Operations & Process Management Flashcards

A creditor forgives $3,000 in a settlement. Which IRS form will the creditor generally issue to the client?

Answer: Form 1099-C

Creditors generally issue Form 1099-C for canceled debt of $600 or more.

A client who was insolvent when debt was forgiven may be able to exclude the canceled debt from income by filing which form?

Answer: Form 982

IRS Form 982 is used to claim exclusions such as insolvency for canceled debt.

A creditor accepts a settlement but requires a lump-sum payment within 10 days. What should operations confirm first?

Answer: That enough funds are in the dedicated account and the client approves the terms

Checking available funds and getting client approval comes before committing to a time-limited settlement.

Which document should a negotiator get from the creditor before any settlement payment is sent?

Answer: A written settlement agreement stating the amount, terms, and that the remaining balance will be resolved

A written settlement letter protects the client by documenting the agreed terms before money is sent.

An enrolled account is sold to a debt buyer partway through the program. What is the BEST operations step?

Answer: Update the creditor of record and send future negotiations to the new owner

When debt is sold, the file should be updated so negotiations and payments go to the current owner.

A client is served with a lawsuit by an enrolled creditor. What is the MOST appropriate program response?

Answer: Escalate quickly, tell the client to respond by the deadline, and prioritize negotiating that account

Lawsuits need quick escalation and a timely response so the client avoids a default judgment.

Which KPI BEST measures how well a debt settlement program delivers results for clients?

Answer: Percentage of enrolled debt settled and average savings per settled account

Settlement rate and savings achieved directly measure results for clients.