Credit Part III

In regards to the 20/10 Rule, you should keep your borrowing total below ____ of your annual after-tax income.

What is excluded from the 20% portion of the 20/10 rule?

• Student loans

• Mortgage Debt

• Car Loans

• Credit Cards

In regards to the 20/10 rule, your goal is to keep your payments on all the loans and credit cards to no more than 20% of your monthly after-tax income.

• True

• False

In regards to the 70/20/10 rule, ____ of your income will go to monthly bills and everyday spending.

_____ is a legal proceeding initiated when a person or business is unable to repay outstanding debts or obligations.

• Consumer Credit

• Credit Fraud

• Liquidation

• Bankruptcy

Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid while giving creditors a chance to obtain some measure of repayment.

• True

• False

Chapter __ bankruptcy allows for individuals/businesses to dispose of unsecured debts by liquidating assets.

Chapter ___ bankruptcy is for debtors with reliable incomes who want to keep their home or car, but have fallen behind on their loan payments.

Match the following

• Liquidation

• Chapter 7

• Reorganization

• Chapter 11

• Business Reorganization

• Chapter 13

Match the following

• restricts the ways that collectors can contact debtors

• Fair Debt Collection Practices Act

• regulates how credit bureaus can and must operate

• Fair Credit Reporting Act

• implements that information must be disclosed to a borrower before extending credit

• Truth in Lending Act