Chapter 07 Quiz
Which federal law (passed in 1969) requires creditors to state the cost of borrowing as a dollar amount so that consumers would know exactly what the credit charges were and thus could compare credit costs and shop for credit?
Truth in Lending Act
A person filing for relief under the bankruptcy code is called:
a debtor.
In a Chapter 7 bankruptcy, a debtor:
all of the answers are correct. [must provide a list of all creditors and the amount and nature of their claims. must provide a list of all the debtor's property. must provide a detailed list of the debtor's monthly expenses. must provide the source, amount, and frequency of the debtor's income.]
Excessive indebtedness can result in:
all of the choices are possible results. [heavy drinking. a neglect of children. marital difficulties. drug abuse.]
One of the disadvantages of borrowing on financial assets (collateral) is that:
the assets are tied up until you have repaid the loan.
Spike goes to a payday loan company to borrow $100. He gives them a check for $115. 14 days later he returns & redeems the check for $115 cash. What APR is he paying?
391%
By evaluating your credit options, you can:
All of these choices are correct. [reduce your finance charges. reconsider your decision to borrow money. discover a less expensive type of loan. find a lender that charges a lower rate.]
Financial and other institutions, the sources of credit:
All of these choices are correct.[come in all shapes and sizes. play an important role in our economy. offer a broad range of financial services.]
Which bankruptcy allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?
Chapter 13
Which of the following is correct about the "Rule of 78s?
It favors lenders and dictates that you pay more interest at the beginning of a loan.
What is (are) the danger signal(s) of potential debt problems?
all of the choices are the danger signals of potential debt problems [paying only the minimum balance on credit cards each month. missing payments or paying late. using savings to pay routine bills. depending on overtime or bonuses to meet normal expenses.]
Most people who are in debt over their heads are:
basically honest people who want to clear up their indebtedness.
If you cannot pay your bills on time (due to a sudden illness or loss of your job), you should:
contact your creditors at once and try to work out a modified payment plan with them.
Which type of credit insurance repays your loan in the event of a loss of income due to illness or injury?
credit accident and health insurance
Which of the following financing methods provides a float period?
credit card
The most commonly purchased type of credit insurance is:
credit life insurance.
According to the Consumer Credit Counseling Service, the most common reason that consumers don't pay their bills on time is:
excessive use of credit
Of the following, which is generally the most expensive lender?
finance companies.
If you default on your automobile loan:
no advance notice is required before repossession.
Which is often the source of the least expensive loan?
parents or family members