Can a CA charge interest? Say your original debt with OC was $400 and at chargeoff was $950. When a JDB like Sherman purchases that debt, do they have the right to add interest? Also, what if they are NOT licensed in your state?
The answer for this depends on the account, the specific contract or application for the account, and/or your states law. Under Section 808(1), charging fees not allowed under the contract, and/or your states laws are illegal. But you need both the application and/or contract, and to look over your states laws with a fine tooth comb in order to figure out whether or not interest, or any other fees are legal.
Thanks for answering, jam. I've been looking over my state law until my eyes are crossed. Everything is starting to run together. Sherman purchased this from Providian. They have added $350.00 in interest. Sherman is not licensed in FL. I don't know if that has anything to do with if they can add interest. The way I see it, I never had a contract with them. Am I making any sense? I think I am confusing myself.
Since they have purchased the debt, they can collect according to the original terms of the contract as long as state laws allow it. in other words if your original contract allowed for interest to be charged, they are probably allowed to charge it too. as to whether they are licensed in FL has anything to do with their collection efforts, I don't know, I nevewr had to deal with the "unlicensed CA attempting to collect"
No no no.....they CANNOT collect if they are not licensed in your state! I would immediately write a letter to that effect and have them remove the TL from your report immediately!!! (They will more than likely send to another CA at which point you do the validation letter and will be so far out they won't be able to) PS There are great sample letters here on the site somewhere....I've seen them
I wouldn't write saying they can't collect because they aren't licensed in the state, I would ask for validation and keep getting violations.
I recently read somewhere(looking for it) whereby a 3rd party (purchaser of debt) can ONLY collect the amount of interest allowed by the state's (where you live) usury laws. It alluded to a banking charter/lender in the business of collecting interest as referred to under Bank charters. I guess it means that an atty debt buyer/collector debt buyers cannot capitalize on those 24% debts. Yet no one will tell you that. I am looking more into this area and if anyone has any info, would appreciate it. Like a thousand eyes and ears looking for the same thing.
If you live in Il. you're in luck. There is Federal case law that is recent. One of our complaints alleging that a bad debt buyer is not entitled to charge more than 9% interest (with an agreement so providing) or 5% (without an agreement) in Illinois was upheld on February 26, 2004 by Judge Darrah in federal district court in Chicago. Shanahan v. Porick, 03 C 7211 (N.D.Ill.). This involved an Asset Acceptance debt. Bad debt buyers routinely attempt to charge the same amount as the original creditor, even though the original creditor had a charter or license entitling it to charge "supervised" rates and the bad debt buyer does not. The effect is that a lot of what is claimed is not owed, and Interest Act or FDCPA penalties may offset some or all of the alleged debt. The theory is also good in Indiana but there the rate is 21%. EDELMAN, COMBS & LATTURNER, LLC 120 S. LaSalle Street, 18th floor Chicago, Illinois 60603-3403 (312) 739-4200 (800) 644-4673 (312) 419-0379 (FAX) Email: edcombs@aol.com
