Personal Finance Chapter 10 Review
With this type of program, a company negotiates with your creditors on your behalf to reduce the amount of debt you owe. a. debt consolidation b. debt management c. debt settlement d. debt counseling
Debt settlement
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
Debt settlement programs are typically free and can reduce your debt by as much as 90 percent.
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
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
Exercising good credit management means a. always getting someone to cosign your loans. b. following an individual plan for using credit wisely. c. never using credit under any circumstances. d. using credit for at least 80 percent of your purchases
Following an individual plan for using credit wisely
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
All of the following are danger signs that you are overextending your credit except a. your credit score is rising. b. your credit cards are all near the limit. c. you skip some payments in order to make other payments. d. you often pay one credit card by using another credit card.
Your credit score is rising
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 true
all of the above are true
A legal process where property used as collateral is sold to pay off a debt is called a. garnishment. b. foreclosure. c. defaulting. d. bankruptcy.
foreclosure
When you have insufficient income and assets to pay your debts, you are said to be a. indigent. b. insolvent. c. liquidated. d. unsecured.
insolvent
This occurs when creditors file a petition with a court asking the court to declare you bankrupt. a. foreclosure b. involuntary bankruptcy c. voluntary bankruptcy d. repossession
involuntary bankruptcy