WorksheetsManaging Credit Bell Ringer 5
Total questions: 7
Worksheet time: 4mins
Quinn started receiving notices that they have overdue payments and they are feeling overwhelmed by their debt. They ask you for advice. Of the following strategies, which would be the best strategy for Quinn to try first?
Ignore the notices to avoid overpaying, as the debt will be discharged after 180 days
Meet with a credit counselor to set up a debt management plan
File for bankruptcy to eliminate their debts
Pay a debt settlement company to solve the problem for them
What does a debt consolidation loan do?
Negotiate with your creditors to lower your debt amount
Combine your existing debts into one loan with one payment
Create a loan repayment schedule as part of Chapter 13 bankruptcy
Charge a high one-time fee to forgive all your existing debts
Which of the following statements is TRUE about Chapter 7 bankruptcy?
Chapter 7 bankruptcy requires you to complete a 3-5 year repayment plan on your debts
Chapter 7 bankruptcy is restricted to higher income levels than Chapter 13 bankruptcy
Chapter 7 bankruptcy leaves your credit report after 3 years
Chapter 7 bankruptcy results in you losing assets, like your home or car
Which of the following statements about bankruptcy is TRUE?
It is the recommended first step if your debts exceed 30% of your income
It stays on your credit report forever
It eliminates all of your debts for free
It decreases your credit score significantly
What does a credit counselor do?
Decides whether or not the bank should issue a loan to someone
Provides low-cost financial advice and creates debt management plans
Collects debts that are owed to creditors and over 180 days late
Co-signs loans to minimize financial risk for a borrower
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 bankruptcy is for individuals; Chapter 13 bankruptcy is for corporations
Chapter 7 bankruptcy sells your assets; Chapter 13 bankruptcy allows you to keep assets if you follow a repayment plan
Chapter 7 bankruptcy only eliminates student loan debt; Chapter 13 bankruptcy eliminates all your debts
There is no meaningful difference; both Chapter 7 and Chapter 13 bankruptcy clear your debts by selling off your assets and stay on your credit report for 10 years
Theo has significant debt and is considering filing for Chapter 7 bankruptcy. He should try all of the following strategies before filing for bankruptcy, EXCEPT…
Meeting with a credit counselor
Paying a debt settlement company
Using a debt repayment strategy, like the Snowball or High Rate Method
Setting up a debt management plan
