CC in Debt Collection, can Interest still accrue?

[GradX]

What is the name of your state? GA

I have a CC that went to Debt Collection and they make you only deal with lawyers. This lawyer claimed that I was still accruing interest while it was in collections. Is this true?

 

[bigun]

It really depends on what the contract you signed calls for. When did you lasy pay the orginal creditor?

 

[GradX]

I last paid them in May of 2003. The account was with Providian but has been transferred to Collect America who uses ******* lawyers.

 

[bigun]

This is one reason you demand validation. ou may demand proof that the debt is yours and, demand an accounting.
Try the newcomers thread at www.creditboards.com for more details.

 

[JETX]

This lawyer claimed that I was still accruing interest while it was in collections. Is this true?

The correct answer to your question is YES. A debt where interest is allowed by the agreement will continue to accrue interest for as long as it is unpaid, or until otherwise ordered by a court of law.
The fact that the debt is in collections or the hands of an attorney does NOT affect the interest clause specified in the agreement.

 

[Ladynred]

The fact that the debt is in collections or the hands of an attorney does NOT affect the interest clause specified in the agreement.

Unless the collection agency is charging MORE than is allowed by law or the agreement. In some states there ARE limits to what they can tack on in interest.

 

[JETX]

Unless the collection agency is charging MORE than is allowed by law or the agreement. In some states there ARE limits to what they can tack on in interest.

Sorry, but not true..... unless the interest being charged is usurious in that state.

 

[bigun]

Il. and In.Appear to be 2 states.


One of our complaints alleging that a bad debt buyer is not entitled to charge more than 9% interest (with an agreement so providing) or 5% (without an agreement) in Illinois was upheld on February 26, 2004 by Judge Darrah in federal district court in Chicago. Shanahan v. Porick, 03 C 7211 (N.D.Ill.). This involved an Asset Acceptance debt. Bad debt buyers routinely attempt to charge the same amount as the original creditor, even though the original creditor had a charter or license entitling it to charge "supervised" rates and the bad debt buyer does not. The effect is that a lot of what is claimed is not owed, and Interest Act or FDCPA penalties may offset some or all of the alleged debt.

The theory is also good in Indiana but there the rate is 21%.

EDELMAN, COMBS & LATTURNER, LLC
120 S. LaSalle Street, 18th floor
Chicago, Illinois 60603-3403
(312) 739-4200
(800) 644-4673
(312) 419-0379 (FAX)
Email: [email protected]

------------------------------------------------

 

[JETX]

Il. and In.Appear to be 2 states.

I stand corrected and was in error.... my post should have been:
"Sorry, but not true..... unless the interest being charged is usurious in that state or where the state (possibly ONLY in Illinois?) has allowed that creditor to use 'supervised rates', not available to the next debt owner (but CAN be charged by a later debt collection agent who is working as an AGENT of the original creditor/owner).
Is that confusing enough???

Here is where Bigun's post came from.... with more information:
http://www.creditforum.org/showthread.php?p=11218#post11218

 

[Ladynred]

unless the interest being charged is usurious in that state.

Is that not what I said ??? That IS what I was getting at.

 

[bigun]

Who's on first!

There sems to be a far amount of research going on now about usury as a defense. I've seen one post where an Il. resident had been sued by a 3rd party collector and had filed his defense and counterclaims and then, discovered the recent ruling. He filed a motion to amend his counter claims for the FDCPA/FCRA violations and the collector offered to drop dismiss the lawsuit with prejudice if he'd do the same. Offer was accepted! I think we need to keep this in the back of our mind when Il. and In. resients post.
Curious about the following from Fl. What if the collector can't produce a contract? Would the 7% cap on interest apply?


STATUTORY INTEREST RATES
PURSUANT TO s. 55.03, FLORIDA STATUTES
INTEREST RATE FOR THE YEAR 2004

Section 55.03(1), Florida Statutes, requires the Chief Financial Officer, on December 1 of each year beginning in 1994, to set the rate of interest that shall be payable on judgments and decrees for the year beginning the following January 1. Additionally, Sections 215.422(3)(b), 337.141(3) and 687.01, Florida Statutes, were amended to require the use of interest at the rate established in Section 55.03(1), Florida Statutes, for the payment of interest applicable to the late payments to vendors for goods and services purchased by the State, for late payments on applicable construction or maintenance contracts administered by the Department of Transportation, and for cases where a rate of interest is not specified in a contract. The interest rate for payments to health care providers pursuant to Section 215.422(13), Florida Statutes, remains at 1% per month or .0003333 per day. Rule 3A-25, Florida Administrative Code, establishes the procedures for computing the interest rate on an annual basis.

The year 2004 interest rate established pursuant to Section 55.03, Florida Statutes, has been set at 7.0% per annum or .0001918 per day.

 

[JETX]

What if the collector can't produce a contract? Would the 7% cap on interest apply?

No. You are misunderstanding the issue.

Some states set the maximum allowed judgment interest to be the larger of: the maximum statutory limit OR the rate set by a contract (if the cause of action is breach of that contract).

In your question about Florida, you are overlooking the LAST sentence of the applicable statute:
"55.03 Judgments; rate of interest, generally.--

(1) On December 1 of each year, the Chief Financial Officer shall set the rate of interest that shall be payable on judgments or decrees for the year beginning January 1 by averaging the discount rate of the Federal Reserve Bank of New York for the preceding year, then adding 500 basis points to the averaged federal discount rate. The Chief Financial Officer shall inform the clerk of the courts and chief judge for each judicial circuit of the rate that has been established for the upcoming year. The interest rate established by the Chief Financial Officer shall take effect on January 1 of each following year. Judgments obtained on or after January 1, 1995, shall use the previous statutory rate for time periods before January 1, 1995, for which interest is due and shall apply the rate set by the Chief Financial Officer for time periods after January 1, 1995, for which interest is due. Nothing contained herein shall affect a rate of interest established by written contract or obligation."
Source: http://www.flsenate.gov/statutes/index.cfm?App_mode=Display_Statute&URL=Ch0055/ch0055.htm

Therefore, if the lawsuit involves a contract, and the contract stipulates a higher interest than the statute, the contractual interest will be applied. And if the 'collector' couldn't provide a copy of the contract, not withstanding other challenges that might arise, the 'collector' should be able to establish the contractual interest from the accounting records.