AFC - Accredited Financial Counselor Credit and Debt Management 3

Question 1

A client is being contacted by a debt buyer who purchased their old medical debt. What rights does the client have under the FDCPA?

Accepted Answer

The same rights as with the original creditor, including the right to request debt validation within 30 days of initial contact

Answer

No rights because the debt was sold

Answer

They can only dispute the debt with the original medical provider

Answer

Debt buyers are exempt from the FDCPA

Question 2

What is credit counseling as required before filing for bankruptcy, and who provides it?

Accepted Answer

It is a mandatory session from an approved nonprofit agency that must be completed within 180 days before filing bankruptcy

Answer

It is optional financial education after bankruptcy discharge

Answer

It is legal advice provided by the bankruptcy attorney

Answer

It is a credit score review by the bankruptcy court

Question 3

A client has both federal student loans and credit card debt. They can only afford to make extra payments on one. What factors should guide the counselor's recommendation?

Accepted Answer

Consider interest rates, tax deductibility of student loan interest, income-driven repayment options, and potential forgiveness programs

Answer

Always prioritize student loans because they are larger

Answer

Always prioritize credit card debt because it is unsecured

Answer

Recommend paying equal extra amounts toward both

Question 4

What is predatory lending and what warning signs should a financial counselor help clients identify?

Accepted Answer

Lending practices that impose unfair, deceptive, or abusive terms on borrowers, including hidden fees, balloon payments, and loan flipping

Answer

Any loan with an interest rate above 10%

Answer

Loans offered only to low-income borrowers

Answer

Any loan that requires collateral

Question 5

A client's wages are being garnished for a defaulted debt. What options should the counselor present?

Accepted Answer

Options include negotiating a payment plan with the creditor, claiming exemptions, filing for bankruptcy, or contesting the garnishment in court

Answer

There are no options once garnishment begins

Answer

The only option is to pay the debt in full immediately

Answer

Changing employers will stop the garnishment

Question 6

What is the significance of the CARD Act of 2009 for credit card consumers?

Accepted Answer

It established consumer protections including advance notice of rate changes, limits on fees, and clear disclosure of repayment costs

Answer

It eliminated all credit card fees

Answer

It capped credit card interest rates at 15%

Answer

It required all credit cards to have zero annual fees