answer 11

18.5%, with outstanding balances totally. $45 billion. This represents one in six Australians (1.9 million people) struggling to repay debt. Young people were identified as a group of particular concern.

Question 12

The THREE consequences of financial management:

Answer 12

• Personal Consequences
• Legal Consequences
• Social Consequences

Question 13

people who can’t manage their money can: (consequences of this)

Answer 13

• End up losing their goods
• Get sued
• Declare bankruptcy

Question 14

Debt Definition:

Answer 14

is the money owed

Question 15

Debtor Definition:

Answer 15

a person who owes money

Question 16

Creditor Definition:

Answer 16

a person who is owed money

Question 17

Repossession Definition:

Answer 17

Reposition means to take back goods bought on credit if repayments have not been made.

Question 18

When people are out of a job or are lacking in financial support, there are TWO main social issues that arise.

Question 19

Garnishee Definition:

Answer 19

A court order that allows an employer or bank representative to take money from your wages or accounts and give it to your creditors

Question 20

Writ of Execution Definition:

Answer 20

A court order that allows a court official (the sheriff) to seize and then sell some of your property. This is then used to pay your debts

Question 21

Default Notice Definition:

Answer 21

A notice informing you of yuor overdue payment and requesting payment of that amount

Question 22

Hardship Variation Definition:

Answer 22

A change to the terms of the loan, based on financial hardship.