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Collecting Interest on a Charge Off

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I seem to remember reading some info that stated once a credit card company charged off your account they could not continue to collect interest on the amount they charged off because they took the tax write-off on the charge off? Does anyone have a link to an IRS, FTC, etc statuate that states this are am I just incorrect?

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Bump,

Sorry I am not exactly sure where you find this, I know interest should no longer be charged but as far as fees. Or what the collection agency has a right to add after the fact I don't know.

Maybe someone help can help here?

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Collection fees could still be added as that is a separate issue and a CA has a right to collect fees for its services on a legal debt. This money would nto be going to the OC, so it wouldn't affect the status of the account as written off.

The OC claimed the loss and would not be able to add interest for something that is unrecoverable and a tax write off. This is just my take on it. Sorry, don't have any links or law references to help out. It is just what makes sense to me. Reasonable CA fees can be added at anytime as far as I know.

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I would really like more information on this as well. My DH has an account that was sold to a collection agency the collection agency has tacked on almost $5000 in interest and fees. Can they legally do that?

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I am not so sure about that. I haven't found the statute yet but this indicates otherwise:

Collection Agency Harassment

The most common abuses are persistent telephone calls at inconvenient hours and threatening letters and telegrams, including phony legal subpoenas. Collectors frequently pretend they are collection-reporting services as well as collection agencies and claim they can list unpaid accounts with various merchant credit retail associations. Thus, people are incorrectly led to believe that their credit rating will be seriously affected unless the bill is promptly paid. Also, some agencies illegally tack collection charges onto the debt.

Here is the direct link. Change it to your state:

http://cobrands.public.findlaw.com/consumer/newcontent/consumerbook/dgtchp3_b.html

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I believe this is what I was looking for:

ยง 808. Unfair practices [15 USC 1692f]

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

If a CA wants to add charges to your account then make them show proof that they are allowed per agreement or law.

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