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CC in collections--Can they still charge interest?

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Nicegirl
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Subject: CC in collections--Can they still charge interest?
 
Posted on Mon Sep 01, 2008 4:53 pm  

I have a credit card that I stopped paying 3 years ago. Shortly after it went into collections and has since went from about $7,500 to 13,000 in this time, on interest. It has also skipped from CA to CA, went through four so far I think.

I had no idea they can continue to charge interest on my CC debt. If so, does anyone know how long they can do this and the highest interest rate they can charge? I live in Maryland. I was planning to wait out the SOL of 6 years here, but if they try to sue, it seems unfair that nearly 80% of what I owe is through compound interest alone (the original used amount was 3,500 that I used 6 years ago, when I was 19).

Does anyone here have any legal information on this or suggestions on how I should approach this? I have been hesitant to contact the CA because I feel that they may worsen things (I may say the wrong thing, or they may use contact to pursue the money).
cbass1017



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Posted on Mon Sep 01, 2008 6:43 pm  

Hi Nicegirl! Welcome to the forum.

Are you sure that the increase in money owed is not mostly just fees from all of the collection agencies that have pursued collecting this debt.

When a line of credit is handed over to a collection agency it is then considered "charged off" meaning the original creditor no longer has interest in trying to collect the debt. At that point you should not be receiving any more finance charges on that debt.

It may seem crazy but if you stopped making your payments all together than I could see how that balance increased like that. Who knows how long you were receiving late, over the limit, and finance charges on that account until it was charged off. And all of the collection agencies aren't helping things either.

Best of luck!
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goodnatured



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Posted on Mon Sep 01, 2008 7:35 pm  

If I were you I would try to wait until the sol runs out, it is very close right? and if someone contacts you about the debt, send them a debt validation request before you pay anything.
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fireyone



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Posted on Tue Sep 02, 2008 12:55 am  

Nicegirl, how old is your debt? do you know theSOL in your state? I am thinking MD is three years. So if this debt is at least that old beware of any payments that will restart your SOL. I am pretty sure you are protected from being sued at this point (unless you have made any payments)> If they do sue you would win due to the SOL.
goodnatured



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Posted on Tue Sep 02, 2008 1:59 am  

Hopefully she will come back and let us know if she has made a payment or not, hopefully she has not and we can better guide her on what to do.
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CMBV22

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Posted on Tue Sep 02, 2008 3:27 am  

Your best bet is to request DV for the balance. The CC company will have to provide an accurate record of accounting which will show where the current balance came from.
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anthony

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Posted on Tue Sep 02, 2008 5:01 am  

Hi Nicegirl
Since another three years is left for the SOL to expire in your state, you need to contact the collection agency to pay off the debt, else, they may sue you to the court and bring judgment against you to garnish your wages. However, you should contact the collection agency by sending a debt validation letter by certified mail. On getting the validation try to negotiate with the collection agency for a reduction in the amount that the CA demand.
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Justin

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Posted on Tue Sep 02, 2008 5:32 am  

Original creditor sells off the debts to the collection agency at a very low price which is sometimes 50% of the original debt amount. Now as far as I know, after purchasing the debt, the CA tries to take out as much as possible from the debtor and so they add interest to the debt and raises the amount of the debt. Now whenever you negotiate with the CA for reducing the amount of the debt, the CA agrees to settle for 60 to 80% of the amount they charged. In this way they can recover the actual debt as well as some interest on the actual debt from you.
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Nicegirl
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Posted on Wed Sep 03, 2008 12:06 am  

I have not made any payments since 2005, and also have not contacted anyone since the original credit card company in 2005. So no payments at all. They have not tried to contact me either though (I don't think they can find me anymore; I did move).

I thought the SOL in MD was 6 years, meaning I have 3 years left to wait, but if it is 3 years then I guess I can just wait it out?

Cbass: I am not sure what the new amounts came from, but when it went to a first collections account it was 8500 I think. I got this in a letter long ago. I think it was about 8 months after my last payment (last payment was in Sept 05 and went to first CA the next summer). My credit report says that it was 10,000 at one point with another company, and lastly and most currently 13,000.
fireyone



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Posted on Wed Sep 03, 2008 12:33 am  

They will keep adding interest to the debt but i thought their was a point that they were no longer able to do this. does anyone know how that works?
Nicegirl, you may be right about MD but this is the listing I found.Maybe I read it wrong.

Civil action: 3 years from the date it accrues, unless:

Breach of contract under any sale of goods and services under the UCC: 4 years after the cause of action, even if the aggrieved party is unaware of the breach.

Promissory notes or instruments under seal, bonds, judgments, recognizance, contracts under seal, or other specialties: 12 years.

Financing statement: 12 years, unless a continuation statement is filed by a secured party six (6) months prior to end of twelve (12) year period. (Maryland, Commercial Law article Sec. 2-725; Courts & Judicial Proceedings Article Sec. 5-101-02, 9-403).

NOTE: The 3 year statute of limitations begins again if creditors can document that a debtor has reaffirmed a debt by a good faith basis by a written agreement, orally, or by payment.
Nicegirl
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Posted on Wed Sep 03, 2008 1:33 am  

I also read that it is 3 years, but 6 years for a promissory note like a mortgage. Is a CC a written contract instead? If so, does this mean that I cannot be sued, but I still have to wait 7 years for it to disappear?

Will the SOL renew if I contact them to verify the debt?
fireyone



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Posted on Wed Sep 03, 2008 1:39 am  

If you can not pay this debt don't try to validate or verify it. They will just start harassing you. I been there and believe me once they know your interested they are like blood hounds. I didn't quite understand MD listings myself. It is a written contract so that is why I thought three years. If you make any payments you will restart the SOL...It will take 7 years to fall off but I have a couple bad debts (now down to 1) and good accounts and still had decent credit. Your credit report should tell you when it will fall off.
fireyone



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Posted on Wed Sep 03, 2008 1:42 am  

Okay I just dug around the net and it is three years. Do you remember when your last payment was. You are really close to the SOL if it was 2005 but when in 2005 was the last payment? That is what I would need to know. If you don't know you can go to www.annualcreditreport.com and pull your report. It will give you all that info on there. Its free and worht it.
Nicegirl
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Posted on Wed Sep 03, 2008 2:24 am  

The last payment, according to the credit report, was 8/2005. But I read somewhere that the date they use can also be the date the account was charged-off. That was 7/2006. I read that at Laura Margulies LLC website.

So either I am okay and the SOL has already passed, or I have to wait until next July. Both don't sound too bad anymore, I would just have to wait for it to fall off, which it says in the credit report will remove in 7/2012.
anthony

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Posted on Wed Sep 03, 2008 6:15 am  

Hi Nicegirl
If it was a credit card debt, your SOL has already expired but if it a mortgage debt then it will expire on 2011. Now since the debt has also been charged off, you should not pay it off if SOL has expired, because even if you make a PFD agreement with your creditor, this negative listing will be there in your report for seven years. Again if you make even a small payment on the request of the CA, the SOL will rewind and the creditor can sue you to the court to garnish your wages till your debt is fully paid.
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