Strategic Planning & Analysis Flashcards

A client's oldest debt was last paid six years ago in a state with a four-year statute of limitations. What is the strategic implication?

Answer: The debt may be time-barred for lawsuits, so a payment could risk restarting the limitations period in some states

A time-barred debt cannot generally be enforced in court, and in some states a payment can revive the limitations period.

How long can most negative items, such as charged-off accounts, remain on a consumer's credit report under the FCRA?

Answer: About 7 years from the date of first delinquency

Under the FCRA, most negative items may be reported for about seven years from the original delinquency date.

When analyzing a creditor's likely settlement posture, which factor typically increases willingness to accept a lower offer?

Answer: The account is significantly delinquent or charged off

Creditors are generally more flexible on delinquent or charged-off accounts because recovery becomes less certain.

A client has significant home equity and high unsecured debt. Which alternative should be evaluated during strategic analysis?

Answer: Whether a secured refinancing or consolidation option is cheaper overall, while weighing the risk of securing unsecured debt

Equity-based consolidation may lower costs but converts unsecured debt into debt secured by the home, a risk that must be weighed.

Which situation would most likely warrant referring a client to a bankruptcy attorney instead of enrolling in settlement?

Answer: Overwhelming debt, no realistic surplus, and multiple pending judgments

When a client cannot fund any program and faces judgments, bankruptcy counsel may offer a more suitable solution.

What is the primary purpose of a cash-flow projection in a client's debt relief plan?

Answer: To forecast when sufficient funds will be available to make settlement offers to each creditor

Cash-flow projections map deposit accumulation to settlement timing for each enrolled account.

A client with a variable income from seasonal work wants to enroll. What is the best planning approach?

Answer: Base deposits on a conservative average and build flexibility for low-income months

Using conservative averages with flexibility reduces the risk of missed deposits during low-income periods.