I have had the most difficult time trying to find an answer to this question. Does anyone know how much interest a bill collector can add to charged off account they receive?
I received one answer, and was told they can add interest if it is "authorized and agreed to in the original contract". Ok, what does this mean? Does it mean, if the original creditor was charging me 12% interest on a $4000 loan charged off in 2000, a bill collector can buy the debt in 2007, and charge me 12% interest for the entire 7 years?
Can someone provide a legal answer, and an example of how this would be broken down? A collector is currently charging me interest EACH MONTH on a charged off account they recently received. I don't see anything in my contract saying bill collectors can charge interest. The only thing mentioned is the interest rate I had with the original creditor on my loan. Thanks.
2006-12-25 08:15:19 · 4 answers · asked by Anonymous in Business & Finance ➔ Credit
P.S. If bill collectors can not charge interest, how are they able to sue for the debt amount with interest?
2006-12-25 08:27:55 · update #1
My brother was a bill collector for 10 years (but I forgave him), he told me that he always tried to collect the interest as a bonus, but had no legal ground to make the debtor pay it.
2006-12-25 08:25:14 · answer #1 · answered by C J 3 · 0⤊ 0⤋
The link below will help answer your question.
A collection agent not only buys your debt, he's buying your contract/agreement. If that agreement states you are paying monthly interest to the original creditor (like in a credit card debt) then the collection agent can collect that as well.
Once they file a lawsuit they can NOT collect further interest, unless it is allowed by state laws. Generally this will be restricted to "judgement interest" which is set by the state. Just to complicate matters, many states have differant rules and rates. Michigan rules state the rate is set at 2% over prime as certified by the State Treasurer's office (currently around 5%) and can only be charged bi-annually on January 1 and July 1. But other states charge much more! But remember, "judgement interest" can only be charged after the court issues a judgement. Be aware of this amount so the collection agent doesn't try to overbill you.
2006-12-26 05:57:59 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If a creditor charges off an account and sells it to another bill collector (ie collection agency) that includes the original contract. So, in short they can and they do. Their goal is to collect all monies due from the original contract with the creditor.
a website to check is the fair credit reporting act. just type in fcra into your search engine
2006-12-25 08:39:25 · answer #3 · answered by whoami2u 1 · 0⤊ 0⤋
What do you mean by "bill collector"? Is it the person you borrowed or purchased from? Collection agencies can't charge interest, but the company you owe the money to, can. They can chrge whatever is in their "fine print"... in other words, whatever they want.
2006-12-25 08:22:58 · answer #4 · answered by Kacky 7 · 0⤊ 0⤋