PCS Legal Remedies & Court Proceedings 1 — Questions and Answers
Question 1: When a debt collector files a lawsuit to collect a debt and the debtor does not respond within the required timeframe, the court may issue a:
- Default judgment (Correct answer)
- Consent decree
- Writ of mandamus
- Declaratory judgment
Correct answer: Default judgment
A default judgment is entered by the court when the defendant fails to respond to a lawsuit within the prescribed time, allowing the plaintiff to win by default.
Question 2: The statute of limitations on a debt refers to:
- The time a debt remains on a credit report
- The period during which a creditor can legally sue to collect a debt (Correct answer)
- The maximum interest rate allowed on a debt
- The time a collector has to validate a debt
Correct answer: The period during which a creditor can legally sue to collect a debt
The statute of limitations defines the window of time within which a creditor or collector must file a lawsuit to collect a debt; after it expires, the debt is time-barred from legal action.
Question 3: Which document formally notifies a debtor that a lawsuit has been filed against them and requires them to appear or respond?
- Writ of execution
- Summons and complaint (Correct answer)
- Judgment lien
- Writ of garnishment
Correct answer: Summons and complaint
A summons and complaint is the legal document served on the debtor to initiate a lawsuit and inform them of the allegations and their obligation to respond.
Question 4: A writ of execution in debt collection proceedings is used to:
- Notify a debtor of a pending lawsuit
- Authorize law enforcement to seize debtor assets to satisfy a judgment (Correct answer)
- Compel a debtor to appear in court
- Place a lien on real property
Correct answer: Authorize law enforcement to seize debtor assets to satisfy a judgment
A writ of execution is a court order directing law enforcement to seize and sell the debtor's non-exempt assets to satisfy an outstanding judgment.
Question 5: Small claims court is typically used in debt collection for cases involving:
- Debts above $50,000
- Commercial bankruptcies
- Smaller dollar amounts, usually under state-set thresholds (Correct answer)
- Federal tax debts
Correct answer: Smaller dollar amounts, usually under state-set thresholds
Small claims court provides a simplified, lower-cost venue for resolving disputes involving smaller amounts of money, with dollar limits set by each state.
Question 6: Filing a collection lawsuit after the statute of limitations has expired is a violation of:
- The Uniform Commercial Code
- The Fair Debt Collection Practices Act (FDCPA) (Correct answer)
- The Truth in Lending Act (TILA)
- The Equal Credit Opportunity Act (ECOA)
Correct answer: The Fair Debt Collection Practices Act (FDCPA)
The FDCPA prohibits collectors from filing or threatening to file a lawsuit on a time-barred debt because it constitutes a deceptive or unfair practice.
Question 7: Before a judgment creditor can garnish wages or levy a bank account, the creditor must first:
- Send a 30-day validation notice
- Obtain a court judgment against the debtor (Correct answer)
- File a proof of claim with the bankruptcy court
- Notify the credit bureaus
Correct answer: Obtain a court judgment against the debtor
Wage garnishment and bank levies are post-judgment remedies that require a valid court judgment before they can be pursued.
PCS Legal Remedies & Court Proceedings 1
When a debt collector files a lawsuit to collect a debt and the debtor does not respond within the required timeframe, the court may issue a: