CCM Collections & Recovery 3

Question 1

Which of the following is a primary objective when negotiating a payment plan with a delinquent commercial debtor?

Accepted Answer

Maximize recovery while preserving the business relationship where viable

Answer

Effective commercial collections balance recovery goals with relationship preservation, especially if the debtor is a valuable long-term customer.

Question 2

A judgment lien gives a creditor what type of security interest?

Accepted Answer

An interest in the debtor's non-exempt real and personal property

Answer

A recorded judgment lien attaches to the debtor's non-exempt real and personal property in the jurisdiction where it is filed.

Question 3

A creditor extends a payment plan to a debtor who later defaults again. Which document best protects the creditor's legal position?

Accepted Answer

A signed forbearance agreement or promissory note acknowledging the debt and new terms

Answer

A signed forbearance agreement or promissory note creates a clear legal record of the debt balance and the agreed repayment terms.

Question 4

The 'statute of limitations' in collections refers to:

Accepted Answer

The period within which a creditor must file suit to collect a debt

Answer

The statute of limitations sets the maximum time after a default during which a creditor can bring a legal action to collect the debt.

Question 5

Which ratio is most useful for assessing a debtor company's short-term ability to repay outstanding invoices?

Accepted Answer

Current ratio (current assets ÷ current liabilities)

Answer

The current ratio measures whether a company has enough short-term assets to cover its short-term obligations, indicating liquidity for near-term payables.

(CCM) Certified Credit Manager Practice Test

(CCM) Certified Credit Manager Practice Test

CCM Collections & Recovery 3