#1
Which of the following is NOT a common billing method?
Monthly donation
ExplanationMonthly donations are typically associated with charitable giving rather than billing for goods or services.
#2
What does 'net 30' refer to in billing terms?
Payment is due within 30 days of invoice date
Explanation'Net 30' means the invoice is due for payment within 30 days of the invoice date.
#3
What is the Fair Debt Collection Practices Act (FDCPA) designed to do?
Protect consumers from abusive debt collection practices
ExplanationThe FDCPA aims to safeguard consumers from unfair and abusive practices by debt collectors.
#4
Which of the following is considered an illegal debt collection practice?
Threatening legal action that cannot be taken
ExplanationThreatening legal action that cannot be legally pursued is prohibited in debt collection practices.
#5
What does 'charge-off' mean in the context of debt collection?
The creditor declares the debt as unlikely to be collected
ExplanationA 'charge-off' indicates that the creditor considers the debt unlikely to be repaid and writes it off as a loss.
#6
What is a 'wage garnishment' in the context of debt collection?
A process where the debtor's wages are withheld to repay a debt
Explanation'Wage garnishment' involves deducting money directly from a debtor's paycheck to satisfy a debt.
#7
What is the purpose of a 'cease and desist' letter in debt collection?
To instruct the debtor to stop contacting the creditor
ExplanationA 'cease and desist' letter directs the creditor to halt communication with the debtor, as requested.
#8
Which of the following is NOT a step typically involved in debt collection?
Threatening physical harm
ExplanationThreatening physical harm is illegal and not a legitimate debt collection tactic.
#9
What is the statute of limitations for debt collection in the United States?
It varies by state and type of debt
ExplanationThe statute of limitations for debt collection varies depending on the state and type of debt involved.
#10
Which federal agency enforces the Fair Debt Collection Practices Act (FDCPA)?
Federal Trade Commission (FTC)
ExplanationThe FTC is responsible for enforcing compliance with the FDCPA.
#11
In debt collection, what does the term 're-aging' refer to?
Restarting the statute of limitations on a debt
Explanation'Re-aging' involves resetting the clock on the statute of limitations for a debt, allowing it to be pursued again.
#12
What is the main purpose of credit reporting agencies in debt collection?
To report accurate information about consumers' credit histories
ExplanationCredit reporting agencies compile and provide credit histories, including debt repayment information, to creditors and lenders.
#13
Which of the following is a violation of the Fair Debt Collection Practices Act (FDCPA)?
Contacting a debtor's employer without permission
ExplanationContacting a debtor's employer without consent is prohibited by the FDCPA.