PCS Payment Negotiation & Settlement 2 — Questions and Answers
Question 1: A debtor offers a lump-sum settlement of 40% of the balance. Before accepting, what should a collector verify first?
- The debtor's credit score
- Authorization from the creditor client to settle at that percentage (Correct answer)
- Whether the debtor has filed for bankruptcy
- The debtor's employment status
Correct answer: Authorization from the creditor client to settle at that percentage
Collectors must have explicit client authorization for any settlement percentage before accepting or promising acceptance.
Question 2: Which negotiation technique involves stating the full balance first before discussing any payment options?
- Anchoring (Correct answer)
- Mirroring
- Bracketing
- Reframing
Correct answer: Anchoring
Anchoring sets the full balance as the reference point, making partial payments or settlements appear more favorable by comparison.
Question 3: A debtor proposes monthly payments but the amount offered won't satisfy the debt within the statute of limitations. What is the best collector response?
- Accept the offer immediately
- Reject the offer and demand full payment
- Counteroffer with a higher monthly payment or a lump-sum settlement (Correct answer)
- Advise the debtor to consult an attorney
Correct answer: Counteroffer with a higher monthly payment or a lump-sum settlement
A counteroffer addressing the timeline concern is more productive than outright rejection and keeps negotiation moving toward resolution.
Question 4: Under the FDCPA, a collector who agrees to a payment arrangement must:
- Report the arrangement to all three credit bureaus immediately
- Ensure any written agreement is signed by a notary
- Honor the agreed terms and not pursue further collection action while the debtor complies (Correct answer)
- Charge the debtor a processing fee for the arrangement
Correct answer: Honor the agreed terms and not pursue further collection action while the debtor complies
Once a payment arrangement is agreed upon, the collector must honor it and refrain from additional collection pressure as long as the debtor complies.
Question 5: What is a 'hardship program' in the context of debt collection?
- A legal defense available to debtors in court
- A reduced payment or interest waiver offered to debtors experiencing financial difficulty (Correct answer)
- A penalty charged for late payments
- A government-sponsored debt forgiveness initiative
Correct answer: A reduced payment or interest waiver offered to debtors experiencing financial difficulty
Hardship programs allow creditors or collectors to temporarily reduce required payments or waive fees for debtors facing documented financial difficulties.
Question 6: When a debtor claims they can only pay after receiving their next paycheck in two weeks, the most effective collector response is to:
- Tell the debtor to call back when they have money
- Schedule a specific follow-up call and confirm a commitment for that date (Correct answer)
- Immediately close the account as uncollectible
- Transfer the account to an attorney
Correct answer: Schedule a specific follow-up call and confirm a commitment for that date
Scheduling a firm follow-up with a specific commitment maintains momentum and holds the debtor accountable without losing the opportunity.
Question 7: A debtor requests that all future communications be in writing. Under the FDCPA, the collector must:
- Ignore the request and continue calling
- Cease all telephone contact and communicate only in writing (Correct answer)
- Close the account immediately
- Report the debtor to the original creditor
Correct answer: Cease all telephone contact and communicate only in writing
When a debtor requests written communication only, the FDCPA requires collectors to honor that preference and stop phone contact.
PCS Payment Negotiation & Settlement 2
A debtor offers a lump-sum settlement of 40% of the balance.
Before accepting, what should a collector verify first?