Quiz: Eye On the Money: Test Your Debt Knowledge: Howstuffworks
Eye On the Money: Test Your Debt Knowledge
4 Min Quiz
Image: refer to hsw
About This Quiz
Debt can be a complex problem, between managing your interest rates, knowing your rights and sticking to your payment plans. Take the debt quiz to see just how much you know about paying off that debt.
Which of the following would be considered "good debt"?
Taking out a mortgage on a home is generally a good kind of debt. Not only does a home loan typically have lower interest rates and tax benefits, but a house's value could increase over time, making it a good investment, unlike credit card or cash advance debt.
If you have a revolving credit account, credit card companies prefer that you:
Because of the strategic combination of interest rate and minimum monthly payment, credit card companies make more money from you in the long run if you consistently pay only the minimum monthly payment.
What does it mean for debt to be unsecured?
Unsecured debt refers to debt not backed by collateral. Credit card debt is one such example of unsecured debt. A mortgage would be secured debt because it is backed by the house.
Which of the following is NOT a benefit of debt settlement?
If you can get a lender to agree to debt settlement, it will probably mean you pay a lump sum of less than your total balance and will end your debt with them. However, it may end up on your credit report and probably make it harder to get a loan in the future.
Which of the following is NOT a likely benefit of consolidating your loans?
Most likely, consolidating your loans will mean a lower interest rate and one simple monthly payment. But it will also take you longer to get out of debt, and you'll pay more in the long run.
Under the Fair Debt Collection Practices Act (FDCPA), which of the following is a debt collector allowed to do?
Although they may have a legal right to sue you, debt collectors can’t use the threat of a lawsuit to coerce you into making a payment. The FDCPA also forbids them from contacting you via postcard. Additional federal law prohibits various other means of contact, too.
Which of the following should be considered a last resort to debt problems?
Entering into bankruptcy can help to alleviate your debts, but it'll also affect your credit rating and your ability to borrow money in the future. So although it can be a good option for those who need it, personal bankruptcy should be a last resort after other alternatives have been exhausted.
What is the maximum number of years bankruptcy can stay on your credit report?
In most cases, negative information stays on your report for seven years. Bankruptcy, however, can stay on for 10 years.
If debt collectors start to pursue old debt that has expired due to the statute of limitations, it is referred to as:
Zombie debt is old debt that has expired, is the result of identity theft or has been settled in bankruptcy.
What's the most common kind of personal bankruptcy?
The typical personal bankruptcy is called Chapter 13, in which the debtor retains some assets -- like a home or car -- and is required to adhere to a court-ordered debt repayment plan in which a percentage of his regular income is used to pay off creditors. Unless you're a municipality or a corporation, you probably won't be filing Chapter 9 or 11 (although people with very large debts can file for 11).
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