Chapter 15 Quiz MGMT 350

Chapter 13 of the Bankruptcy Act provides the opportunity to seek the protection of the court to arrange a debt adjustment plan for _____. A.individual debtors B.family farm businesses C.general partnerships D.limited partnerships

A

Which of the following is the federal agency charged with protecting consumers from "unreasonable risks of injury and death" from products such as toys, lawn mowers, washing machines, bicycles, fireworks, pools, portable heaters, and household chemicals? A.The Consumer Product Safety Commission B.The Consumer Goods Commerce Agency C.The Consumer Financial Protection Bureau D.The Federal Trade Commission

A

Which of the following is true of procedural unconscionability in the context of contracts? A.It usually arises from lack of knowledge or a lack of choice. B.It is a situation where the clause is so clearly unfair as to "shock the conscience of the court." C.It is a situation in which both the parties of a contract have equal bargaining power. D.It occurs when one party in a contract is spectacularly clever and the other is not.

A Procedural unconscionability usually arises from lack of knowledge (e.g., fine print) or lack of choice (e.g., urgent circumstances). Mere foolishness or want of knowledge does not constitute grounds for unconscionability.

In the context of lemon laws, a new vehicle would be considered a lemon if it has been A.damaged due to negligence on the part of a consumer. B.returned to the manufacturer or dealer three or four times to repair the same defect. C.sold by a dealer who is not registered in the state where the vehicle was purchased. D.stolen and resold to a new buyer.

B

Which of the following credit reporting protections is offered by the federal Fair Credit Reporting Act? A.In all cases, negative information more than seven years old must be reported in a consumer's credit report. B.All inaccurate information must be corrected or removed from a consumer's credit file, usually within 30 days. C.Consumers cannot sue a credit reporting agency or a bank for damages even if their rights under the act have been violated. D.Anyone using information from a credit reporting agency to deny a consumer credit cannot reveal the source of information to the consumer.

B

Under the Fair Credit Billing Act (FCBA) where a "reasonable investigation" determines the credit card statement was correct and the consumer continues to contest it, which of the following is false? A.The consumer must be told who received the credit report which contains the delinquency information. B.The wronged consumers do not have the right to sue for damages. C.The creditor must give the consumer 10 days to pay the disputed amount before beginning collection procedures. D.The creditor may report the bill to the credit bureau as being delinquent.

B Where a "reasonable investigation" determines the bill was correct, but the consumer continues to contest it, the consumer may refuse to pay, and the creditor will then be free to commence collection procedures after giving the consumer 10 days to pay the disputed amount. If the bill is reported to a credit bureau as delinquent, that report also must indicate the consumer's belief that the money is not owed, and the consumer must be told who received the report. Wronged consumers may complain to the CFPB and sue for damages.

The federal Fair Debt Collection Practices Act (FDCPA) is designed to shield debtors from which of the following practices? A.Erroneous credit reports against a consumer B.Civil lawsuits by creditors in an effort to collect a consumer debt C.Unfair debt collection tactics by some attorneys D.Unfair delinquency reports by creditors against consumers

C

Which of the following Acts was passed mostly as a response to anger over discriminating treatment of women in the financial marketplace? A.The Fair Debt Collection Practices Act B.The Social Security Act C.The Equal Credit Opportunity Act D.The Mortgage Finance Act

C

All but which of the following is true of credit reporting protections provided to consumers under the federal Fair Credit Reporting Act (FCRA)? A.You can sue for damages if your rights under the act have been violated. B.Lenders are required to provide a consumer's credit score as well as any factors that affected that score if the lender took any adverse action based on that score. C.You must provide written consent before a CRA can provide information to your employer or prospective employer. D.Negative information more than three years old must be removed from a consumer's credit file.

D

The _____, authorized by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, is charged with writing and enforcing rules covering consumer financial products and services including mortgages, credit cards, payday loans, loan servicing, check cashing, debt collection, and others. A.Consumer Credit Status Agency B.Consumer Monetary Safety Bureau C.Consumer Product Safety Commission D.Consumer Financial Protection Bureau

D

Which of the following standards determines the Truth in Lending Act's applicability? The debtor must be an organization. The amount secured as credit must be above $25,000. The purpose of the credit must not be personal. The credit must be subject to a finance charge.

D

In the context of the Bankruptcy Act, a _____ can be voluntarily filed in federal court by a debtor, or creditors can seek an involuntary bankruptcy judgment. A.Chapter 11 reorganization lawsuit B.Chapter 15 class action lawsuit C.Chapter 13 adjustment of debts petition D.Chapter 7 liquidation petition

D A Chapter 7 liquidation petition can be voluntarily filed in federal court by a debtor, or creditors can seek an involuntary bankruptcy judgment. A Chapter 7 liquidation is commonly called a "straight" bankruptcy.

Which of the following standards determines the Truth in Lending Act's applicability? A.The debtor must be an organization. B.The amount secured as credit must be above $25,000. C.The purpose of the credit must not be personal. D.The credit must be subject to a finance charge.

D One of the standards that determine the Truth in Lending Act's applicability is that the credit must be subject to a finance charge or payable in more than four installments. The Truth in Lending Act is designed primarily to assure full disclosure of credit terms.

Which of the following debt collection practices would be legal under the federal Fair Debt Collection Practices Act? A.Using physical force on a debtor to recover debt B.Making repeated phone calls to a debtor with the intent to harass C.Contacting a debtor in an unfair, abusive, or deceptive manner D.Contacting third parties to locate a debtor

D The act forbids contact with third parties other than for the purpose of locating the debtor. This provision is an attempt to prevent harm to the debtor's reputation.

Chapter 11 of the Bankruptcy Act allows creditors to submit a provisional debt reorganization plan while the debtor, under the supervision of the court, works out a financial reorganization plan and continues to pay creditors. T/F

False Bankruptcy is an adjudication relieving a debtor of all or part of his/her/its liabilities. Any person, partnership, or corporation may seek debtor relief. Reorganization (Chapter 11 of the Bankruptcy Act), used by both individuals and businesses, keeps creditors from a debtor's assets while the debtor, under the supervision of the court, works out a financial reorganization plan and continues to pay creditors.

Based on Sue's credit history, Honest Money Bank denied her a loan. In this case, the bank need not notify Sue and tell her where it secured her credit information. T/F

False Honest Money Bank must notify Sue and tell her where it secured her credit information. Anyone using information from a credit reporting agency (CRA), such as Equifax, to take "adverse action" against consumers (denying them credit, a job, insurance) must notify them and tell them where it secured the information.

The heart of the Truth in Lending Act (TILA) is the required conspicuous disclosure of only the number of payments to be made annually. T/F

False The Truth in Lending Act (TILA) and Regulation Z interpreting the act were designed both to protect consumers from credit abuse and to assist them in becoming more informed about credit terms and costs, so they could engage in comparison shopping. The heart of the TILA is the required conspicuous disclosure of the amount financed, the finance charge (the actual dollar sum to be paid for credit), the annual percentage rate (APR-the total cost of the credit expressed at an annual rate), and the number of payments.

A contract may be unconscionable merely because one party is spectacularly clever and the other is not. T/F

False The doctrine of unconscionability emerged from court decisions where jurists concluded that some contracts are so unfair or oppressive as to demand intervention. Mere foolishness or want of knowledge does not constitute grounds for unconscionability, nor is a contract unconscionable and hence unenforceable merely because one party is spectacularly clever and the other is not.

Chapter 13 of the Bankruptcy Act permits only voluntary bankruptcies and is restricted to those with steady incomes and somewhat limited debts. T/F

True Under Chapter 13, individuals (not partnerships or corporations) can seek the protection of the court to arrange a debt adjustment plan. Chapter 13 permits only voluntary bankruptcies and is restricted to those with steady incomes and somewhat limited debts.

Under the Fair Credit Billing Act, within two billing cycles but not more than 90 days, the creditor must issue a response to a consumer's complaint either by correcting the account or by forwarding a written statement to the consumer explaining why the bill is accurate. T/F

True Under the Act, a cardholder who receives an erroneous bill must complain in writing to the creditor within 60 days of the time the bill was mailed. The creditor must acknowledge receipt of the complaint within 30 days. Next, within two billing cycles but not more than 90 days, the creditor must issue a response either by correcting the account or by forwarding a written statement to the consumer explaining why the bill is accurate.

In cases of severe and imminent hazards, the CPSC has the power to enforce its decisions by seeking a court order to remove a product from the market. T/F

True In cases of severe and imminent hazards, the Consumer Product Safety Commission (CPSC) has the power to enforce its decisions by seeking a court order to remove a product from the market. Only a few products, such as drop-side cribs, have actually been banned from the market by the Commission.