CCDS CCDS Negotiation & Collection Practices 2 — Questions and Answers
Question 1: What is 'wage garnishment' in the context of debt collection?
- A voluntary payroll deduction set up by the debtor
- A court-ordered withholding of a portion of a debtor's wages to satisfy a debt (Correct answer)
- A penalty charged by a creditor for late payment
- A lien placed on a debtor's real property
Correct answer: A court-ordered withholding of a portion of a debtor's wages to satisfy a debt
Wage garnishment is a legal process whereby a creditor with a court judgment can direct an employer to withhold part of the debtor's wages.
Question 2: Which of the following best describes the 'debt avalanche' repayment method?
- Paying the smallest balance first to gain momentum
- Paying the debt with the highest interest rate first to minimize total interest (Correct answer)
- Consolidating all debts into one low-interest loan
- Making equal payments across all outstanding debts
Correct answer: Paying the debt with the highest interest rate first to minimize total interest
The debt avalanche method prioritizes paying the highest-interest debt first, minimizing the total interest paid over time.
Question 3: Under the FDCPA, which of the following is a prohibited debt collection practice?
- Sending a written notice of the debt amount
- Threatening to take legal action the collector cannot or does not intend to take (Correct answer)
- Calling the debtor during permitted hours
- Identifying themselves as a debt collector
Correct answer: Threatening to take legal action the collector cannot or does not intend to take
The FDCPA prohibits collectors from making false threats of legal action that they have no intention or legal ability to carry out.
Question 4: What is the primary role of a CCDS-certified specialist when negotiating with creditors on behalf of a client?
- To guarantee a specific settlement outcome for the client
- To advocate for the client's financial interests within ethical and legal boundaries (Correct answer)
- To represent the client in bankruptcy court
- To issue legal opinions on debt validity
Correct answer: To advocate for the client's financial interests within ethical and legal boundaries
A CCDS specialist advocates ethically for clients, helping negotiate with creditors while remaining within legal and professional boundaries.
Question 5: What is a 'judgment lien' in debt collection?
- A lien placed on a debtor's property after a court judgment in favor of the creditor (Correct answer)
- A voluntary agreement by the debtor to secure a loan with property
- A government lien for unpaid taxes
- A lien placed by a mortgage servicer
Correct answer: A lien placed on a debtor's property after a court judgment in favor of the creditor
A judgment lien results from a court ruling in the creditor's favor, allowing them to attach the lien to the debtor's real property.
Question 6: Which CFPB rule, effective in 2021, updated the FDCPA to address digital communication methods in debt collection?
- Regulation X
- Regulation F (Correct answer)
- Regulation E
- Regulation Z
Correct answer: Regulation F
Regulation F, the CFPB's 2021 update to the FDCPA, established rules for electronic communications including email and text messaging in debt collection.
CCDS CCDS Negotiation & Collection Practices 2
What is 'wage garnishment' in the context of debt collection?