CCC CCC Bankruptcy & Credit Recovery 2

Question 1

A credit counselor is helping a post-bankruptcy client rebuild credit. Which is the BEST first step for re-establishing credit?

Accepted Answer

Opening a secured credit card and paying the balance in full each month

Answer

A secured credit card, used responsibly and paid in full monthly, is one of the most effective tools for rebuilding credit after bankruptcy.

Question 2

What is a 'reaffirmation agreement' in bankruptcy proceedings?

Accepted Answer

A voluntary agreement where the debtor agrees to remain personally liable for a dischargeable debt

Answer

A reaffirmation agreement allows a debtor to voluntarily keep a debt (such as a car loan) that would otherwise be discharged, maintaining personal liability.

Question 3

Under the Fair Credit Reporting Act (FCRA), how long may a Chapter 13 bankruptcy remain on a consumer's credit report?

Accepted Answer

7 years from the filing date

Answer

Chapter 13 bankruptcy is reported for 7 years from the filing date, compared to 10 years for Chapter 7.

Question 4

A client has a credit score of 540 after a bankruptcy discharge two years ago. Which factor will have the GREATEST positive impact on their score recovery?

Accepted Answer

Consistently making all payments on time on new accounts

Answer

Payment history is the most heavily weighted FICO factor (35%), so consistent on-time payments have the greatest positive impact on credit score recovery.

Question 5

What is a 'means test' in bankruptcy law?

Accepted Answer

An income-based calculation to determine if a debtor qualifies for Chapter 7

Answer

The means test compares the debtor's income to the state median income to determine eligibility for Chapter 7; those who fail must consider Chapter 13.

CCC Practice Test

CCC Practice Test

CCC CCC Bankruptcy & Credit Recovery 2