Chapter 9 Credit Management

Match the following

• Debt

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

• credit fraud

• Something that is owed that will decrease future earnings.

• debt load

• The amount of debt a consumer has at a given point in time.

• bankruptcy

• The fraudulent use of someone else’s credit information.

Of the following, which is not a result of a credit problem?

• lien

• garnishment

• foreclosure

• zero balance

Which of the following is positive aspect of using credit?

• opportunity to buy expensive items, and pay for them later

• reduction of future spendable income

• easy to overspend

• can be expensive because of interest and fees

Which of the following solutions to credit problems should be done first?

• declare bankruptcy

• allow creditors to garnish wages

• notify creditors of your situation

• allow foreclosure

If you find yourself with a lot of debt, which of these is a RESPONSIBLE strategy for paying off your debts?

• Pay only your secured debt so you don't lose your house or car, then worry about your unsecured debt later on

• Pay your unsecured debt first, then worry about your secured debt later on because that debt is backed up by your house or car

• Make the minimum payment on all debts, cut out all unnecessary spending from your budget, and put all the extra money toward paying down debt

• File for bankruptcy so you can start anew with a clean slate

Match the following

• foreclosure

• Business that specializes in collecting past due debts.

• repossession

• Forced sale of property.

• wage garnishment

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

• collections agency

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

• lien

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

There are different consequences for different types of debt.

Sort the following debts into the correct category.

Groups:

(a) Seizure of Property

,

(b) Wage Garnishment

,

(c) Debt sent to Collections

• mortgage debt

• student loan debt

• medical debt

• tax debt

• credit card debt

• auto loan debt

A law that protects consumers against unfair methods of collecting debts.

• Equal Credit Opportunity Act

• Fair Credit Reporting Act

• Fair Debt Collection Practices Act

• Truth in Lending Act

The law that prohibits creditors from discrimination against an applicant on the basis of race, color, religion, origin, gender, martial status is called.....

• Equal Credit Opportunity Act

• Credit Card Accountability and Disclosure Act of 2009

• Dodd-Frank Wall Street Reform and Consumer Protection Act

• Electronic Funds Transfer Act

Which law requires creditors to tell consumers what credit will cost them before they use it?

• Credit CARD Act

• Truth in Lending Act

• Fair Credit Reporting Act

• Consumer Credit Report