Collection agencies and interest rates

Have a question, that pertains to your post ( I think), SHAZZER. On my CR, I have the OC and a CA reporting on the same account. They are BOTH charging % on the balances. Are you saying they CANNOT do this, legally?

As I understand it, if:

the contract allows it,
and
the collection agency meets state requirements to be a lender,
and
state law does not prohibit a CA from continuing to charge interest,

then it would be legal. A law usually (always?) states what one must or must not do, not what one can do. Go through your state's lending and collection laws to see if this is prohibited.

Thanks for the reply. I'll do that. :)

I appreciate the response, thank you so much!

WHAT IS THE MAX INT A CALIF AGCY CAN CHARGE ??

Is this on a CC debt? What was the interest rate before you defaulted? Judgemetn interest is 10% in CA
You will find the Payday loan laws forCalifornia here (just select your state),

http://www.debtconsolidationcare.com/paydayloan/explain-pdls-laws.html

I am also trying to find a law about collection agencys' charging interest. My original medical bill was only 200.00 and now is 285.00 (interest added)Does anyone know?

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 authoized 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.

interest rates are often set by state statute. collections agencies are allowed BY LAW to charge the court set rate of interest. some states have a set rate, other adjust it year to year. check with the laws of your local state.

[QUOTE]expressly authorized by the agreement creating the debt or permitted by law.[/QUOTE]

That does not mean they cannot charge interest, or that they need your express permission. If they are collecting on a credit card, and the credit agreement calls for 18%, then the FDCPA doesn't necessarily preclude them from charging interest, because interest is called for in "the agreement creating the debt."

Whether they can charge interest or not depends whether state laws allow them to charge interest. For example in IL we have the "Interest Act", which states (in part) that anyone attempting to charge interest in excess of 9% must be licensed by DFI to charge such interest. So a CA that wants to charge the 18% called for in the credit agreement would have to be licensed, or else they could not charge additional interest. If they did charge 18% without a license then it would A) be against IL state laws, and B) against FDCPA because it is not permitted by IL state laws.

So the main point I am trying to make is that FDCPA doesn't necessarily prohibit CA's from charging interest, but the interest they charge would have to be allowed by state law and pursuant to the terms of the original credit agreement.

Thanks for clarifying.

Hey great post. Thanks very much . The post seems to be very much helpful.



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