Collection Strategy & Escalation Flashcards
7 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Collection Strategy & Escalation flashcards as text
The statute of limitations on a debt is most accurately defined as:
Answer: The time period during which a creditor may file a lawsuit to collect the debt
The statute of limitations defines how long a creditor has to initiate legal action to collect a debt; it varies by debt type and state law.
A 'settlement in full' offer typically requires the debtor to pay what percentage of the outstanding balance?
Answer: A negotiated lump sum, often 40-60% of the balance depending on account age
Settlement amounts are negotiated based on account age, debtor ability to pay, and recovery probability, typically ranging from 40-60% of the outstanding balance.
When an account is 'charged off,' what is the impact on the creditor's financial statements?
Answer: The balance is removed from accounts receivable and recognized as a loss on the income statement
A charge-off is an accounting action that removes the uncollectible balance from the asset side of the balance sheet and recognizes a loss, though collection efforts may continue.
In a collection call, the 'mini-Miranda' disclosure requires a collector to state:
Answer: That the call is from a debt collector attempting to collect a debt and information will be used for that purpose
The FDCPA's mini-Miranda requires collectors to identify themselves as debt collectors and disclose that information obtained will be used for collection purposes.
Which behavioral segmentation approach identifies debtors most likely to pay if given a settlement discount versus those who will pay in full without an incentive?
Answer: Propensity-to-pay modeling using payment history and behavioral data
Propensity-to-pay models use historical payment patterns and behavioral signals to identify debtors who need an incentive to pay versus those who would self-cure.
A creditor considering outsourcing to a third-party collection agency must ensure the agency complies with which oversight requirement under the CFPB framework?
Answer: The creditor remains responsible for the agency's UDAAP compliance as a service provider
The CFPB holds creditors accountable for the actions of their third-party service providers under UDAAP, requiring creditor oversight programs for outsourced collection activities.
Which metric best measures the efficiency of an early-stage (30-59 DPD) collection strategy?
Answer: Cure rate — the percentage of accounts that return to current status
The cure rate directly measures how effectively early-stage strategies prevent accounts from rolling into deeper delinquency by returning them to current status.