Deck 35: Protecting the Borrower

Question 1

The Equal Credit Opportunity Act ensures that anyone applying for credit receives it.

Answer 1

False

Question 2

A denial of credit based solely on the age of the borrower is always illegal.

Answer 2

False

Question 3

The maximum amount that may be owed on a credit card at any one time is called the

A) finance charge.
B) line of credit.
C) annual percentage rate.
D) collateral.

Answer 3

B

Question 4

If an applicant is denied credit, the applicant must receive a written explanation.

Question 5

The Truth in Lending Law requires that the cost of credit be stated both in dollars and cents and as a percentage of the amount borrowed.

Question 6

Any person who is seriously in debt may be forced into involuntary bankruptcy.

Question 7

An agreement to pay for an item in fixed, regular payments is called

A) a charge account.
B) a bank loan.
C) an installment loan.
D) none of these.

Question 8

All consumers are entitled to a free annual credit report.

Question 9

If you use your car as collateral for a loan, you will not have clear title to the car until the loan is repaid.

Question 10

A credit card holder's liability for unauthorized use of the charge card is unlimited if the card was lost or misplaced.

Question 11

A consumer with a revolving charge account must pay the full amount owed each month.

Question 12

It is illegal for a creditor to call a debtor at the debtor's place of employment without the employer's consent.

Question 13

If a debit card owner never notifies the card issuer of the card's loss, the cardholder will be liable for

A) losses up to $50.
B) losses up to $100.
C) losses up to $500.
D) all losses.

Question 14

A debit card holder who notifies the card issuer within two days of the card's loss is liable for

A) all losses.
B) losses up to $500.
C) losses up to $50.
D) losses up to $1,000.

Question 15

The Fair Debt Collection Practices Act forbids the use of threats or violence to collect an amount owed.

Question 16

If the card issuer is properly notified of the loss of a credit card, the cardholder's liability is limited to

A) $25.
B) $50.
C) $100.
D) $250.

Question 17

All debtors must receive credit counseling before they can file for bankruptcy.

Question 18

In many states, usury is a crime.

Question 19

A credit bureau is not required to verify information in a person's credit file.

Question 20

When deciding whether to grant credit, a creditor may not consider the applicant's

A) sex.
B) income.
C) credit history.
D) requested amount of credit.

Question 21

An applicant who is denied credit is entitled to receive

A) an explanation by phone.
B) a written explanation.
C) both an explanation by phone and a written explanation.
D) none of these.

Question 22

The ____________________ Act allows debtors access to their credit records and the right to have corrected any reporting mistakes.

Question 23

A debtor filing for bankruptcy

A) must receive credit counseling.
B) must take a financial means test.
C) must take a credit management course.
D) all of these.

Question 24

The maximum interest rate that may be charged on a business loan is

A) 19 percent.
B) 12 percent.
C) 16 percent.
D) unlimited.

Question 25

The Fair Debt Collection Practices Act applies only to

A) professional debt collectors.
B) collection attorneys.
C) creditors.
D) collection accountants.

Question 26

Items of value that may be pledged as security for the repayment of a loan are called ____________________.

Question 27

Property that may not be seized in bankruptcy is known as

A) garnishee property.
B) attachment property.
C) exempt property.
D) judgment property.

Question 28

The history of a person's use of credit is contained in a

A) line of credit.
B) bankruptcy petition.
C) credit record.
D) charge account.

Question 29

A credit card that automatically withdraws money from the cardholder's bank account is known as a(n) ____________________ card.

Question 30

While waiting to have a bill corrected, the consumer

A) must pay the disputed amount.
B) must pay any undisputed amount.
C) does not have to make any payments.
D) must contact the local credit bureau.

Question 31

____________________ is the right granted to a person or business to purchase items and pay for them at a later time.

Question 32

An inability to pay debts as they become due is known as

A) bankruptcy.
B) solvency.
C) Chapter 13.
D) insolvency.

Question 33

The maximum rate of interest permitted under state law is called the ____________________ rate.

Question 34

If an applicant is denied credit without just cause, the

A) creditor may be fined.
B) creditor may be sued for damages.
C) creditor may be fined and the creditor may be sued for damages.
D) creditor may not be fined and the creditor may not be sued for damages.

Question 35

The purpose of the Truth in Lending Law is to protect the

A) creditor.
B) state.
C) consumer.
D) seller.

Question 36

Charging an interest rate higher than the rate permitted by law is known as

A) ex post facto.
B) usufruct.
C) ab initio.
D) usury.

Question 37

Of the following debts, the only one that is dischargeable in bankruptcy is

A) an automobile loan.
B) child support.
C) alimony.
D) taxes.

Question 38

The law permitting debtors access to their credit records is

A) The Credit Act.
B) The Fair Credit Reporting Act.
C) The Fair Debt Act.
D) The Fair Debt Collection Practices Act.

Question 39

The ____________________ Act forbids discrimination when granting credit because of such factors as national origin, sex, and race.

Question 40

The ____________________ is the cost of credit stated in dollars and cents.

Question 41

Katz received an unordered credit card from the Rand Department Store. The card was stolen by Cooper, who charged purchases of $300 at the store. Is Katz liable for these purchase?

Question 42

The chapter of the Bankruptcy Act that permits reorganization is Chapter ____________________.

Question 43

Johnson had a charge account at Brown's Department Store. On the most recent statement, Johnson noticed a $90 charge that she had not made. What action may Johnson take?

Question 44

The inability to pay debts as they become due is called ____________________.

Question 45

Farber became insolvent as a result of a loss of employment. What options does Farber have to solve his financial problems?

Question 46

Assets that may not be taken in bankruptcy are referred to as ____________________.

Question 47

King had just received a discharge in bankruptcy. When Landsdale College contacted King about repaying a college loan, he refused to pay, claiming that the debt had been discharged. Is King correct?

Question 48

Monroe applied for a loan at the First National Bank. The bank denied the loan because Monroe had a history of not paying his bills. What are Monroe's rights?