ADRA Negotiation & Settlement Strategies Flashcards

Which negotiation tactic involves restating the creditor's position back to them to build rapport and demonstrate understanding before making a counter-offer?

Answer: Active listening and paraphrasing

Active listening and paraphrasing show the creditor their concerns are heard, building trust and creating a cooperative environment that improves the likelihood of a favorable settlement.

Under the FDCPA, which of the following actions by a third-party debt collector is PROHIBITED?

Answer: Calling before 8 AM or after 9 PM local time

The FDCPA explicitly prohibits collectors from contacting debtors outside the hours of 8 AM to 9 PM local time without the debtor's prior consent.

When should an ADRA agent recommend a client stop making payments to unsecured creditors as part of a debt settlement strategy?

Answer: Only after the client fully understands the credit score impact and has accumulated sufficient settlement funds, and only on unsecured debts

Stopping payments on unsecured debts is a calculated strategy to build leverage for settlement, but must only proceed when clients understand credit risks and have saved enough to negotiate.

What is the role of a 'hardship letter' in debt settlement negotiations?

Answer: It documents the client's financial difficulties to persuade creditors to accept a reduced settlement

A hardship letter explains the circumstances causing financial difficulty and serves as supporting evidence to persuade creditors that a reduced settlement is preferable to default.

After successfully negotiating a settlement, what document should an ADRA agent obtain BEFORE the client submits payment?

Answer: A written settlement agreement signed by an authorized creditor representative

A written, signed settlement agreement protects the client by legally documenting the terms and prevents the creditor from claiming full debt is still owed after partial payment.

Which of the following best describes the concept of 'debt validation' under the FDCPA?

Answer: A consumer's right to request written proof that a debt is valid and that the collector has authority to collect it

Under the FDCPA, consumers have 30 days from first contact to request debt validation, requiring collectors to provide written verification of the debt before continuing collection efforts.