Applied Knowledge & Practice Flashcards

Before enrollment, which disclosure must be given under the TSR regarding timing?

Answer: The amount of time necessary to achieve the represented results, including when offers will be made to each creditor

The TSR requires disclosure of how long it will take to get results and when settlement offers will be made to each creditor.

A company charges fees as a percentage of the amount saved. Under the TSR, savings are measured from which balance?

Answer: The amount of the debt at the time it was enrolled

Percentage-of-savings fees must be based on the difference between the enrolled balance and the settlement amount.

A client fails to make deposits and a creditor files a lawsuit. What is the best practice for the debt relief agent?

Answer: Inform the client the lawsuit must be taken seriously, that responding by the deadline matters, and refer them to an attorney if needed

Ignoring a lawsuit can lead to default judgment, so clients should respond timely and seek legal advice.

Under the Fair Credit Reporting Act, how long can most negative account information such as a charged-off account generally remain on a credit report?

Answer: 7 years

Most negative information can be reported for about seven years from the date of first delinquency.

A client's account has been sold to a third-party debt buyer that is now collecting. Which federal law primarily governs that collector's conduct?

Answer: Fair Debt Collection Practices Act

The FDCPA regulates third-party debt collectors and debt buyers collecting consumer debts.

Which client profile is generally the BEST fit for a debt settlement program rather than a debt management plan?

Answer: A client with significant unsecured debt in hardship who cannot repay the full principal but can make consistent monthly deposits

Settlement suits hardship clients who cannot repay full principal yet can fund a dedicated account consistently.

A debt settlement company is affiliated with the dedicated account administrator and receives referral payments from it. Under the TSR, this is:

Answer: Not permitted, because the provider may not own, control, or be affiliated with the account administrator or receive referral fees from it

The TSR prohibits affiliation with, control of, or referral fees from the dedicated account administrator.