CCP Collections & Recovery Strategies 3 — Questions and Answers
Question 1: Which collections model uses statistical scoring to prioritize which accounts to work first?
- First-in-first-out (FIFO) model
- Predictive dialer model
- Propensity-to-pay scoring model (Correct answer)
- Flat-file waterfall model
Correct answer: Propensity-to-pay scoring model
Propensity-to-pay models assign scores based on historical behavior, allowing collectors to focus on accounts most likely to pay.
Question 2: A debtor's account has been charged off. What does this mean from the original creditor's accounting perspective?
- The debt is legally forgiven
- The balance is written off as a loss on the books but the debt still legally exists (Correct answer)
- The statute of limitations has expired
- The debtor has been discharged in bankruptcy
Correct answer: The balance is written off as a loss on the books but the debt still legally exists
Charge-off is an accounting entry removing the receivable from active assets; the debt legally remains collectible.
Question 3: The 'mini-Miranda' warning required by the FDCPA must be included in:
- Every written communication only
- The initial communication and any subsequent written notice
- All communications with the consumer (Correct answer)
- Only communications sent via certified mail
Correct answer: All communications with the consumer
The mini-Miranda disclosure — that the communication is from a debt collector attempting to collect a debt — is required in every communication.
Question 4: Which bankruptcy chapter is most commonly filed by individual consumers seeking to discharge unsecured debt?
- Chapter 7 (Correct answer)
- Chapter 11
- Chapter 12
- Chapter 13
Correct answer: Chapter 7
Chapter 7 is a liquidation bankruptcy that allows eligible individuals to discharge most unsecured debts quickly.
Question 5: When a collections account is reported to a credit bureau, the FCRA requires that negative information be removed after:
- 5 years from the date of last activity
- 7 years from the date of first delinquency (Correct answer)
- 10 years from the charge-off date
- 3 years from the date of last payment
Correct answer: 7 years from the date of first delinquency
The FCRA mandates that most negative information, including collection accounts, be removed 7 years from the original delinquency date.
Question 6: In a contingency-fee collections arrangement, the collection agency is compensated by:
- A flat monthly retainer fee
- A percentage of the amount actually recovered (Correct answer)
- A per-account fee regardless of outcome
- The face value of accounts placed
Correct answer: A percentage of the amount actually recovered
Contingency-fee agencies earn a pre-agreed percentage (e.g., 20–35%) only on amounts they successfully collect.
Question 7: Which type of lien gives a creditor a security interest in a debtor's real property as a result of an unpaid court judgment?
- Mechanic's lien
- Judgment lien (Correct answer)
- Consensual lien
- Statutory lien
Correct answer: Judgment lien
A judgment lien attaches to a debtor's real property automatically upon recording the judgment in the county where property is located.
CCP Collections & Recovery Strategies 3
Which collections model uses statistical scoring to prioritize which accounts to work first?