Personal Finance Ch. 10

Bankruptcy will not affect certain types of income a debtor may have, such as Social Security or alimony payments.

true

Creditors may ask debtors to agree to pay their debts, even after bankruptcy has discharged them.

true

Generally, accounts with the highest interest rates should be your first priority in a credit payment plan.

true

In bankruptcy, most of a debtor's assets will probably be used to repay unsecured debt.

true

Information on credit scams, as well as credit advice, is available on the Federal Trade Commission (FTC) website.

true

To qualify for a debt consolidation loan, you must have some type of collateral that secures the payment of the debt.

true

Voluntary bankruptcy, the most common type of bankruptcy, is initiated by the debtor.

true

With a debt management plan, a consumer makes a single monthly payment to a credit counseling organization that distributes funds to creditors.

true

Jack and Diane are setting up a credit payment plan. They have disposable income of $250/month with which to pay credit card bills. The minimum monthly payments for their bills are as follows:Credit card 1: $50 Credit card 2: $60 Credit card 3: $20 Credit card 4: $15 Suppose credit card 1 is the highest priority. What should their monthly payment be on this card?

155

Take-home pay is about 70 percent of gross pay. If your annual salary is $40,000, what is your annual take-home pay?

28,000

Kimberlee's take-home pay is 70 percent of her gross pay. Her annual salary is $60,000. Use the 20/10 Rule to determine her maximum monthly credit payments.

350

Ahmed's take-home pay is 75 percent of his gross pay. His annual salary is $50,000. Use the 20/10 Rule to determine his maximum borrowing.

7,500

Which of the following is a reorganization form of bankruptcy for businesses?

Chapter 11 bankruptcy

You should beware of any credit repair company that

a. requires you to pay a fee before they act on your behalf. b. advises you to create a new credit identity. c. promises to remove negative information from your credit report. D. ALL OF THE ABOVE ARE CORRECT

_______is a legal process that relieves debtors of the responsibility of paying their debts or protects them while they try to repay.

bankruptcy

To qualify for a consolidation loan, you must have some type of_______ that secures the payment of the debt.

collateral

Credit _________is a service to help consumers manage their debt load and credit more wisely.

counseling

The process of reestablishing a good credit rating is called

credit repair

Assets considered necessary for survival are called _______property.

exempted

Which of the following would NOT be considered a disadvantage of bankruptcy?

exempted assets are retained

A person planning to file for bankruptcy must receive credit counseling within two years before filing the petition.

false

Chapter 13 bankruptcy is often referred to as straight bankruptcy.

false

Credit problems usually happen quite suddenly.

false

It is vital that you follow the 20/10 Rule when you take out a mortgage loan.

false

The majority of funding for credit counseling organizations comes from the federal government.

false

Exercising good credit management means

following an individual plan for using credit wisely.

A legal process where property used as collateral is sold to pay off a debt is called

foreclosure

When you have insufficient income and assets to pay your debts, you are said to be

insolvent

Which of the following is the main advantage of Chapter 7 bankruptcy?

it provides immediate debt relief

A_______loan is a cash advance from your next payroll check.

payday

The agreement to pay debts that have been legally discharged is called __________

reaffirmation

With a debt_________program, a company you hire will call your creditors on your behalf and convince them to reduce the amounts you owe.

settlement

Paolo is paying off a credit card with a current balance of $450. The interest rate on the card is 23%. The minimum monthly payment is $25, but he plans to make monthly payments of $45. He will not be using the card to accumulate further debt. Approximately how many months will it take to pay off the balance?

11

With this type of program, a company negotiates with your creditors on your behalf to reduce the amount of debt you owe.

debt settlement

________debts are debts erased by the court during bankruptcy proceedings.

discharged

Debt settlement programs are typically free and can reduce your debt by as much as 90 percent.

false

The use of gold and platinum credit cards almost always improves your credit rating, as it indicates that you have a high level of creditworthiness.

false

This occurs when creditors file a petition with a court asking the court to declare you bankrupt.

involuntary bankruptcy

All of the following are danger signs that you are overextending your credit except

your credit score is rising.