Credit Disbursement And Collection

Question 1

What are the 5 C’s of creditworthiness

Answer 1

Capacity 
Credit 
Character 
Capital 
Collateral

Question 2

What does capacity access

Answer 2

Ability to repay debt, current income and likelihood to continue

Question 3

How long is considered job stability

Answer 3

Minimum 3 years with same employer

Question 4

3 main credit bureaus

Answer 4

Equifax
Trans union
Experian

Question 5

Info credit bureau reports. 5

Answer 5

Personal information 
Credit bureau score 
Inquiries 
Public information 
Trade lines

Question 6

Important info in personal info section of credit bureau report

Answer 6

Time at address

Question 7

What is credit score range

Answer 7

300 - 900

Question 8

Average credit score

Answer 8

650

Question 9

Score if client has no credit history

Answer 9

O

Question 10

Score required to get mortgage from schedule l bank

Answer 10

Over 600

Question 11

What info is in public info section of credit bureau

Answer 11

Details of collection,bankruptcy

Question 12

What is in trade lines report section of credit bureau report

Answer 12

History of how client managed past credit dealings

Question 13

How to calculate total debt to service ratio

Answer 13

(Monthly debt / monthly income) x 100

Question 14

What TDS ratio is wanted

Answer 14

Less than 40%

Question 15

What GDS do you want

Answer 15

Under 32%

Question 16

What does the GDS include

Answer 16

Only house expenses, 50% condo

Question 17

A client that’s deemed insolvent can consult 3 sources for managing debt

Answer 17

Lender
Credit counselling
Licensed trustee

Question 18

How would a licensed trustee help an insolvent client

Answer 18

They administer bankruptcy - they are licensed by superintendent of bankruptcy

• provide advice on repayment
• ensure rights of client and lender are respected
• if filed for bankruptcy, must work with one

Question 19

If client and lender can not work together on insolvency. What are 3 options

Answer 19

Debt management program
Consumer proposal
Bankruptcy

Question 20

What is a debt management program

Answer 20

• Consolidates debt
• Through credit counselling, and may be free through a non profit
• monthly payments through agency
• may negotiate lower interest
• all payments must be made and in full
• shows on credit score for 3 years R7

Question 21

What does it mean to work with a consumer proposal for insolvency

Answer 21

• licensed insolvency trustee
• alternative to bankruptcy
• less than $250k (not including mortgage) - repay over up to 5 years
• if creditors reject proposal, then bankruptcy
• remains on credit record for 3 years R7

Question 22

What is bankruptcy

Answer 22

Legal process that halts all proceedings by creditors to collect debts

Question 23

How long does bankruptcy stay on record

Answer 23

6 - 7 years

Question 24

Debt not discharged by bankruptcy

Answer 24

• secured debt
• student loan less than 10 years
• outstanding child and spouse support
• court ordered payments I.e. fines
• government overpayments

Question 25

What is the order of paying creditors

Answer 25

• secured
• reasonable funeral
• administration costs of estate. I.e. trustee
• levy on dividends paid to secured, preferred and unsecured creditors
• various unsecured but preferred creditors. I.e. landlords, municipal tax, support claims
• unsecured creditors with no unique priority

Question 26

What is the credit rating when bankruptcy is declared

Answer 26

R9 and remains for 6 - 7 years