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 statute of limitations is the legally defined period — which varies by state and debt type — after which a creditor loses the right to file a lawsuit to collect the debt.

Question 2

A 'zombie debt' refers to:

Accepted Answer

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

Answer

Zombie debt is old debt — often past the statute of limitations — that debt buyers attempt to collect on; consumers may inadvertently restart the statute of limitations by making a payment or acknowledging the debt.

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 CFPB has supervisory authority over larger non-bank financial companies, including debt relief service providers and credit counseling organizations, and can examine them for compliance with consumer protection laws.

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

Under the FTC's amended TSR, for-profit debt relief companies that use telemarketing are prohibited from charging fees until they have renegotiated or settled a debt and the consumer has made at least one payment on that agreement.

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

DMPs allow clients to repay debts in full at reduced interest rates without requiring delinquency, which means far less damage to the client's credit score compared to debt settlement, which requires accounts to default.

ADRA - Accredited Debt Relief Agent Practice Test

ADRA - Accredited Debt Relief Agent Practice Test

ADRA Debt Relief Programs & Consumer Options 3