Legal & Regulatory Compliance in Credit Management 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 Legal & Regulatory Compliance in Credit Management flashcards as text
Under the Fair Debt Collection Practices Act (FDCPA), which of the following communications is PROHIBITED when contacting a consumer about a debt?
Answer: Contacting the consumer at their place of employment when the employer prohibits such calls
The FDCPA prohibits debt collectors from contacting consumers at their workplace if the collector knows the employer prohibits such calls.
A creditor files a UCC-1 financing statement to perfect a security interest. What is the primary purpose of this filing?
Answer: To provide public notice of the creditor's security interest to third parties
Filing a UCC-1 financing statement perfects a security interest by providing constructive notice to third parties, establishing priority over subsequent creditors.
Which federal law requires creditors to provide applicants with a notice of adverse action when credit is denied?
Answer: Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act (ECOA) requires creditors to notify applicants of adverse action taken on a credit application, including the reasons for denial.
A business debtor files for Chapter 11 bankruptcy. What is the immediate effect on creditors' collection efforts?
Answer: An automatic stay immediately halts most collection activities against the debtor
Upon filing for Chapter 11 bankruptcy, an automatic stay immediately goes into effect, which prohibits most collection actions, lawsuits, and enforcement of liens against the debtor.
Under the FCRA, how long may a Chapter 7 bankruptcy remain on a consumer's credit report?
Answer: 10 years from the date of filing
Under the FCRA, a Chapter 7 bankruptcy may remain on a consumer's credit report for 10 years from the date of filing.
What does the term 'subordination agreement' mean in the context of commercial credit?
Answer: An agreement where one creditor agrees to have their debt repaid after another creditor's debt
A subordination agreement is a contract in which one creditor (the subordinated party) agrees that its claim will rank behind that of another creditor in the event of default or bankruptcy.
Which of the following best describes 'piercing the corporate veil' in credit law?
Answer: Holding individual shareholders or officers personally liable for corporate debts
Piercing the corporate veil is a legal remedy allowing courts to hold shareholders or officers personally liable for corporate obligations when fraud or abuse of the corporate form is found.