7
AssignmentMultiple Select

Managing Financial Information

Question 7 • Personal Finance - EL3403

What effects are Mary and Todd likely to face if they declare bankruptcy? Check all that apply.

Answer
A
They will find it hard to get new loans.
B
They will find it easier to buy a home, since their debt will have been eliminated.
C
They will get to keep their cars, but they will not have to make payments.
D
They will have to pay higher interest rates on any new credit cards they obtain.
E
They will have poor credit reports.

Explanation

Bankruptcy can damage a person’s credit history, making lenders less willing to approve new loans and causing new credit to come with higher interest rates. It also remains on credit reports for years, so Mary and Todd are likely to have poor credit reports. Bankruptcy does not make buying a home easier simply because some debts are discharged, and it does not automatically let them keep cars without making payments.

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