Chapter 9

Question 1

a new loan arrangement that allows you to make reduced payments, usually on a temporary basis

Answer 1

loan modification

Question 2

failure to pay debts as required by agreement or by law

Answer 2

credit delinquency

Question 3

the act of taking an asset used as collateral and selling it to pay the debt

Answer 3

repossession

Question 4

the legal process of taking possession of the house (property) when the borrower does not make mortgage payments as agreed

Answer 4

foreclosure

Question 5

a legal process that allows part of an employee’s paycheck to be withheld for payment of a debt

Answer 5

garnishment

Question 6

the process of informing a credit company of an error on your bill

Answer 6

disputing a charge

Question 7

records that support your claim

Answer 7

documentation

Question 8

a letter written to inform a credit company of an incorrect charge on your account

Answer 8

dispute letter

Question 9

a method of settling a dispute using a neutral third party

Answer 9

alternative dispute resolution (ADR)

Question 10

intentionally using someone’s credit account to steal money or goods

Answer 10

credit card fraud

Question 11

using someone’s personal information without his or her permission to commit fraud or other crimes

Answer 11

Identity theft

Question 12

a scam in which a company claims to be able to “fix” your poor credit record and give you a clean credit history-for a price

Answer 12

credit repair

Question 13

a legal procedure to relieve a person of excessive debt

Answer 13

bankruptcy

Question 14

the abuse of bankruptcy laws in a way that favors the debtor and defrauds creditors

Answer 14

bankruptcy fraud

Question 15

the forfeiture of an individual’s assets in exchange for the discharge of debts

Answer 15

Chapter 7 bankruptcy

Question 16

a court order that pardons the debtor from having to pay debts

Answer 16

exemption

Question 17

a repayment plan for some of an individual’s debt

Answer 17

Chapter 13 bankruptcy

Question 18

a reorganization form of bankruptcy for businesses that allows them to retain possession of their assets and continue operating under court supervision as they repay their restructured debts

Answer 18

Chapter 11 bankruptcy

Question 19

a service to help consumers manage credit and avoid bankruptcy

Answer 19

credit counseling

Question 20

a type of debt relief service in which a company negotiates with your creditors on your behalf to reduce the amount of debt you owe

Answer 20

debt settlement program

Question 21

the process of getting one loan with a single monthly payment to pay off all of your debts

Answer 21

debt consolidation

Question 22

a second mortgage or debt secured with the equity in your home

Answer 22

equity loan

Question 23

the process of freeing or state of being free from an obligation or liability imposed on others

Answer 23

exemption

Question 24

the process of helping consumers resolve problems

Answer 24

consumer advocacy

Question 25

a law that regulates the collection, dis-semination, and use of consumer credit information

Answer 25

Fair Credit Reporting Act

Question 26

a law that requires lenders to fully inform consumers about the cost of credit in a loan or credit agreement

Answer 26

Truth in Lending Act

Question 27

a law that sets requirements for resolving billing disputes

Answer 27

Fair Credit Billing Act

Question 28

a law that protects consumers from abusive collection practices by creditors and collection agencies

Answer 28

Fair Debt Collection Practices Act

Question 29

a law that protects consumers from discrimination in the granting or denying of credit

Answer 29

Equal Credit Opportunity Act

Question 30

a comprehensive reform to credit card law to establish fair practices related to credit

Answer 30

Credit Card Accountability Responsibility and Disclosure Act

Question 31

property that a debtor in bankruptcy does not have to forfeit to pay off creditors

Answer 31

exemption