Question 1

Rural Credit Corporation lends money to Sven,a farmer,and the owners of other agricultural enterprises within its region.To compensate for the higher risk of bankruptcy among its debtors when the prices of agricultural products decrease,Rural Credit can

A)become less selective in granting credit.
B)increase the interest rate charged to a few borrowers.
C)increase the interest rate charged to everyone.
D)require less security (collateral).

C

Accepted Answer

C

Question 2

Dale's debts are discharged in a liquidation bankruptcy.With respect to Dale's prebankruptcy debt,Even Stevens Credit Reporting Agency must automatically report&#10;A)nothing.&#10;B)the debt as &#34;discharged,&#34; except the nondischargeable debt.&#10;C)the debt as &#34;discharged,&#34; including the nondischargeable debt.&#10;D)the debt as &#34;unpaid.&#34;

Accepted Answer

When a debtor's debts are discharged in a liquidation bankruptcy, credit reporting agencies must report the debts as "discharged," except for nondischargeable debts such as certain taxes, student loans, or debts incurred through fraud. Reporting the debt as "unpaid" would be inaccurate, as the debt has been legally discharged.

Question 3

Wendy is a consumer who files for,and is granted,a discharge of her debts in bankruptcy.The consequences to Wendy of this discharge are most likely to include&#10;A)blemished credit ratings for up to ten years.&#10;B)favorable publicity.&#10;C)lower interest charges for new debts.&#10;D)unexpected job offers from potential employers.

Accepted Answer

Filing for bankruptcy and obtaining a discharge of debts can potentially blemish one's credit rating for up to ten years. This may make it difficult for Wendy to obtain credit or loans in the future, as lenders will view her as a high-risk borrower. The other options (B, C, and D) are not likely consequences of obtaining a discharge of debts in bankruptcy.

Deck 30: C: Bankruptcy Law