Deck 8: Debt, Foreclosure, and Bankruptcy

Question 1

Which of the following is not a major warning sign that you are headed for financial trouble?

A) Cash advances on credit cards
B) Net worth is increasing
C) No emergency fund
D) Taking money from retirement savings

Answer 1

Net worth is increasing

Question 2

What is the minimum amount of money you should have in your emergency account fund at all times?

A) $750
B) $500
C) $1,000
D) Six months' wages

Answer 2

$1,000

Question 3

When digging out of debt what do you need to clarify?

A) Your needs from your wants
B) Your wants from your desires
C) Quality from quantity
D) Size from shape

Answer 3

Your needs from your wants

Question 4

Which of the following is a red flag warning?

A) No emergency fund
B) Living paycheck-to-paycheck
C) Using payday loan cash advances on your credit cards
D) None of the choices are correct

Question 5

Which of the following is not a question to ask when trimming expenses?

A) Can I get a lower rate on insurance?
B) Can I eat out more?
C) Can I live in a less expensive house?
D) Can I cut down my utilities?

Question 6

Which is not an early warning sign of financial trouble to come in the future?

A) No Emergency fund
B) Paying only the minimum amount on a credit card bill
C) Not having a monthly budget
D) Investing in a 401(k)or a 403(b)plan

Question 7

Which of the following is a red flag when it comes to credit card debt?

A) Not being able to make the minimum payment
B) Getting cash advances from the credit card
C) Taking money from retirement savings to pay off the bill
D) All of the choices are correct

Question 8

Which is a way to stop little financial leaks?

A) Cut coupons out
B) Pack your lunch
C) Avoid the malls when bored or depressed
D) All of the choices are correct

Question 9

What is one thing you could do to stop little financial leaks?

A) Stop every morning to get a coffee
B) Avoid malls when you are bored or depressed
C) Eat more convenience foods
D) Keep unwanted purchases

Question 10

Which would not be an example of stopping little financial leaks of spending?

A) Cutting coupons
B) Putting credit cards on ice
C) Eliminating convenience foods
D) Eating out a minimum of three times a week

Question 11

To keep yourself from using your credit card you should:

A) Destroy it
B) Hide it
C) Leave it at home
D) Keep it in your wallet

Question 12

What are yellow flag warning signs that you are headed toward the financial illness path?

A) No emergency fund
B) Your net worth is decreasing each month
C) Living paycheck-to-paycheck
D) All of the choices are correct

Question 13

Which of the following are early warning signs of financial problems?

A) Not having an emergency fund
B) Living paycheck-to-paycheck
C) Charging essentials like gas and groceries with a payday loan
D) All of the choices are correct

Question 14

Which of the following is an early warning sign of credit card trouble?

A) You have an emergency fund
B) You are getting cash advances on your credit card
C) You are paying only the minimum balance
D) You are unable to make the minimum payment

Question 15

In stopping little financial leaks,what are the first things you need to sort out?

A) Needs from wants
B) Bills from payments
C) Ongoing bills vs.one-time payments
D) Giving vs.spending

Question 16

The fastest way to get out of debt is to:

A) Buy things you don't need
B) Don't buy things you cannot afford
C) Refinance to get better interest rates
D) All of the choices are correct

Question 17

Buying a pop from the vending machine every morning before class is an example of:

A) Convenience drinks
B) Everyday habits
C) Everyday necessity
D) Non-essential spending

Question 18

Ava decided to establish an emergency fund for herself.She established this fund by "paying herself first" and transferring money out of each paycheck into her new savings account.She established her emergency fund at a bank that is different from her usual bank where she has her checking account.Ava's emergency fund:

A) Is a smart idea because having her emergency fund at a different bank makes it more difficult for her to gain access to her money and make a transfer
B) Gives her more time to think twice about using her emergency fund if she has to physically go to a different bank other than her checking account bank for access to her money
C) Has helped her establish a life-long habit to develop her financial security
D) All of the choices are correct

Question 19

What strategy to help impulse buyers does the book suggest?

A) The "ten second hold" rule
B) Realistic budget evaluation
C) The "do I need it?" strategy
D) The stop and think strategy

Question 20

Borrowing money from family and friends is a:

A) Yellow flag warning: caution
B) Red flag warning: danger
C) Green flag warning: go ahead
D) None of the choices are correct

Question 21

Paying rent,gas,and utilities and buying groceries are examples of what kind of spending?

A) Necessary
B) Non-essential
C) All of the choices are correct
D) None of the choices are correct

Question 22

Jamil and Vicki have been experiencing financial troubles and are unable to keep making their mortgage payments.They both want to safeguard their credit so they agree to sell their home.However,they know that they will not be able to sell their home for the full amount of their loan.They negotiate with their mortgage lender,who agrees to accept the selling price as satisfying the mortgage.Jamil and Vicki are selling their home as part of:

A) An assumption of loan
B) A deed-in-lieu of foreclosure
C) A short sale
D) A sale

Question 23

Olivia found herself in over $10,000 worth of credit card debt after she graduated from college.Most of her purchases on her credit cards came from purchases at the mall which included clothing,shoes,and purses.She also used her credit cards to finance her vacation to Mexico during spring break.Overwhelmed by her high credit card balances,Olivia has decided she wants to start digging herself out of credit card debt.What is the first step she should take?

A) Increase her income
B) Stop using her credit cards
C) Stop buying things she cannot afford
D) Create a realistic budget and use the envelope system

Question 24

What is the first step of digging out of debt?

A) Create a realistic budget
B) Make payments on time
C) Stop using credit cards
D) Don't try to buy stuff you can't afford

Question 25

During the process of foreclosure,at which step does the lender begin to become concerned?

A) You missed the first payment
B) You are unable to make your payment
C) You miss your second payment
D) You miss your third payment

Question 26

_________________ is when you alter mortgage terms in attempt to keep borrowers from foreclosure.

A) Avoiding foreclosure
B) Cramdown
C) Interest rate
D) Reinstatement

Question 27

Which of the following terms means "to alter mortgage terms in an attempt to keep borrowers from foreclosure"?

A) Cramdown
B) Forbearance
C) Reinstatement
D) Mortgage assistance

Question 28

The best way to deal with not being able to pay your mortgage is:

A) Don't open the mail from the bank
B) Call your lender and work something out
C) Don't answer the phone
D) Move in the middle of the night

Question 29

Which of the following terms describes the case in which a lender renegotiates a loan at a lower interest rate?

A) Cramdown
B) Skimming
C) Reinstatement
D) Forbearance

Question 30

If you are in credit card debt and call the company,what might it do to help you?

A) Nothing
B) Raise your rate
C) Lower your rate and waive fees
D) Wave good bye

Question 31

Which of the following is the first step in digging yourself out of debt?

A) Increase income
B) Stop using credit cards
C) Don't buy things you cannot afford
D) None of the choices are correct

Question 32

According to the Fair Debt Collection Practices Act,debt collectors cannot:

A) Call you before 10:00 a.m.
B) Call you after 7:00 p.m.
C) Contact you after you ask them in writing to stop contacting you.
D) Tell you who they are.

Question 33

_________________ is a temporary reduction or suspension of your mortgage payments for three or four months,followed by a new repayment plan for the loan.

A) Reinstatement
B) Forbearance
C) Foreclosure
D) Cramdown

Question 34

What is a cramdown?

A) Altering mortgage terms in an attempt to keep borrowers from foreclosure
B) Sending your banker lots of cakes and cookies
C) Shoving money at your banker
D) All of the choices are correct

Question 35

If a lender agrees to new loan terms in an attempt to help a homeowner,and the terms of the new agreement are met,this constitutes a:

A) Foreclosure
B) Reinstatement
C) Forbearance
D) Cramdown

Question 36

Elijah has three major purchases to pay off on his credit card.They are as follows: $1,000 at 10%,$500 at 15%,and $250 at 5%.How should he pay off his debts?

A) Pay them all sporadically until they're gone
B) Pay off the highest amount first
C) Pay off the lowest amount first
D) Split the money to pay off the debts equally between all purchases

Question 37

You have three credit cards,each of which has a negative balance.Which should you pay off first?

A) The largest balance
B) The smallest balance
C) Neither-pay some of each every month
D) All of the choices are incorrect

Question 38

What is the 10-second rule?

A) If you drop an item in a store,it's still safe to pick it up after 10 seconds
B) Hold an item for 10 seconds before you put it in your cart,asking yourself if you really need the item and can afford to pay for it
C) Put an item in your cart and if you don't want it after 10 seconds take it out
D) All of the choices are correct

Question 39

Before you buy an item,you should hold it for _________________ seconds.

A) 5
B) 10
C) 15
D) 20

Question 40

Which of the following is a temporary solution to a financial problem?

A) Reinstatement
B) Partial claim
C) Credit cards
D) None of the choices are correct

Question 41

Stanley experienced many financial problems and ended up filing for bankruptcy.Now,he is looking to restore his credit and develop good financial habits.Which of the following will help Stanley establish good habits after his bankruptcy?

A) Pay everything on time
B) Change his lifestyle by using self-control and self-discipline to stay within his budget
C) Don't use credit; if Stanley wants or needs something he should save up money for it
D) All of the choices are correct

Question 42

In Chapter 13 bankruptcy a person:

A) Sells all his/her assets to pay off lenders
B) Doesn't pay anything back because he/she has no money
C) Takes out a loan from the federal government to pay off lenders
D) Reorganizes his or her finances in order to keep his/her assets,but still pays off lenders in the long term

Question 43

What is another term for Chapter 13 bankruptcy?

A) Liquidation bankruptcy
B) Chapter 7 bankruptcy
C) Wage earner bankruptcy
D) All of the choices are incorrect

Question 44

What is a long-term solution if you are having trouble paying back your loan?

A) Loan modification
B) Reinstatement
C) Forbearance
D) A repayment plan

Question 45

Which of the following is the first step in the foreclosure process?

A) The bank files a paper with the courts declaring the intent to foreclose
B) Required legal notices are published in the local paper
C) The property is sold to the highest bidder at the sheriff's auction
D) The new owner evicts the existing owner from the property

Question 46

Using your credit card to buy a motorcycle you know you can't afford is:

A) Breaching a moral obligation
B) Liquidation
C) Forbearance
D) Starting a reinstatement program

Question 47

After bankruptcy,it's important for a person to rebuild his or her credit history.Which of the following is a good habit to follow in coming out of bankruptcy?

A) Continue your previous lifestyle
B) Pay all your bills on time
C) Continue to use credit
D) Establish a secured credit card

Question 48

Bob has filed for bankruptcy.What doesn't he have to do?

A) Undergo pre-bankruptcy credit counseling
B) Repay the discharged claims
C) Undergo debtor education
D) All of the choices are correct

Question 49

Which is not one of the three main reasons people declare bankruptcy?

A) Bad luck
B) Lack of preparation
C) Getting cash advances on credit cards
D) Poor decisions

Question 50

Which of the following are short-term solutions if you are at risk for foreclosure?

A) Reinstatement
B) Loan modifications
C) Loan defaults
D) Partial claim

Question 51

When foreclosure is likely,lenders want to:

A) Get the owner out of the home so they can sell it and make a profit
B) Work with the owner to negotiate payments
C) Sell the home regardless of what the owner thinks
D) None of the choices are correct

Question 52

A temporary reduction or suspension of your mortgage payments for three or four months followed by a new repayment plan is called a:

A) Reinstatement
B) New payment plan
C) Forbearance
D) None of the choices are correct

Question 53

What do you call altered mortgage terms that attempt to keep borrowers from foreclosure?

A) Forbearance
B) Reinstatement
C) Cramdown
D) Bankruptcy

Question 54

How does Chapter 7 bankruptcy differ from Chapter 13 bankruptcy?

A) Chapter 7 is the quickest and simplest form of bankruptcy
B) In a Chapter 13 bankruptcy,the debtor proposes a plan of reorganization to keep his or her assets and pay creditors over an extended time period
C) Both are correct
D) Neither is correct

Question 55

What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?

A) Chapter 7 liquidates all of your debts
B) Chapter 13 liquidates all of your assets
C) In a Chapter 7 bankruptcy,you do not have to pay off anything
D) In a Chapter 13 bankruptcy,you pay off your debt over a period of 3 to 5 years

Question 56

After bankruptcy,what is the best way to build credit?

A) Get a secured credit card
B) Get an unsecured credit card
C) Don't worry about credit; it got you in trouble in the first place
D) Take out a loan

Question 57

In which type of bankruptcy does the debtor propose a plan of reorganization to keep his or her assets and pay creditors over an extended period of time?

A) Chapter 7
B) Chapter 9
C) Chapter 13
D) Chapter 11

Question 58

Which type of bankruptcy involves the liquidation of assets with the proceeds distributed to the creditors?

A) Means test
B) Chapter 13
C) Chapter 7
D) Chapter 9

Question 59

The Federal Trade Commission considers a loan delinquent after how many days?

A) 60
B) 30
C) 90
D) 120

Question 60

What is the quickest and simplest form of bankruptcy?

A) Chapter 13
B) Chapter 8
C) Chapter 7
D) Chapter 5

Question 61

In your own words,explain three ways to "stop little leaks."

Question 62

The best way to avoid a financial crisis is to arrive at a point where you are spending less than you make.

Question 63

_________________ is a legal process in which a person declares his or her inability to pay debts.

A) Liquidation
B) Cramdown
C) Bankruptcy
D) Chapter 13

Question 64

Budgeting and money journaling are helpful tools for realizing where you are financially and what you can trim.

Question 65

When you live paycheck-to-paycheck,you are close to financial trouble.

Question 66

If you focus on paying off the largest balance first,you can gain momentum in getting out of debt by experiencing a "quick win".

Question 67

Pick one of the steps involved in digging out of debt and describe how that step would help you the most to stay out of debt/dig yourself out of debt.

Question 68

Chapter 13 is:

A) The quickest and simplest form of bankruptcy; it is the liquidation of assets with the proceeds distributed to the creditors
B) A reorganization bankruptcy,in which the debtor proposes a plan of reorganization to keep his or her assets and pay creditors over an extended time period,usually three to five years
C) A sale of a debtor's nonexempt property and the distribution of the proceeds to the creditors
D) None of the choices are correct

Question 69

Chapter 7 bankruptcy is also known as wage earner bankruptcy.

Question 70

What are the seven steps needed to dig out of personal debt?

Question 71

What are some tips for stopping little leaks?

Question 72

aa

Question 73

What debts are not discharged in a Chapter 7 bankruptcy?

Question 74

Bankruptcy will discharge a student loan.

Question 75

The deed-in-lieu of foreclosure forgives the balance of your mortgage and gives the property to the lender.

Question 76

There are some important habits to follow after your bankruptcy has been discharged.Which of the following is not one of them?

A) Change your lifestyle
B) Pay everything on time
C) Get all new credit cards
D) Establish a secured credit card

Question 77

List the yellow flag warnings that indicate that your spending is out of control and leading to a financial disaster.