Collections & Recovery Strategies Flashcards

Which collections model uses statistical scoring to prioritize which accounts to work first?

Answer: Propensity-to-pay scoring model

Propensity-to-pay models assign scores based on historical behavior, allowing collectors to focus on accounts most likely to pay.

A debtor's account has been charged off. What does this mean from the original creditor's accounting perspective?

Answer: The balance is written off as a loss on the books but the debt still legally exists

Charge-off is an accounting entry removing the receivable from active assets; the debt legally remains collectible.

The 'mini-Miranda' warning required by the FDCPA must be included in:

Answer: All communications with the consumer

The mini-Miranda disclosure — that the communication is from a debt collector attempting to collect a debt — is required in every communication.

Which bankruptcy chapter is most commonly filed by individual consumers seeking to discharge unsecured debt?

Answer: Chapter 7

Chapter 7 is a liquidation bankruptcy that allows eligible individuals to discharge most unsecured debts quickly.

When a collections account is reported to a credit bureau, the FCRA requires that negative information be removed after:

Answer: 7 years from the date of first delinquency

The FCRA mandates that most negative information, including collection accounts, be removed 7 years from the original delinquency date.

In a contingency-fee collections arrangement, the collection agency is compensated by:

Answer: A percentage of the amount actually recovered

Contingency-fee agencies earn a pre-agreed percentage (e.g., 20–35%) only on amounts they successfully collect.

Which type of lien gives a creditor a security interest in a debtor's real property as a result of an unpaid court judgment?

Answer: Judgment lien

A judgment lien attaches to a debtor's real property automatically upon recording the judgment in the county where property is located.