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Note to the teacher:
As consumers, your students must be able to negotiate the often confusing and rigid rules for credit and bill paying. This case scenario presents a conflict that, together with your students, can be solved. Teachers often use their students’ stories or other codes such as pictures or articles to create class material that poses problems and that prompts problem solving. Pay attention to the bills your students complain about or ask your students if they have ever received an unexpected bill; these too are methods for creating meaningful prompts for your students to safely discuss credit and debt issues.

 

Tools for Teachers

Activity: I Can’t Pay This Bill—What Should I Do?


Story

Just recently Jordan and Jan’s daughter crashed on her bicycle. They had to rush her to the hospital, where she ended up getting x-rays and having a cast put on her arm. They were so concerned about their daughter that they didn’t even stop to think about not having health insurance. Two months went by. They had forgotten about all of the papers they signed when they were at the hospital. Then, out of the blue, a bill came from the hospital for $1,000. If they didn’t pay, it would go on their credit report and create problems for them later when they want to buy a house or get any other type of loan. They had only $300 in their savings. Together they sat down and brainstormed about ways to come up with some extra money. This is the list they came up with:

  • Have a garage sale. All three of them have some things they can get rid of. Jan says they can sell the two old bikes in the garage, the old TV in their bedroom, and a number of appliances that never get used. They would only have to pay a small fee to advertise it in their local newspaper and make a few fliers to post around their neighborhood.

  • Take a few things to Mike’s Pawn Shop down the street. They can bring in their new big-screen TV and the antique watch Jordan inherited from her grandfather and get a loan for 50 percent of the value of each of them. Between the two products they should be able to get about $800. The only problem is the pawnbroker will charge them 20 percent interest, and if they don’t repay the loan in three months they will lose their TV and the watch.

  • Borrow money from family or friends. This is definitely one of the most inexpensive options, but it’s sometimes awkward or can put a strain on relationships.

  • Negotiate a payment plan with the hospital. Call the accounting department of the hospital and explain the situation. Offer to pay a set amount of money each month (maybe $50) until the loan is paid off and in return not be reported to a collection agency.

  • Take out a payday loan25 from the Fast Cash store down the street. Both Jordan and Jan make about $600 every pay period (every two weeks). So, if they take out a payday loan they will have $1,200 immediately. Of course they will pay a service charge of 15 percent and they will still need to pay back the $1,200 as soon as they get paid. If they can’t repay the $1,200 right away they will pay an additional 15 percent each pay period on the original $1,200 loan.

Follow-up Questions

1. What are the pros and cons of each option?

  Pros Cons
Garage
sale
   
Pawn
shop
   
Friends and family    
Hospital payment plan    
Payday
loan
   

2. What do you think Jordan and Jan should do?

 

 

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