Professional in Human Resources (PHR) Practice Exam

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Prepare for the Professional in Human Resources Test with flashcards and multiple choice questions. Each question includes hints and explanations. Get ready for your exam!

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What does the Consumer Credit Protection Act limit?

  1. The total amount of loans offered to consumers.

  2. The percentage of income that can be given as savings.

  3. The amount of wages that can be garnished by creditors in one week.

  4. The maximum credit card interest rates allowed.

The correct answer is: The amount of wages that can be garnished by creditors in one week.

The Consumer Credit Protection Act primarily focuses on the rights of consumers concerning credit and debt. It specifically addresses various consumer protection measures, one of which involves wage garnishment. The act places a limit on the amount of an individual's earnings that creditors can garnish for the repayment of debts, ensuring that consumers retain a portion of their income to support their basic living expenses. This limitation is crucial because it balances creditor rights with consumer protections, preventing excessive financial distress that could be caused by overreaching debt collection practices. By restricting the amount that creditors can take from a consumer's wages, the act helps maintain a floor for earnings, enabling individuals to manage their financial responsibilities while still having enough income for essential needs. In contrast, the other options relate to aspects of consumer debt and credit but do not specifically align with the protections and limitations established by the Consumer Credit Protection Act. Thus, the chosen answer highlights a key consumer protection provided by the legislation.