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Who can collect interest

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rhomar

Joined: 29 Sep 2008
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Posts: 1

39 Magic Points

Subject: Who can collect interest

Mon Sep 29, 2008 5:06 pm

can the purchaser of a bad debt collect interest on that debt

goodnatured

Joined: 03 Nov 2007
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Posts: 3235

2257 Magic Points

Mon Sep 29, 2008 6:40 pm

I don't know if it is legal or not, they will though, they add all types of fees, sometimes they actually triple the amount of the original debt, it is crazy what they get away with.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!

fireyone

Joined: 26 Feb 2008
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Posts: 3249

1340 Magic Points

Mon Sep 29, 2008 10:57 pm

I thought once a debt collection agency purchased a debt they could not add any more fees to the debt? Anyone know the right answer to this?

Mary

Joined: 06 Jul 2006
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Posts: 424

10960 Magic Points

Tue Sep 30, 2008 10:45 am

As far as I know, under the fair debt collection practices act, a collection agency or any third party collector including junk buyer, cannot charge interest to the debt. If they do so it is illegal. However, the original creditor can definitely add interest and other fees to the outstanding debt. If you find any Collection agency or a bad debt purchaser adding interest to your outstanding amount, you should immediately report it to the Federal Trade Commission and the BBB.
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carol

Joined: 27 Jun 2006
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12343 Magic Points

Tue Sep 30, 2008 11:16 am

The objective of the junk debt collectors is to maximize profit. They purchase debt at very low rates, sometimes even less than 50% of the outstanding debt amount. Now they know that the debtors will not be willing to pay the entire amount of the debt and will ask for a discount on the outstanding debt amount. So they add interest rates and other fees and increase the debt amount and on that increased amount they give the discount of 30% to 40% in spite of the fact that it is illegal. However, most of these debt buyers cannot validate the debt and so whenever you are paying off a debt, always ask for debt validation by certified mail. Only if they are able to validate the debt, pay them off, else there is no need to repay them back.
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fireyone

Joined: 26 Feb 2008
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Posts: 3249

1340 Magic Points

Tue Sep 30, 2008 12:28 pm

I was pretty sure that after the debt was bought no more interest fees could be added. What other fees are they allowed to add or is any type of fee not allowed? My hubby has a debt from 2002 and it has been passed through several collection agencies. Every time a new one purchases the debt it raises considerably. It was a little ve $1000 when it left the oc hands and now is around $2200...almost twice the amount. It is suppose to fall off next year..is there any sense in even messing with it?

creditcardwarehouseonline

Joined: 28 May 2008
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Posts: 27

1180 Magic Points

Tue Sep 30, 2008 4:22 pm

Yes they can. But there is a cap that varies from state to state. In florida i believe it is 10.5%/year. You have to check individual states for their rates. It is far less then Original Creditors can charge.

fireyone

Joined: 26 Feb 2008
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Posts: 3249

1340 Magic Points

Wed Oct 01, 2008 12:48 am

Wow this is different info than I heard from hear. Where do you find the interest trap? That explains why tha amount owed has risen just not the amount.


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