Applied Knowledge & Practice Flashcards

A client with $40,000 in unsecured debt can only deposit $150 per month. What is the most responsible action?

Answer: Evaluate whether the program is realistic and discuss alternatives such as bankruptcy consultation or credit counseling

Suitability requires confirming the client can realistically complete the program, otherwise alternatives should be discussed.

In Chapter 13 bankruptcy, a repayment plan typically lasts how long?

Answer: 3 to 5 years

Chapter 13 plans usually run three to five years depending on income relative to the state median.

Which statement about the FDCPA debt validation process is accurate?

Answer: Consumers have 30 days after receiving the validation notice to dispute the debt in writing

Under the FDCPA, consumers have 30 days from receiving the validation notice to dispute the debt.

A company tells prospects it will 'repair your credit and remove negative items' for an upfront fee. Which law is most directly implicated?

Answer: Credit Repair Organizations Act

CROA prohibits advance fees for credit repair services and misleading claims about removing accurate negative information.

A settlement agreement is reached for a 24-month installment plan with the creditor. What should the agent confirm before advising the client to accept?

Answer: That the client's dedicated account funding can cover each installment and that the terms are documented in writing

Clients should have written settlement terms and sufficient projected funds to meet every scheduled payment.

How is a settled account most commonly reported to credit bureaus after a debt settlement?

Answer: Settled or paid for less than the full balance

Settled accounts are usually reported as settled for less than the full amount, which is a negative mark.

A client is assessed as insolvent with liabilities of $60,000 and assets of $45,000 when $10,000 of debt is forgiven. How much of the forgiven debt may be excluded from income under the insolvency exclusion?

Answer: $10,000

The exclusion is limited to the amount of insolvency ($15,000), so the full $10,000 forgiven may be excluded.