Can a Creditor collect on the interest of a debt i
Date: Thu, 04/07/2011 - 13:14
prinicpal is made?
If you have defaulted on a credit card or a personal loan, then
If you have defaulted on a credit card or a personal loan, then the creditor can collect on the interest even after the principal amount has been paid.
Quote:If you have defaulted on a credit card or a personal loan,
Quote:
If you have defaulted on a credit card or a personal loan, then the creditor can collect on the interest even after the principal amount has been paid. |
Huh???
This is credit 101...
As a general rule, interest is paid first, then principal. When you make a payment, your payment goes to past due and current interest first and then to principal. With some loans , interest is capitalized into the balance. You cannot knock out principal without paying the interest first.
Soaplady, your answer is not all related to the main query. I ha
Soaplady, your answer is not all related to the main query. I have never claimed that the interest rate is paid later. The OP wanted to know whether the creditors have the right to collect interest rate on the debt if the principal amount has already been paid off. If in his case, the interest rate is really past due, then he needs to repay it. Have I said anything wrong?
Anyway, you can also go through the following page where somewhat similar sort of discussion has taken place.
http://www.debtconsolidationcare.com/collection-agencies/payment-of-principal.html
I think her point is that interest is collected before principal
I think her point is that interest is collected before principal so, it would kind of be impossible to pay off the principal before paying the interest.
Unless we're talking about an illegal payday loan. I think the OP needs to be more clear as to what type of debt this is so we can determine the correct answer/advice. Hence my original question.