Can a Collection Agency Charge Interest?

Do you have proof that you sent them a validation letter in October? Was the validation letter sent to a collection agency? If so, then they can't sue you until they validate that debt, they also need to compute how they came up with the interest and fees. I would send them another validation letter with a copy of proof that they never replied to the first one, and remind them that they are in violation of the fdcpa, which states, all collection activity must cease during the validation period. This only applies if it was a collection agency. What state are you in?

I guess I should have been a bit more clear.

I still have the Return Receipt that shows I sent them the letter back in October. They replied to the validation a couple of weeks ago with my original lease from the apartment complex, as well as a summary of fees they assessed. I have no idea where the interest charges stemmed from, and the letter that accompanied the validation said if I didn't pay in full by 30 days of the date of that letter (which was marked July 2nd), I would be subject to a 10% per day charge annum.

So they are collecting it since they included a copy of the original lease, but I never agreed to pay interest on this since it was an apartment lease. I don't know where they have come up with that.

Oh, and I'm in California.

This is what the "itemization" from them says.

Amount Referred: $306.41
Principal Balance: $306.41
Accumulated Interest: $0.00
Other Charges: $0.00
Court Costs: $0.00
Attorney Fees: $0.00
Other: $0.00
Interest: $43.49
Acc't Balance: $349.90

Then below that there's a divider...

Total Due on All Accounts: $349.90
Total Interest Paid for 2007: 0.00
Total Interest Paid for 2008: 0.00

I got another sheet of paper that says "Revised Statement of Deposit Account (SODA)"

Then it tells the original amount due for the lease, then they rented out the apt immediately after I left and it says "Adjustment Rent" ... giving me the grand total due of $306.41

The interest charges are what the collection agency tacked on but it doesn't say where it came from since I never agreed to pay that.

Under fdcpa Section 808, a CA can only charge interest if they have a judegement against you or your original contract gives the CA the authority from the original creditor to charge you interest.

Demand that they send you a copy of the lease stating that you are responsible for paying interest when the balance goes to collections or a copy of judgement against you allowing for interest to be charged. If they dont have that, then they cannot charge you interest.

CA's charge interest even though it is illegal to pump up the balance in case you dont pay. They can then sell the debt to another CA and make a profit by selling them an inflated debt balance.

If is a junk fee. As jasonmit said, unless it is in the lease contract that allows for interest, or they already have a court judgment, they cannot charge you interest.

Ok.. that's what I assumed.

Any tips on what I should say in a letter to the CA to get those interest charges removed? I'll pay what I owe, but not a cent more. I'm not giving them the satisfaction.

Suggeastions as to how I should word a letter/what I should include?

I would just settle with them for full delete. The amount is so small and the interest charge is almost negligible. I would start by offering $150 as settled in full and work my way to $300 since you intend on paying it anyway. Basically I would just negotiate out the interest and not worry about proving they can't collect it unless they are going to be a pain and not agree to settle. Make sure that you get the agreement in writing before paying them.

I do not believe this

What do you not believe?

I can tell you that I called the Federal Trade Commission the other day. As it turns out, the FTC receives more complaints on collection agencies than on any other business.

The person I spoke with told me that CAs are not allowed to charge interest on their accounts. If a CA tries to charge you interest, call the FTC and file a complaint.

Assept acceptance was suing me for 887 i decided to settle to avoid court, so i paid 300 and i expected the balance to be 587, but when i received a letter in the mail stating the agreement and the new balance it was 904. i called assept acceptance asking them what the balance was thinking it must be a mistype..the lady said since i did not pay the 887 and since i did not agree to pay 200 a month i am subject to intrest incurring on the account..so basically it will never be paid off..she told me she was not here to rearrange my balance...i oew 904 if i do not want anymore intrest to incur i need to pay the balance..mind you the card was only for 250 dollars...and i did send a debt valadation letter because i want to see where the intrest came from, since they could only prove 887 to the court.

[QUOTE=Anonymous;659094]I can tell you that I called the Federal Trade Commission the other day. As it turns out, the FTC receives more complaints on collection agencies than on any other business.
The person I spoke with told me that CAs are not allowed to charge interest on their accounts. If a CA tries to charge you interest, call the FTC and file a complaint.[/QUOTE]
under Section 808 Unfair Practices of the Fair Debt Collection Practices Act under the Consumer Credit Protection Act, federal law prohibits a debt collector from collecting any amount (including any interest, fees, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
If a debt collection agency owns your account, and you did not expressly enter an agreement to pay interest and fees to that collection agency, than they cannot charge you anymore than what the already existing balance is.

I am being sued by a collection agency for a cc where the balance was a $1,000.00. They are sueing me for $2500.00. I asked during pretrial for a itemized bill not statements from the cc company. Judge asked for them to bring it to the pre-trial again and reset the date. If they do not have itemized charges should the suit be dropped? I am going tommorrow morning so I need a quick answer. Thanks,

I have an account with Palisades Collection. I have never missed a payment nor have I ever been late I have been paying them for some time now. All of a sudden them have tact on $5000.00 to my balance, I have requested an itemized account statement from them, but have not rec'd it yet. I am in illinois can they legally add $5000.00 to my account? I don't know if they are calling it interest or what but there has never been an interest charge from them in the past and I don't know what to do.

Until you know what it's for, it's hard to tell. Sounds fishy though. $5000 is a LOT of interest to just suddenly appear.

Scott Lowery Law Firm rep has told me

1.the account is accuring interest and penalties(around 200.00 since they took over the account)
2.He said they are a law firm and not a collection agency.
3.they will seek legal action to the fullest extent of the law to collect.

This guy has violated the FTC....right?

If so,what steps do I take to bust his you no what?


Thanks for any help,

gator11

They can ONLY charge interest if the contract/agreement allows for this. If they are collecting a debt then they are acting as a debt collector and are subject to debt collection laws. Lawyers do not collect debt, they do legal stuff....especially if they are collecting on the debt for themselves...if they are collecting on behalf of another company then send the DV to them and send a letter with a copy of the DV to the lawyer. If they are not acting on behalf of anyone else then go ahead and send the DV...oh and also ask for the bar number.

gator i answered your other post.do a search in the bar top right.a complete douche bottomfeeder that needs to be reported,not paid.

thanks guys,they are collecting for cach llc.