CCDS CCDS Negotiation & Collection Practices 1 — Questions and Answers
Question 1: Which federal law governs third-party debt collectors and prohibits abusive collection practices?
- Truth in Lending Act (TILA)
- Fair Debt Collection Practices Act (FDCPA) (Correct answer)
- Equal Credit Opportunity Act (ECOA)
- Fair Credit Billing Act (FCBA)
Correct answer: Fair Debt Collection Practices Act (FDCPA)
The FDCPA, enacted in 1977, regulates the behavior of third-party debt collectors and prohibits abusive, unfair, and deceptive practices.
Question 2: Under the FDCPA, within how many days must a debt collector provide verification of a debt after the consumer requests it?
- 15 days
- 30 days
- Upon request, the collector must cease collection until verification is mailed (Correct answer)
- 60 days
Correct answer: Upon request, the collector must cease collection until verification is mailed
Under the FDCPA, when a consumer disputes a debt in writing within 30 days, the collector must cease collection activities until it provides verification.
Question 3: What is the 'statute of limitations' on debt collection?
- The time a collector has to call a debtor before 8 AM
- The time period within which a creditor can sue to collect a debt (Correct answer)
- The maximum number of collection calls allowed per week
- The legal cap on interest rates charged on consumer debt
Correct answer: The time period within which a creditor can sue to collect a debt
The statute of limitations is the time window during which a creditor or collector can legally file a lawsuit to collect on a debt.
Question 4: Under the FDCPA, debt collectors are prohibited from calling consumers at what times?
- Before 9 AM or after 8 PM local time
- Before 8 AM or after 9 PM local time (Correct answer)
- Before 7 AM or after 10 PM local time
- Before 8 AM or after 8 PM local time
Correct answer: Before 8 AM or after 9 PM local time
The FDCPA prohibits collectors from calling before 8 AM or after 9 PM in the consumer's local time zone.
Question 5: Which negotiation strategy involves making a lump-sum offer to a creditor to settle a debt for less than the full balance?
- Debt consolidation
- Debt settlement (Correct answer)
- Debt avalanche
- Loan modification
Correct answer: Debt settlement
Debt settlement involves negotiating with creditors to accept a lump-sum payment that is less than the total amount owed.
Question 6: What is a 'cease and desist' letter in the context of debt collection?
- A letter demanding the debtor pay immediately or face legal action
- A written request from a consumer asking a collector to stop contacting them (Correct answer)
- A court order halting a wage garnishment
- A settlement offer from a creditor
Correct answer: A written request from a consumer asking a collector to stop contacting them
A cease and desist letter is a written request from a consumer directing a debt collector to stop all contact, which collectors must honor under the FDCPA.
CCDS CCDS Negotiation & Collection Practices 1
Which federal law governs third-party debt collectors and prohibits abusive collection practices?