Are collection agencies allowed to add interest to debts. If not what law does this violate. Thanks Matt
They can only charge you according to your contract/agreement with the OC - that's what I have read on the board. Now, does that mean they can only charge you the same fees, int, etc that the OC would charge if the account was still open? Or are there provisions in the OC contract that are explicitly for CA's? That's my question.
They can only charge you according to your contract/agreement with the OC - that's what I have read on the board. QUEEN_BEE ========= must send monthly statenents to do it THE END ** *** ** LB 59
Great questions: In short, they may charge interest according to the provisions of your contract up to the maximum permitted by your state laws. In most contracts there is a separate provision for "defaulted debt" which would be substantially higher than the regular interest charged for an open account. In my state, (Ohio) the max they could charge on a defaulted debt is 18%. Even if my contract stipulates a rate at 21%, they still could charge only 18%. So your formula looks like this: "Interest can be charged according to the provisins of the contract up to the maximum permitted by your state, WHICHEVER IS HIGHEST". There have been a few people on here lately who've provided enough information for me (A Financial Planner) to calculate the Internal Interest Rate, (IIR)". We need to know the beginning balance, the ending balance and the number of months involved. For example, Mary gets a collection notice for $200. The debt began at $100, 12 months ago. This represents a 100% increase. Suppose now we examine the contract and discover that the interest for defaulted debt is 20%, and your state permits only 18%. In both instances (State Law AND Federal Law) you have a violation: § 807. False or misleading representations [15 USC 1962e] A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt .... the following conduct is a violation of this section: (1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof. (2) The false representation of -- (A) the character, amount, or legal status of any debt Charging, in this case 100% as opposed to 18%, represents a rate 5.555 times higher than that which is permitted. Nail em!
BTW - I'm developing a theory that would explain why so many CA's are reluctant to answer your demand for validation. Why are we being ignored right and left? Because they have misrepresented the amount of the debt. In these cases they would be foolish to prove it in writing, so they ignore it. To the precise extent a CA is unwilling to provide val documents it becomes obvious that they have something to hide.
