Nothing prohibits a creditor from continuing to charge interest after they charge off an account. The term "charge-off" really only refers to the creditor's internal bookkeeping. Fun fact: if they felt like it, they could charge off your debt the day after you incurred it. Or 30 days after, or at the point they normally do, which is currently usually somewhere past 90 and before 180 days.
Re: Interest after Charge-off? Law Anyone else have comments or have dealt with this? basically....[bump] Mommy2cats
Re: Interest after Charge-off? Law Looking at it in this perspective, charge off is only an accounting term, not a legal term. Charge off means that they think that the debt is uncollectible, BUT if it is, they want you to pay interest on the money they have 'loaned' you in the meantime. It sucks, but I see the creditor's point of view.
Re: Interest after Charge-off? Law Thank you all for responding. This is for an OC that I have on several violations and I just wanted to get all my ducks together. I had heard rumors that this was illegal - but then I'd not seen any actual caselaw. Rumors often are just that... rumors. This helps me clear that one up. Mommy2cats
Re: Interest after Charge-off? Law Mommy2cats, Whether it is legal or not depends if it is in your original contract or greement or otherwise permitted by state law. Whoever you are dealing with, ask them under what authority they are continuing to charge you interest. Sassy
Re: Interest after Charge-off? Law Mommycat, I applaud you for that question! Its one I was searching on. If anyone has a site recommendation that perhaps can clarify what regulations and by laws for how long an interest rate after charge off can occurr Id be interested in it. I currently am in the same interest rate dilema on a charge off...Thank you in advance for any recommendations!
Re: Interest after Charge-off? Law Actually, it's state law that determines the interest rates. Collection agencies and even the holders of judgments are allowed to charge interest on outstanding debts. They all have limits set.
Re: Interest after Charge-off? Law FDCPA § 808. Unfair practices [15 USC 1692f] A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: (1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law. Thanks Kristy!!!!!!!!! AZ is 10% mommy2cats, I've never been charged interest on collections or charge-offs -- knocking on wood too! Sassy
There are specific laws against it. The ONLY exceptions are, as Sassy pointed out, State law and/or the Original Contract. Just ask them and they better tell you which they are relying upon.
