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Chapter 9- Credit Management

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 

Of the following, which is not a result of a credit problem?
A.
lien
B.
garnishment
C.
foreclosure
D.
zero balance
 

 2. 

Which law limits how credit card companies can charge consumers?
A.
Dodd-Frank Wall Street Reform and Consumer Protection Act
B.
Credit Card Accountability and Disclosure Act of 2009
C.
Fair Credit Billing Act
D.
Electronic Funds Transfer Act
 

 3. 

According to financial experts, how should credit cards be used?
A.
To buy things you wouldn’t normally buy with your own money.
B.
As often as possible, as long as you pay it off monthly.
C.
Primarily for emergencies.
D.
Primarily for everyday purchases.
 

 4. 

Which of the following is not a negative aspect of using credit?
A.
opportunity to buy expensive items
B.
reduction of future spendable income
C.
overspending
D.
expense
 

 5. 

Which law requires creditors to tell consumers what credit will cost them before they use it?
A.
Credit CARD Act
B.
Truth in Lending Act
C.
Fair Credit Reporting Act
D.
Fair Credit Billing Act
 

 6. 

Which law protects debtors from being forced to pay for goods and services when they have a legitimate dispute with the seller of those goods and services?
A.
Dodd-Frank Wall Street Reform and Consumer Protection Act
B.
Fair Credit Billing Act
C.
Equal Credit Opportunity Act
D.
Preservation of Consumers’ Claims and Defenses Ruling
 

 7. 

Which of the following actions helps protect against credit fraud?
A.
Carry all cards with you at all times.
B.
Allow others to use or carry your card.
C.
Destroy cards that have expired.
D.
Throw credit statements in the garbage.
 

 8. 

What did the Dodd-Frank Wall Street Reform and Consumer Protection Act do?
A.
Increased regulation of the banking and financial services industry.
B.
Prohibited companies from mailing offers to customers under the age of 21.
C.
Made filing for Chapter 7 bankruptcy more difficult.
D.
Gave consumers the right to refuse to pay a creditor if there is a dispute with a seller.
 

 9. 

Which of the following is true regarding a debt management plan (DMP)?
A.
You will be excused from all debt over $15,000.
B.
Your creditors may agree to lower your interest rates or waive certain fees.
C.
Debtors should pay high fees for the service.
D.
A DMP does not require monthly payments.
 

 10. 

Which law prohibits credit card companies from offering free T-shirts or other incentives to sign up at university-sponsored events?
A.
Credit Card Accountability and Disclosure Act
B.
Dodd-Frank Wall Street Reform and Consumer Protection Act
C.
Equal Credit Opportunity Act
D.
Fair Credit Recruitment Act
 

 11. 

Which of the following solutions to credit problems should be done first?
A.
declare bankruptcy
B.
allow creditors to garnish wages
C.
notify creditors
D.
allow foreclosure
 

 12. 

Which of the following always results in lost ownership of property?
A.
garnishment
B.
repossession
C.
bankruptcy
D.
debt collection
 

 13. 

What law requires debtors to get counseling before filing for bankruptcy?
A.
Preservation of Consumers’ Claims and Defenses Ruling
B.
Credit Card Accountability and Disclosure Act of 2009
C.
Fair Debt Collection Practices Act
D.
Bankruptcy Abuse Prevention and Consumer Protection Act
 

 14. 

Under the Fair Credit Reporting Act, a consumer has the right to _____.
A.
request forgiveness for debts older than twelve years
B.
receive the name and address of the reporting agency that sent the report
C.
take legal action for lost time during the denial
D.
bypass a credit check at the cost of a higher interest rate
 

 15. 

Which governmental agency was created as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act?
A.
Consumer Financial Protection Bureau
B.
Wall Street Reform Organization
C.
Bureau for Financial Monitoring
D.
Coalition of Consumers’ Defense
 

Matching
 
 
Match the following terms with their definitions.
A.
bankruptcy
B.
Chapter 7 bankruptcy
C.
Chapter 13 bankruptcy
D.
collection agency
E.
debt
F.
financial personality
G.
foreclosure
H.
garnishment
I.
lien
J.
repossession
 

 16. 

Permits debtors with regular incomes to pay all of a portion of their debts under the protection and supervision of the court.
 

 17. 

Legal procedure requiring a portion of the debtor’s pay to be set aside by the person’s employer to pay creditors.
 

 18. 

Eliminates most types of debt and stays on a person’s credit report for up to ten years.
 

 19. 

Legal state in which the courts excuse a debtor from paying some or all debt.
 

 20. 

Something that is owed that will decrease future earnings.
 

 21. 

Taking of collateral when a borrower fails to repay a loan.
 

 22. 

Legal claim on a borrower’s property by a creditor who is owed money.
 

 23. 

Combination of an individual’s attitudes about money and spending patterns.
 

 24. 

Business that specializes in debt collection.
 

 25. 

Forced sale of property.
 

Completion
Complete each statement.
 

 26. 

In _________________________, the lender sells the property under court supervision.
 

 

 27. 

An organization that provides debt and financial management advice and services to people with debt problems at little or no cost is called a _________________________.
 

 

 28. 

A secure website is denoted by _________________________ in the URL.
 

 

 29. 

The _________________________ of the Department of Justice maintains a list of credit counseling agencies approved for pre-bankruptcy counseling.
 

 

 30. 

A credit counseling service may recommend that you enroll in a(n) _________________________.
 

 

Short Answer
 

 31. 

Describe the 20/10 rule?
 

 32. 

What is the difference between a lien and repossession?
 



 
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