Debt fouls: How the rules of soccer can help you prevent that

The International Federation of Association Football, better known as FIFA has laid down some stringent Laws of the game - soccer. These laws form the basic tenets of its so-called "Constitution". Non-compliance with the rules are either a foul or a misconduct.

Speaking about fouls, do you know what is it, actually?

It is a foul (or an offence) only:

  1. when it is committed by a player
  2. when it is committed on the field of play
  3. when the ball is in the field

Similarly, you and me, like the soccer players commit a series of foul when we play games with our lives, especially debt obligations. Basically, there are laws that you and me have to abide by when dealing with financial issues like credit card debt, payday loans, medical debt, outstanding utility bills, car loans, student loans, home loans and so on and so forth. If you don't follow them, then it’ll be considered a foul.

Now, lets see how we do the same just like the soccer players.

Popular debt fouls

1. Handling the ball deliberately, except by the goalkeeper within the penalty area.

What you might be doing: Here the player is you and your personal credit card - the ball, whereas, the field is your financial obligations. So, how does the foul materialize here then? It goes like this (and you’ll agree with me), you make business loan repayments using your personal credit card.

The consequence - A direct free kick: This debt foul will make determining how your business is performing, a difficult task to accomplish due to lack of proper accounting statements as well as other financial documents. Moreover, such a foul can skyrocket the Annual Percentage Rates (APRs) on your personal credit cards without much prior notice. This is because credit card issuers will find out if you use your personal credit card for business, commercial or agricultural purpose and exempt themselves from the ambit of the Credit CARD Act that prevented them from suddenly increasing interest rates on their cards and allocating unfair payments and other bank-benefiting terms and conditions on the same.

2. Tackling opponents to possess the ball without touching it.

What you might be doing: In this case, what you may probably be doing is spend your paycheck to its entirety without contributing even a bit of it towards your savings or any other retirement accounts like 401(k) or Individual Retirement Account (IRA).

The consequence - A direct free kick: Having little or no savings or retirement funds at all will keep you vulnerable to various debt penalties. This may happen in the guise of a sudden car breakdown in the middle of a road or an accident which may leave you high and dry for want of money to pay for the car’s repair or to clear out the hospital’s bills.

Hence, you’ll have to borrow and that too at a high rate of interest from the lenders or charge your credit card for that matter. Such loans will add to your financial burden and may eat up a major portion of your paycheck when making the repayments. This in turn may keep you entangled into vicious cycle of debt. Or else, you may end up breaking your bank.

3. Ignoring a second caution (two yellow cards) in the same match.

What you might be doing: Like the soccer players, you may ignore repeated signs of warning (here calls or letters) from the debt collectors or summons by the court (the referee) for defaulting on the same loans multiple times.

The consequence - A Red card (send off): This is one of the most gruesome acts of irresponsibility and ignorance. As a result, your debt collectors may file a lawsuit against you in the court and even win a judgement benefiting out of your negligence. The court, thus, can permit them to have your wages garnished, slap liens on your assets and prevent you from enjoying various government-funded social welfare programs. Alternatively, ignoring court summons will show you in poor light in the eyes of the judge. Besides, honoring your creditor with a judgment in his/her favor, the judge may even put a black mark on your credit rating.

Apart from that, failing to respond to a court summon will be counted as contempt of court. So, if you can’t come up with a proper justification as to why you didn’t show up in court as scheduled, the court may take whatever action it deems fit against you.

4. Darting towards an opponent in a careless and reckless manner, using excessive power.

What you might be doing: As far as your financial life is concerned, then like you there are hundreds and thousands of them who could be guilty of using their financial resources like income, savings, assets (home, jewelleries, investment properties etc), retirement accounts like IRA or 401(k), insurance policies and so on, in a reckless and careless manner. In other words, you could be using your financial resources to live a flashy life without caring to plan for your retirement or to follow a monthly budget.

The consequence - A free kick: This is most dangerous foul of them all, as you could be injuring your life and that of your dependents beyond repair, financially though. If you are not following a budget, then you might just end up spending more than what you make and get deeper into debt. For instance, if you try to keep-up-with-the-joneses, then it’ll force you to spend more than what your budget can accommodate.

While doing so, you may fail to heed the signs of an impending trouble that could potentially throw your financial stability off. For example, your boiler could break or that your house needs immediate renovation, so if you don’t have a contingency plan (an emergency fund), then that too will blow your budget or force you to charge your credit card to resolve the crisis, thereby further putting you into debt.

Additionally, having no retirement plans might jeopardize your dependents’ future as they won’t have a solid financial support to pay for their basic living expenses in your absence.

Special case study: Doping - An off-field offence

Doping refers to substance abuse used with a motive to improve performance. FIFA works towards this issue through educating its players and creating awareness about various preventive measures.The most prominent example here would be Diego Maradona’s cocaine usage in 1991.

A player convicted of doping can face from a formal warning to 2-year ban if its first time and lifetime ban on repeat offence.

The same goes with you, if you forge your financial documents or resort to unfair means when filing for bankruptcy protection to improve your chances of having your debts discharged, then the bankruptcy court will drop your case and a lawsuit will be filed by the trustee against you which is known as adversary proceeding.

These debt fouls are just a reminder that you should not ignore the tell-tale signs of an upcoming financial disaster - something that can be prevented with timely, well-planned action. So, during this soccer season, enjoy your game to the fullest while you manage your debt with care and diligence.

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