I have a derog. (Charge off), and the original creditor has agreed to change the entry to pays as agreed, no lates etc in exchange for payment in full. The amount listed on my credit report is the amount that I assumed I would have to pay in full. However, the OC is now saying that interest was added to the original amount (not showing on credit report), so in order to change the listing, I need to pay the interest also. I was under the assumption that once something was charged off, that interest could not be added thereafter. Does anyone know about this type of thing?
I'm no banking or tax expert, but this may give you at least a starting point to do some more research. I don't think that adding interest when taking payment from you would be inherently illegal. When the issuer charged off the account, they more than likely deducted all or a portion of your balance from their earnings, making their tax liability lower. If they now collect money from you, they just need to properly report their earnings. I'm not aware of any banking regulation that prohibits this idea. Additionally, I am aware of certain tax instances where companies continue to accrue some level of interest on bad debts based on their assessment of the ultimate collectibility of the debts. Did you ask the OC on what grounds they are adding interest? It sounds like now that you have contacted them, someone became greedy.
