Chapter 9 Credit Management

Match the following

• Debt

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

• debt load

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

• bankruptcy

• 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.

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

• repossession

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

• foreclosure

• Forced sale of property.

• lien

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

• wage garnishment

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

• collections agency

• Business that specializes in collecting past due debts.

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

• credit card debt

• mortgage debt

• auto loan debt

• student loan debt

• medical debt

• tax 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