State of Minnesota
More about
Attorney General
Lori Swanson

Minnesota Attorney General's Office

1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101

(651) 296-3353
(800) 657-3787

M - F 8 am - 5 pm

TTY:(651) 297-7206
TTY:(800) 366-4812

Chapter 8: Resources

The Credit Handbook

Did You Know?

At the end of July 1998, Americans owed $1.266 trillion in nonmortgage debt _ a number that has ballooned 66 percent since the roaring 1980s and now equals roughly $5,000 in debt for every man, woman and child in the nation.

For help and more information contact these consumer agencies:

Minnesota Attorney General's Office
Consumer Protection

445 Minnesota Street, Suite 1400
St. Paul, MN 55101
Helpline: (651) 296-3353
TTY: (651) 297-7206
TTY: 1-800-366-4812

Better Business Bureau
220 South River Ridge Circle
Burnsville, MN 55337

Minnesota Department of Commerce
85 East 7th Place, Suite 500
St. Paul, MN 55101
(651) 539-1500

Minnesota State Bar Association
600 Nicollet Mall, Suite 380
Minneapolis, MN 55101
(612) 333-1183
Toll Free (800) 882-6722
Web site:
(for consumer information from many federal government agencies)

Consumer Information Center
P.O. Box 100
Pueblo, CO 81002
Web site:
(to review and order hundreds of federal government publications)

Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue NW
Washington, DC 20580
Web site:
(for help with entities regulated by the FTC such as finance companies, stores, auto dealers, mortgage companies, and credit bureaus)

Board of Governors of the Federal Reserve System
Division of Consumer and Community Affairs
20th and C Streets, N.W., Stop 801
Washington, DC 20551
(888) 851-1920
(investigates consumer complaints against state chartered banks that are members of the System)

Comptroller of the Currency
Office of the Ombudsman
Customer Assistance Unit
1301 McKinney Street, Suite 3710
Houston, TX 77010
(for help with banks it regulates such as banks with "national" in the name or N.A. after the name)

Federal Deposit Insurance Corporation
Compliance and Consumer Affairs
550 17th Street, N.W.
Washington, DC 20429
(202) 942-3100
(for help with banks it regulates such as state chartered banks that are not members of the Federal Reserve System)

National Credit Union Administration
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
(703) 518-6330
(for help with federally chartered credit unions)

National Foundation for Consumer Credit
Web site:
(for help with money management, budgeting and debt counseling)

PO Box 105851
Atlanta, GA 30348-5851

PO Box 2104
Allen, TX 75013-9595

PO Box 2000
Chester, PA 19022
Phone: (877)322-8228


Chapter 9: Glossary

The Credit Handbook

Did You Know?

Credit card companies charge off $22 billion a year in unpaid bills _ $60 million a day.

Advance-fee loan scam _ In this scam, con artists promise loans in exchange for up-front payment.

Adversary proceeding _ A lawsuit arising or related to a bankruptcy case that is begun by filing a complaint with the court.

Annual fee _ A flat, yearly charge imposed by credit card companies, similar to a membership charge.

Annual percentage rate _ This is the measure of the cost of credit, expressed as a yearly rate.

Asset _ This is property that can be used to repay debt, such as a car or home.

Automated Teller Machine (ATM) _ Electronic terminals that consumers can use to make deposits, withdraw money, and conduct other financial transactions.

Automatic stay _ An injunction that automatically stops lawsuits, foreclosure, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

Bankruptcy _ A legal procedure in federal court for dealing with the debt problems of individuals and businesses.

Bankruptcy Code _ The formal name for title 11 of the United States Code, (11 U.S.C. 101-1330), the bankruptcy law.

Bankruptcy estate _ All legal or equitable interests of the debtor at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)

Bankruptcy petition _ A formal request for the protection of the federal bankruptcy laws. (There is an official form for bankruptcy petitions.)

Bankruptcy trustee _ An individual appointed in all Chapter 7 and 13 cases to represent the interests of the bankruptcy estate and the debtor's creditors.

Chapter 7 _ The chapter of the Bankruptcy Code that provides for liquidation (or sale) of a debtor's assets. The proceeds are distributed to creditors.

Chapter 13 _ Also called personal reorganization, this type of bankruptcy allows a debtor to keep property and pay debts over three or five years.

Claim _ A creditor's assertion of a right to payment from a debtor or the debtor's property.

Complaint _ The first document in a lawsuit that notifies the court and the defendant of the grounds claimed by the plaintiff for an award of money or other relief against the defendant.

Collateral _ Property offered to support a loan and subject to seizure if you default on the loan.

Confirmation _ Approval of a plan of reorganization by a bankruptcy judge.

Co-signer _ A person who signs a loan or credit contract with someone else, thereby assuming equal responsibility for the loan or agreement.

Credit _ The right granted by a creditor to pay in the future in order to buy or borrow in the present.

Credit Bureau _ An agency that keeps your credit record. The credit bureau creates credit reports about you.

Credit Card _ A card used over and over to borrow money or buy goods or services on credit.

Credit history _ The record of how you have used credit over time. This is usually reported by credit bureaus in the form of a credit report.

Credit Repair _ A scam in which con artists promise to "fix" your credit report.

Credit report _ Information provided by a credit bureau to someone with a legitimate business need. The report details how you have borrowed and repaid debts.

Creditor _ A person or business owed money by a debtor.

Credit scoring system _ A statistical system used to rate credit applicants according to characteristics relevant to creditworthiness.

Creditworthiness _ Past and future ability to repay debts.

Debit Card _ A plastic card that consumers use to make purchases, access cash, or make other types of electronic funds transfers.

Debtor _ Formally, a person who has filed a petition for relief under the Bankruptcy Code. Informally, anyone who owes money.

Default _ Failure to repay a loan or otherwise meet a credit obligation.

Defendant _ An individual against whom a lawsuit is filed.

Deferment _ A legal right to postpone payment on a student loan.

Discharge _ A release of a debtor from personal liability for certain dischargeable debts.

Dischargeable debt _ A debt for which the Bankruptcy Code allows the debtor's personal liability to be discharged.

Disclosures _ Information that must be given to consumers about their financial dealings.

Equity _ The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. (For example, if you have a home valued at $100,000 and you have a $60,000 mortgage on the home, you have $40,000 in equity.)

Electronic Funds Transfer Systems _ Technology used to transfer funds electronically rather than by cash or check.

Exempt _ Property that a debtor may prevent creditors from using to pay debts.

Exempt property _ Property that a debtor is allowed to keep, free from the claims of creditors who do not hold a security interest in it.

Exemption _ Property that state law or the Bankruptcy Code permits a debtor to keep from creditors.

Finance Charge _ The dollar amount you pay to use credit. This includes interest costs and all charges associated with the transaction.

Forbearance _ Asking the lender for a temporary break or reduction in student loan payments.

Garnishee _ The third party, often an employer or a bank, that holds your assets.

Garnishment _ This takes place when a creditor wins a judgment against you in court and then tries to collect it by taking money out of your bank account or paycheck.

Grace Period _ This is the number of days you have before a credit card company starts charging you interest on new purchases. Not all credit cards have grace periods. Also called a free period.

Joint account _ A credit account held by two or more people so that all can use the account and all assume responsibility to repay the debt.

Joint petition _ One bankruptcy petition filed by a husband and wife together.

Late payment _ A payment made after the due date. Additional penalties may be assessed.

Lessee _ A person who signs a lease to get temporary use of property.

Lessor _ A company that provides temporary use of property, usually in exchange for periodic payment.

Lien _ A claim against a property designed to secure payment of a debt or performance of an obligation.

Liquidation _ A sale of a debtor's property with the proceeds to be used for the benefit of creditors.

Liquidated claim _ A creditor's claim for a fixed amount of money.

Motion to lift the automatic stay _ In bank-ruptcy proceedings, a request by a creditor to allow the creditor to take action against a debtor that would otherwise be prohibited by the automatic stay.

No-asset case _ A Chapter 7 case where there are no assets available to satisfy any portion of the creditor's claims.

Nondischargeable debt _ A debt that cannot be discharged in bankruptcy.

Objection to discharge _ A trustee's or creditor's objection to a debtor receiving any discharge in bankruptcy.

Objection to discharge of a particular debt _ A creditor's objection to the debtor being released from personal liability for a particular debt.

Objection to exemptions _ A trustee's or creditor's objection to a debtor's attempt to claim certain property as exempt.

Open-end credit _ A line of credit that may be used over and over again, including credit cards, overdraft credit accounts, and home equity lines of credit.

Overdraft checking _ A line of credit that allows you to write checks or withdraw funds for more than your actual balance, with an interest charge applying to the overdraft.

Periodic rate _ The interest rate the card issuer applies to your outstanding account balance to figure the finance charge for each billing cycle.

Personal Identification Number (PIN) _ This is a numeric password that you use to activate your ATM or debit card.

Plan _ A debtor's detailed description of how the debtor proposes to pay creditors' claims over a fixed period of time.

Plaintiff _ A person that files a formal complaint with the court.

Point-of-Sale (POS) _ An instantaneous payment method by which consumers have money taken electronically from their accounts and deposited with a merchant's account.

Priority _ The Bankruptcy Code's identification and ranking of some unsecured claims. This determines the order in which certain unsecured claims that are considered priority claims are paid if there is not enough money to pay them all in full. Some examples of priority claims that may be ranked by the Bankruptcy Code are attorney's fees, accountant's fees, child support and some tax debts.

Reaffirmation agreement _ An agreement by a debtor who has gone through Chapter 7 to continue paying dischargeable debt after the bankruptcy, usually to keep the collateral or property that would otherwise be repossessed.

Replevin _ This is a court action allowing a sheriff to conduct a repossession with a court order.

Schedules _ Lists submitted by the debtor along with the petition showing the debtor's assets, liabilities and other financial information.

Secured debt _ Debt backed by a mortgage, lien, or other agreement. A debt for which the creditor has the right to pursue specific property upon default.

Security _ Property pledged to a creditor in case a consumer defaults on a loan.

Statement of intention _ A declaration made by a Chapter 7 debtor detailing how the person intends to deal with consumer debts that are secured by property of the estate.

341 meeting _ A meeting of creditors at which the debtor is questioned under oath by creditors, a trustee, examiner, or the United States trustee about the debtor's financial affairs.

Transaction fee _ Some credit card issuers charge a fee for a cash advance, a late payment or going over your credit limit.

Transfer _ Any means by which a debtor disposes of the debtor's property.

United States trustee _ An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates, and trustees, monitoring plans and disclosure statements, monitoring creditors' committees, monitoring fee applications, and other duties.

Undersecured claim _ A debt secured by property that is worth less than the amount of the debt.

Unlawful detainer action _ A lawsuit brought by a landlord to evict a tenant from rental property.

Unliquidated claim _ A claim for which a specific value has not been determined.

Unscheduled debt _ A debt that should have been listed by a debtor in the schedules filed with the court, but was not.

Unsecured claim _ A claim or debt for which a creditor holds no special assurance of payment. A debt for which credit was extended based solely upon the creditor's assessment of the debtor's future ability to pay.

Voluntary transfer _ A transfer of a debtor's property with the debtor's consent.

Top 10 Credit Tips

The Credit Handbook

  1. Remember that credit cards are just like a loan _ you have to repay what you borrow.
  2. Pay your bills on time. This will help your credit rating, and eliminate costly late fees.
  3. Pay your bills in full if possible. This will eliminate finance charges.
  4. Always pay more than the minimum payment. If you don't, it will take forever to get caught up on your bills, and you will pay a lot of money in finance charges.
  5. Reduce your reliance on credit. When you do use credit, keep track of how much you spend. Remember that impulse purchases add up fast.
  6. Save your receipts. Then, you can compare your receipts to your monthly bill, and promptly report any problems.
  7. Never lend your credit card or debit card to anyone. Don't share your PIN numbers either. You could just be setting yourself up for fraud.
  8. Set a budget and stick to it so you don't end up owing more than you can afford. This could damage your credit rating. A negative credit rating can make it harder to finance a car, rent an apartment, buy a house, or even get a job.
  9. Once a year check out your credit report. Make sure it accurately reflects your financial situation, and check for potential fraud.
  10. If you are overwhelmed by credit debt, seek help. Don't delay. Facing up to your financial problems will help you begin solving them.