Question

If you default on a loan, you may have to do all of the following except _____.

Question 1 options:

have the creditor cancel the loan due to your low income

pay an extra fee

have your wages garnished

lose your good credit rating

Question 2 (1 point)

 

To avoid defaulting on a loan and its consequences, you should do all of the following except _____.

Question 2 options:

pay something, even if it's late

know your rights

contact your lender once you get back on your feet

consider getting help from family or friends

Question 3 (1 point)

 

Tamara's parents co-signed her student loan. Tamara was able to pay her loan every month for a year without fail, but after she was laid off from her job, she missed several payments. How will these missed payments affect her parents?

Question 3 options:

The lender might demand payment from Tamara's parents since they are responsible for the loan.

Nothing. It is Tamara's responsibility to pay back her student loan.

The lender will start legal action to force Tamara's parents to declare bankruptcy.

The lender will contact a consumer credit counseling service to help Tamara and her parents set up a payment plan that they can afford.

Answer 1

Question 1: have the creditor cancel the loan due to your low income.
- Defaulting can lead to fees, wage garnishment, and damaged credit — creditors do not cancel the loan because you have low income.

Question 2: contact your lender once you get back on your feet.
- You should contact the lender as soon as you have trouble (and do things like pay something, know your rights, or seek help), not wait until after you recover.

Question 3: The lender might demand payment from Tamara's parents since they are responsible for the loan.
- A co-signer is legally responsible, so missed payments can lead the lender to seek payment from them and hurt their credit.