CARS Asset Recovery Specialist Legal Compliance 2 — Questions and Answers
Question 1: Under the Fair Debt Collection Practices Act (FDCPA), which of the following is a permissible time to contact a debtor by phone?
- 6:00 AM local time
- 9:00 PM local time
- 2:00 PM local time (Correct answer)
- 11:00 PM local time
Correct answer: 2:00 PM local time
The FDCPA restricts calls to between 8:00 AM and 9:00 PM local time; 2:00 PM falls within this window.
Question 2: A debtor sends a written cease communication request. Under the FDCPA, which action is still legally permitted after receiving it?
- Calling the debtor to negotiate a payment plan
- Notifying the debtor of a planned lawsuit (Correct answer)
- Continuing normal collection calls
- Reporting the debt to a credit bureau without notice
Correct answer: Notifying the debtor of a planned lawsuit
After a cease communication notice, a collector may still notify the debtor of specific actions such as filing suit.
Question 3: Which federal law governs the repossession of motor vehicles in the context of secured lending and primarily requires 'no breach of the peace'?
- Truth in Lending Act (TILA)
- Uniform Commercial Code (UCC) Article 9 (Correct answer)
- Fair Credit Reporting Act (FCRA)
- Gramm-Leach-Bliley Act
Correct answer: Uniform Commercial Code (UCC) Article 9
UCC Article 9 governs secured transactions and permits self-help repossession only if it can be accomplished without a breach of the peace.
Question 4: Which statement best describes 'skip tracing' within legal compliance boundaries for asset recovery?
- Accessing a debtor's bank account records without authorization
- Using lawfully obtained public records and databases to locate a debtor (Correct answer)
- Contacting a debtor's employer to discuss the debt
- Installing tracking software on a debtor's vehicle without consent
Correct answer: Using lawfully obtained public records and databases to locate a debtor
Skip tracing must rely on permissible sources such as public records, credit headers, and licensed databases to remain legally compliant.
Question 5: Under the Gramm-Leach-Bliley Act (GLBA), asset recovery companies that obtain nonpublic personal information must:
- Share it freely with all business partners
- Safeguard it and limit disclosure to permitted purposes (Correct answer)
- Retain it indefinitely for future collection use
- Publicly post it to verify debt ownership
Correct answer: Safeguard it and limit disclosure to permitted purposes
GLBA requires financial institutions and their affiliates to protect nonpublic personal information and restrict its use and sharing.
Question 6: When a repossession agent encounters a debtor who verbally objects to the repossession and stands in front of the vehicle, the legally correct action is to:
- Proceed with the repossession since verbal objection is not legally binding
- Abort the repossession to avoid a breach of the peace (Correct answer)
- Call local police and request they force the debtor to move
- Hook up the vehicle while law enforcement is contacted
Correct answer: Abort the repossession to avoid a breach of the peace
Physical or verbal confrontation constitutes a breach of the peace under UCC Article 9, requiring the agent to abandon the repossession attempt.
Question 7: A lender must provide a 'right to cure' notice to a borrower before repossession in states that require it. What does this notice typically allow the borrower to do?
- Contest the validity of the original loan
- Bring the account current within a specified period to avoid repossession (Correct answer)
- Request a jury trial before the vehicle is taken
- Negotiate a lower principal balance on the loan
Correct answer: Bring the account current within a specified period to avoid repossession
A right-to-cure notice gives the borrower an opportunity to reinstate the loan by paying past-due amounts within the state-mandated timeframe.
CARS Asset Recovery Specialist Legal Compliance 2
Under the Fair Debt Collection Practices Act (FDCPA), which of the following is a permissible time to contact a debtor by phone?