CRPA CRPA Collections & Debt Recovery 1 — Questions and Answers
Question 1: Under the Fair Debt Collection Practices Act (FDCPA), which of the following is a prohibited debt collection practice?
- Contacting a debtor at a reasonable hour to discuss payment
- Sending a written validation notice within five days of initial contact
- Calling a debtor before 8 AM or after 9 PM local time (Correct answer)
- Notifying a debtor of their right to dispute the debt
Correct answer: Calling a debtor before 8 AM or after 9 PM local time
The FDCPA prohibits debt collectors from contacting consumers before 8 AM or after 9 PM local time.
Question 2: A debtor sends a written cease communication request. Under the FDCPA, which action is still permissible for the collector?
- Calling the debtor once more to confirm receipt
- Notifying the debtor that collection efforts are being terminated (Correct answer)
- Reporting the debt to a credit bureau without notice
- Transferring the account to a third-party agency immediately
Correct answer: Notifying the debtor that collection efforts are being terminated
After a cease communication request, collectors may still send a single notice informing the debtor that collection efforts are being terminated or that specific remedies may be pursued.
Question 3: Which collections strategy prioritizes contacting accounts with the highest balance and oldest past-due status first?
- First-in, first-out (FIFO) collections
- Risk-based collections stratification
- Waterfall collection methodology
- Balance-weighted aging prioritization (Correct answer)
Correct answer: Balance-weighted aging prioritization
Balance-weighted aging prioritization focuses collector effort on accounts that represent the greatest financial exposure based on both dollar amount and delinquency period.
Question 4: What is a 'skip tracing' process in the context of receivables collections?
- Bypassing overdue accounts to focus on current receivables
- Locating a debtor who has moved without providing updated contact information (Correct answer)
- Removing small-balance accounts from the collections queue
- Transferring delinquent accounts to legal counsel
Correct answer: Locating a debtor who has moved without providing updated contact information
Skip tracing refers to the investigative process of locating a debtor who has disappeared or failed to update their contact information.
Question 5: When should a receivables professional typically recommend sending an account to a third-party collection agency?
- Immediately upon invoice issuance
- After one missed payment regardless of amount
- After internal collection efforts have been exhausted, typically 90–120 days past due (Correct answer)
- Only when the debtor has filed for bankruptcy
Correct answer: After internal collection efforts have been exhausted, typically 90–120 days past due
Best practice is to escalate to a third-party collection agency after internal efforts have been exhausted, commonly after 90–120 days past due.
Question 6: Which metric best measures the effectiveness of a collections department's recovery efforts?
- Days Sales Outstanding (DSO)
- Collections Effectiveness Index (CEI) (Correct answer)
- Accounts Receivable Turnover Ratio
- Bad Debt Reserve Percentage
Correct answer: Collections Effectiveness Index (CEI)
The Collections Effectiveness Index (CEI) measures the percentage of receivables that were successfully collected during a given period, making it the most direct measure of collections performance.
CRPA CRPA Collections & Debt Recovery 1
Under the Fair Debt Collection Practices Act (FDCPA), which of the following is a prohibited debt collection practice?