ADRA Debt Relief Programs & Consumer Options 3

Question 1

What does the term 'statute of limitations' mean in the context of consumer debt?

Accepted Answer

The time period within which a creditor can sue to collect a debt through the courts

Answer

The maximum amount a creditor can collect on a debt

Answer

The federal deadline for reporting a debt to credit bureaus

Answer

The window in which a debtor must respond to a settlement offer

Question 2

A 'zombie debt' refers to:

Accepted Answer

Old, time-barred debt that collectors attempt to revive by contacting consumers

Answer

Debt that has been discharged in bankruptcy but is still reported on the credit report

Answer

Debt transferred between so many collectors that its origin is unknown

Answer

Debt owed to a creditor who has gone out of business

Question 3

Which federal agency has primary supervisory authority over large non-bank debt relief and credit counseling companies?

Accepted Answer

The Consumer Financial Protection Bureau (CFPB)

Answer

The Federal Trade Commission (FTC)

Answer

The Office of the Comptroller of the Currency (OCC)

Answer

The Federal Reserve Board (FRB)

Question 4

The FTC's Telemarketing Sales Rule (TSR) prohibits debt relief companies from collecting fees before:

Accepted Answer

A settlement or other relief has been achieved and the client has made at least one payment pursuant to it

Answer

The client signs a written contract

Answer

The client has had at least one consultation with a licensed attorney

Answer

The company provides a disclosure about credit score impact

Question 5

Which of the following is an advantage of a Debt Management Plan (DMP) over debt settlement?

Accepted Answer

A DMP typically does not require accounts to go delinquent, minimizing credit damage

Answer

A DMP eliminates debt faster because creditors accept lower payoff amounts

Answer

A DMP costs less in total fees than debt settlement programs

Answer

A DMP can eliminate student loans and tax debts

Question 6

When a debt is sold to a third-party debt buyer, which document is most critical for the buyer to pursue legal collection?

Accepted Answer

A chain-of-title or bill of sale proving legal ownership of the debt

Answer

A copy of the original credit application

Answer

The original signed monthly statement

Answer

A letter from the original creditor verifying the balance

Question 7

A client who is considering debt relief options asks about the impact on their ability to obtain new credit. Which statement is MOST accurate?

Accepted Answer

Bankruptcy typically remains on credit reports for 7-10 years, while settled accounts remain for 7 years from the date of first delinquency

Answer

Bankruptcy has no credit impact after the discharge is complete

Answer

All debt relief options have identical credit impacts lasting exactly 7 years

Answer

Enrolling in a DMP has the same credit impact as filing for bankruptcy