Small Claims on Credit Interest Charges

Washington State
My wife and I took advantage of an offer by a local furniture store to pay no interest or fees for one year.
At the ten month point my wife gave them a credit card number and asked them to charge the account balance to a credit card. They did not reply. She sent a second letter and also sent back a statement requesting this action. No reply from GECAF - the credit company used by the furniture store. As soon as the one year point came they sent a bill for the accrued interest $900 plus dollars. I immediately called three times and explained the situation to managers who just sent letters saying basically tough luck. Since we made several good faith attempts to settle the account prior to the interest coming due and were ignored - can we take them to small claims court and ask the court to disallow the interest and any penalty charges, and direct the company to rescind any negative credit reports? We have paid the original balance.

It depends. You need to look at the original sales paperwork to see how this transaction (and the interest clause) was worded. There may very well be conditions on the payment and how the interest is applied. For example, in return for you using 'their' money interest free, they may require that payment be made "in full and without any detriment'. Since you attempted to make payment with a credit card, which would cost them the merchant percentage, that really wouldn't be 100% full payment (example: if you charge a $1,000 purchase on a credit card, and the merchant agreement provides for a 4.5% merchant fee, the money the merchant actually receives is only $955.00... not payment in full of the $1,000).

However, absent any agreement to the contrary, you might have a cause of action for the charged interest, but only if you have actually paid it. If you haven't paid it, then you haven't been damaged and would have to wait for them to initiate suit against you.

Bottom line.....
1) You MIGHT have a suit for the accrued interest, but you won't know until you are 'damaged'.
2) You need to read the agreement and see what (if anything) it says specifically about the interest accrual.

Thanks for your advice. I will check the original papers. However, my real question is that since we tried to make payment weren't they required to at least inform us the method of payment was unacceptable or accept it and bill us for the other 4.5%? We attempted the original payment 2 months prior to the interest due date. We would have had plenty of time to reverse the action and get a check for the full amount sent by our bank. Since we were ignored we feel we were the victims of bad business practices at least and a deliberate delaying action at most. Does any of that make any difference at all?

Your original question was, "can we take them to small claims court and ask the court to disallow the interest and any penalty charges, and direct the company to rescind any negative credit reports?"

Again, my answer is... Read your agreement and see if there are any clauses that allow them to do what they did. If not, you might have a claim against them, but only IF you have been damaged. At this point, you have only received a bill, that is not 'actual damages'. I would certainly sit down and write them a letter, certified RRR, and detail your position. Tell them that any action that they might take against you will be vigorously defended and that you are considering taking action against them for their practices. Include a long list of persons that you are considering; state Attorney General, BBB, FTC, even include the furniture manufacturer. You want to put them 'on notice' that you are not going to accept their actions.

As for "can you take them to small claims court". Certainly, you can sue them. However, you will need to be able to PROVE your claims and damages in court and could be making yourself liable for THEIR legal costs if you fail. Finally, most small claims courts are limited to money judgments only, if so in your state, the court may not be able to do anything about reversing 'negative credit reports' (you can do that by contacting the credit reporting agency (CRA). Click on http://www.ftc.gov to see what your rights are.