Free Practice Quiz Question List

06 Debt Management Online Quiz Questions

Use this free practice quiz with 20 questions to review 06 Debt Management, test your knowledge, and prepare for your next test or exam.

20 questions

True or false

1 point

In the United States, individuals generally must complete approved credit counseling before filing for bankruptcy, although limited exceptions may apply. True or false?

A
True
B
False

Written response

1 point

Under the snowball method, which debt should receive extra payments first?

Fill in the blank

1 point

When making a debt list, record each debt's balance, , minimum payment, and due date.

Choose one

1 point

Someone wants help understanding their budget and possible ways to manage debt. Which statement best describes how a credit counselor may help?

A
A credit counselor can guarantee that creditors will erase the debts.
B
A credit counselor can review a budget and explain options.
C
A credit counselor automatically makes all creditors accept a repayment plan.

Choose one

1 point

A borrower owes $500 at 8% APR and $2,000 at 24% APR, has made both minimum payments, and has extra money to put toward one debt. Which debts do the avalanche and snowball methods target, respectively?

A
Avalanche: the $500 debt; snowball: the $2,000 debt.
B
Avalanche: the $2,000 debt; snowball: the $500 debt.
C
Both methods: the $500 debt.
D
Both methods: the $2,000 debt.

True or false

1 point

A consolidation loan offers a lower monthly payment than the borrower's current payments. That alone proves the borrower will repay less overall. True or false?

A
True
B
False

Fill in the blank

1 point

A debt management plan may combine payments, but it does not the debts.

Written response

1 point

A common payday-loan example charges $15 per $100 borrowed for two weeks. The example is equivalent to an APR near 400%. Enter the approximate APR as a percentage-point value.

Choose one

1 point

Before choosing a repayment approach that may pay off a loan early, what should the borrower check in the loan terms?

A
Whether the lender will automatically forgive the remaining balance.
B
Whether the borrower can skip all required minimum payments.
C
Whether the loan has fees or prepayment restrictions.

Written response

1 point

A creditor offers a borrower a revised payment arrangement. In what format should the borrower get the arrangement's terms?

Choose all

1 point

Which are warning signs when evaluating a debt-relief company? Select all that apply.

A
A company guarantees to erase the debts.
B
A company explains its services and asks the consumer to verify them independently.
C
A company provides a written contract for the consumer to review.
D
A company demands payment upfront for promised debt-relief results.

Choose all

1 point

Before taking a payday loan, which alternatives does the material recommend considering? Select all that apply.

A
Ask a creditor for more time to pay.
B
Check lower-cost options through a bank or credit union.
C
Roll over a payday loan repeatedly to avoid its costs.
D
Seek help from a reputable community organization.

Open ended

1 point

A person receives a collection notice for an unfamiliar debt and later receives court papers after being sued over a debt. Explain how the person should respond to each situation and what could happen if the court papers are ignored.

True or false

1 point

A payday-loan rollover can add fees while leaving the original balance unpaid. True or false?

A
True
B
False

Written response

1 point

The material describes a payday-loan fee of $15 per $100 borrowed for two weeks as equivalent to an APR near what value? Enter the approximate APR as a percentage-point value, not a decimal.

Choose one

1 point

Someone is organizing several debts before choosing a repayment plan. Which set of details should they record for each debt?

A
Each balance, APR, minimum payment, due date, and whether the debt is secured by property
B
Each balance and monthly payment, with no need to record APR or due dates
C
Only the debts with the highest balances and the dates they were opened
D
Each balance, the lender's name, and the borrower's credit score

Choose one

1 point

After making the minimum payments on all debts, a borrower directs extra money to the balance with the highest APR. Which repayment method are they using?

A
The smallest-balance method, because it targets the debt with the highest APR
B
The highest-interest-rate method, because it targets the debt with the highest APR
C
The highest-interest-rate method, because it targets the debt with the smallest balance
D
The smallest-balance method, because it prioritizes the debt with the highest minimum payment

Choose one

1 point

A consolidation offer would lower a borrower's monthly payment. What should the borrower do before agreeing?

A
Accept the loan because a lower monthly payment always means a lower total cost
B
Compare monthly payments only, since fees and collateral do not affect the borrowing decision
C
Compare the total amount repaid and understand how the loan affects existing accounts
D
Assume the loan will erase the existing debts once the new payment begins

Choose one

1 point

Which debt-relief offer has both warning signs identified in the material?

A
A counselor reviews a budget and explains available options
B
A lender offers a temporary due-date change after discussing the borrower's situation
C
A repayment plan may involve creditors agreeing to lower rates or fees
D
A debt-relief company guarantees to erase debts and demands payment upfront

Choose one

1 point

A borrower's income has dropped, and they expect to miss an upcoming payment. What is the best next step described in the material?

A
Wait until the payment is missed, then agree to any arrangement offered
B
Contact the lender or service provider promptly and ask about hardship options
C
Stop reviewing the budget and wait for the lender to propose a solution
D
Borrow more at any available rate to avoid contacting the lender