Which term describes the situation faced by people who cannot repay their loans?
A. bankruptcy
B. collateral
C. credit
D. interest
The term that describes the situation faced by people who cannot repay their loans is A. bankruptcy.
The term that describes the situation faced by people who cannot repay their loans is bankruptcy.
To arrive at this answer, you can understand the definitions of the given options:
A. Bankruptcy refers to the legal status of a person or organization that is unable to repay their debts to creditors.
B. Collateral refers to an asset that is pledged as security for a loan. If the borrower fails to repay the loan, the lender can seize the collateral.
C. Credit refers to the ability of a person to borrow money from a lender, typically based on their creditworthiness.
D. Interest is the amount charged by a lender for borrowing money.
By understanding the definitions, you can determine that bankruptcy is the appropriate term that describes the situation when someone cannot repay their loans.