Because my brain is small......

[Guest]

Once a creditor has charaged off an account.. and also listed it as Written off as well..

Can they still collect interest at the default rate on the card?

I thought once it was charged off they had to quit but maybe I am wrong.

Thanks for clarifying my pea sized brain today

[luckyduck]

Just had a conversation not too long ago on this topic, not that the title would say that.

Methuss says no.

http://www.debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=23293

I say it would go against GAAP, but I can't find it.

I don't see it in the cite provided by methuss, but I see it as a matter of accounting principles. Is this regarding your Sweety's Cap1 account?

I'm personally working as hard as I can to find the solid 100% undisputable proof that what they are doing is illegal. I will find it somehow. Not sure if it's a matter of contract law, accounting principles, billing principles.

Can't tie it down yet, but I will. I would almost argue it's contract law, but don't know exactly how to word the argument.

You default, they discontinue extending credit by writing the account off and closing it. Once the account is closed, the contract is no longer enforceable. If you come back and pay the balance off, they won't just start extending credit again. So, likewise, if you don't pay the balance off, how can they continue to enforce their benefit of the contract?

My outlook: Credit grantor no longer has to extend credit. You no longer have to pay the fees associated with the extension of credit.

Of course, this does not get you out of paying the balance that was due at when the account was closed.

The only question in that argument is whether there remains a right to charge interest on credit which was extended before the contract was nullified. I don't know, and I think that is the next step in my research. Hey, if anyone wants to help out, that would be cool.

I know it's not right, but I still haven't found enough proof to feel confident in saying it's illegal. I have a bad feeling though, that if it isn't restricted by the state's (of the OC) usury laws, then it isn't restricted.

Sorry, that might not have been much help. This is an issue that's been bugging me too, and putting forward what I've come up with is at least a start.

[Guest]

Yes. it is over my sweeties Crap 1 and one I had with them as well.

They charged it off late 2003 at like 600 bucks ((After refusing to give me the unemployment insurance that I paid shi#loads of money for))

Now it is over 3 times that and they report the new amount every month on my CR. I would love to find out if this is legal.

I would think once something is closed that you cant collect on it anymore but I dont remember what the contracts say either.

Any of our Legal Experts know the answer to this one?

[luckyduck]

Ok, I dug all day today on this issue. The answer is unfortunately, that yes, they can continue to charge interest. Between case law, accounting principles, American Banking Association, IRS, everybody. Yes, they can.

I could provide everything I found, and show how it can be misinterpreted, which some of it has been, but I'm honestly pretty tired right now, and that would take a while.

The basic jist of it is this: IRS, accounting, and banking laws actually used to force this. Banks don't like being forced to accrue interest on uncollectibles because it's difficult for accounting and tax purposes. Basically, they have to place the uncollectible in an accounts receivable account, then move it to a bad debt account, then write it off for tax purposes and they have to do this forever, even though they know they will never get the money.

Now, the ABA and IRS have stated that interest should not accrue on uncollectible accounts. But this can easily be misinterpreted. They are not stating that it cannot be accrued if the financial instituation chooses to do so. They are stating that the taxpayer (bank) should not have to do this, and therefore they no longer have to do this. Once an account is charged off, they are no longer required to continue to accrue interest on a non-performing debt. However, there is absolutely nothing anywhere that prohibits them from doing so.

I also looked into TILA which says that they have to send you a statement in any month that they charge interest to give you the opportunity to pay the balance in full to avoid paying further interest. I thought that was the winner. Boo Hoo. There is case law that says that this does not apply once the account has become uncollectible, charged off, etc... They can charge you interest, and they do not need to send you statements.

Whaaaaaahh

[Guest]

I wonder if we can't find some kind of case law to counter that.

I know they have ruled that over the limit fees and late fees HAVE to be considered as Finance charages thereby changing you interest rate.

I dont know if that could be used in using this against them

Cap 1 hasn't even tried to call me since I sent them a DV letter and threatened to sue them for their CA harrassing me.

Law firm sent sweetie a demand letter, we DVd then.. they sent back crap and we sent them a "that don't cut it" letter and aint heard a word since from them.

So I guess we shall just sit back and wait.

[luckyduck]

But see, I don't know if they are charging over the limit and late fees. All they sent me in response to my dispute was statements from when the account was open, and included in their letter what the current balance was. They sent me nothing detailing what the charges after the delinquency were for. I have a letter ready to go out requesting specifics. Hopefully, they will respond to that as well with what i'm requesting.

Once I've got a grip on the several CAs I'm trying to battle, and this issue with Cap1 on my own account, I'm gonna have to go after them on the refusing to report limits on DH's open/never late accounts. Too Bad I'm not supermommy, superwife, supercook, and supercreditfixer all wrapped up one.