CCP Collections & Recovery Strategies 2 — Questions and Answers
Question 1: Under the Fair Debt Collection Practices Act (FDCPA), how many times may a debt collector call a consumer in a seven-day period regarding a specific debt?
- Once (Correct answer)
- Three times
- Five times
- Seven times
Correct answer: Once
The FDCPA's 2021 rule limits collectors to one call per debt per seven-day period to prevent harassment.
Question 2: Which collection strategy involves selling a portfolio of delinquent accounts to a third-party buyer at a discount?
- Debt placement
- Debt sale (Correct answer)
- Charge-off transfer
- Assignment for value
Correct answer: Debt sale
A debt sale permanently transfers ownership of the accounts to a debt buyer for a lump-sum price below face value.
Question 3: A consumer submits a written dispute within 30 days of receiving an initial validation notice. What must the collector do?
- Continue collection and verify within 60 days
- Cease collection activity until verification is provided (Correct answer)
- Report the dispute to the credit bureau only
- Escalate to legal collections immediately
Correct answer: Cease collection activity until verification is provided
Upon written dispute, the FDCPA requires the collector to cease collection and mail verification before resuming.
Question 4: In skip tracing, what is the PRIMARY purpose of using address verification services?
- To confirm the debtor's employment status
- To locate a debtor who has moved without leaving contact information (Correct answer)
- To assess the debtor's creditworthiness for a new account
- To calculate the statute of limitations on the debt
Correct answer: To locate a debtor who has moved without leaving contact information
Skip tracing uses address and contact databases to locate debtors who have relocated and are difficult to reach.
Question 5: Which metric best measures the efficiency of a collections department's recovery efforts?
- Days Sales Outstanding (DSO)
- Recovery Rate (Correct answer)
- Net Promoter Score (NPS)
- Current Ratio
Correct answer: Recovery Rate
Recovery rate — the percentage of delinquent balances actually collected — directly measures collections effectiveness.
Question 6: A debtor proposes to pay 60% of the outstanding balance as full settlement. This arrangement is best described as:
- A forbearance agreement
- A compromise settlement (Correct answer)
- A debt consolidation
- A payment deferral
Correct answer: A compromise settlement
A compromise settlement (or lump-sum settlement) accepts less than the full balance owed to close the account.
Question 7: Which legal remedy allows a creditor to intercept a portion of a debtor's wages directly from the employer after obtaining a court judgment?
- Levy
- Attachment
- Wage garnishment (Correct answer)
- Replevin
Correct answer: Wage garnishment
Wage garnishment is a post-judgment remedy directing the employer to withhold and remit a portion of earnings to the creditor.
CCP Collections & Recovery Strategies 2
Under the Fair Debt Collection Practices Act (FDCPA), how many times may a debt collector call a consumer in a seven-day period regarding a specific debt?