21st Century Student FinLit -Getting Personal SW

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ANSWER KEY

Are You Financially Literate? Chapter 18 Quiz The Automatic Stay of bankruptcy immediately stops evictions and debt collections / phone calls. Acceptable answers include reducing the risk of borrowing money and starting a business, preventing people from being completely destitute, allowing debtors a fresh financial start, helping creditors recover some of their money in an organized, legal and impartial format. Patrice would file for Chapter 12 bankruptcy which lets his company operate while it reorganizes. Jeanette’s plan will not work because Chapter 7 bankruptcy applies mainly to people who have no steady income. She’ll

15. adjustments; liquidated 16. repayment; foreclosures, lawsuits, wage garnishments, and other collection actions 17. automatic 18. fines; restitution; loans; non 19. personal; liable/responsible 20. The creditor can deal with the trustee instead of the debtor to recover the money that is owed to them, and hopefully get the debtor on a regular payment plan even though the debt may be reduced.

most likely be put into CH. 13 where she can work out a repayment plan with her creditors.

1.

5. 6. 7.

D B

2.

Chapter 11 bankruptcy allows corporations to terminate contracts if it will enable it to return to profitability.

8.

D

9 A 10. A debt management plan (DMP) is an agreement by a debtor who is having trouble handling the repayment of debts to make monthly payments to a counseling agency. Under a DMP, the debtor and credit counselor work out a repayment plan with creditors. This may include lowered interest rates, reduced debt, and fee waivers. The agency pays the creditors on the debtor’s behalf which assures that the agreement terms are met. 11. A 12. Students should indicate that bankrupt people are allowed to retain their housing and things that are necessary to earn income, like a car to get to work, clothes and tools. This enables them to improve their financial situation. 13. B 14. Acceptable answers include: loss of assets, impacts credit history, attorney’s fees, emotional toll. 15. Yes, a co-signor is still liable for repayment discharged, but it is unlikely he will be able to eliminate them because he failed to file his tax return. 17. B 18. T 19. No, restitution orders are non-dischargeable debt. 20. This a classic Ch 7 no asset case. Marta can discharge these debts: consumer debt, such as credit card debt fees and late charges medical bills personal loans, overdue utility bills and unpaid rent. She keeps her clothes and bus pass. of the loan. Only the person who filed bankruptcy is discharged form liability. 16. Probably not. Under very limited circumstances income taxes can be

3.

Quotable Notable

4. PRODUCT PREVIEW Chapter that provides for the reorganization of debts of a person with regular income Elimination in bankruptcy of legal liability for a debt Chapter providing for a liquidation of debtor’s assets to pay creditors Form filed by a creditor indicating what the debtor owes them Assets which may be liquidated to pay creditors A debt secured by collateral Matchy-Match Bankruptcy

Student’s discretion.

Chapter 11

discharge

insolvent

Chapter 7

U.S. trustee

automatic stay

Mandatory sale of assets to pay debts

Proof of Claim

Assets which may not be sold to pay creditors

repayment plan

The state of being unable to meet financial obligations

liquidation

Chapter that provides for a reorganization of the debts of an operating business.

nonexempt

Number of years that must pass before a debtor can file another Chapter 7 bankruptcy

secured claim

Impartial administrator of the bankruptcy case

exempt

Suspension of any action by a creditor against the debtor to collect the debt

Chapter 13

A written strategy showing how the individual debtor will repay their creditors within 3-5 years

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387 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY

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