I had a loan with an illegal pay day loan company. When I discovered they had no license to operate in my state I had paid them over $900.00 on a $300.00 loan. I wrote them a letter (certified) using the template provided on this site. Now this illegal loan company has turned this debt over to a collection agency.

QUESTION: Does the collection agency have to verify that the original debt was legal?

I do not know if ACA Recovery Inc. is licensed in Mississippi or not. I do know that the original debt was not with a licensed business in my state.

I hope someone can answer this question for me.

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If it is an illegal lender you need to pay only the principle amount of the debt. Now, since you have already paid over and above the principle amount, you may ask for a refund. The CA cannot collect the debt any further because you have already paid the principle amount to the OC. However, you may send a DV letter to the CA.

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