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Interest accrued on a debt legal?


aarondb
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HI all my question is over the validity of a CA charging DAILY COMPOUNDED INTEREST on a debt that they are attempting to collect. I have read through the FDCPA and found this at 15 USC 1692 808 (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

In regards to the last line "or permitted by law". In what instances would be permitted by law?

To give a background I used to live in California, currently reside in North Carolina, my old appartment in San Diego, turned in the final balance over to the CA (Hunter Warfield) who are now charging me daily compound interest on the original debt until it is settled. Is this actually legal? The only thing I have found on the matter is if the original principal accrued interest (i.e. loans or credit cards) then the same interest rate transfers over to the new owners of the debt (CA's). This is for an apartment complex and if they charge interest on anything it is news to me. What are my options at this point.

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It is going to depend on the language in the lease. Many contracts have provisions for Interest for past due amounts.
I agree with above. Check the lease. If no provision for interest plus collection costs, then they are not entitled to it. The agreement is binding- if you have no agreement to pay interest, then fight it. And if you want to fight fire with fire, bring a misrepresentation FDCPA claim and put the CA on the defensive.

Charging interest "permitted by law" is ordinarily for post-judgment amounts.

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Guest usctrojanalum

Check your lease, but I'm sure it's there. Charging interest on past due rent has been standard for like the last 5-6 years now. (at least that's how long I've been renting and it's in every lease I've signed)

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Check your lease, but I'm sure it's there. Charging interest on past due rent has been standard for like the last 5-6 years now. (at least that's how long I've been renting and it's in every lease I've signed)

The interest is not from past due rent it is for "damages" to the apartment. I looked through all my files for a copy of the lease and I can't find one. At this point would it be better to attempt to get a copy from the CA or the original apartment. Where would I look to find what the maximum interest rate is for California. I looked through the Rosenthal act and didn't see it mentioned.

Also if they are trying to compound interest daily is that only one violation of the FDCPA or would it be a violation for each day interest is compounded?

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you ask the ca for that in discovery if they dont have then they can not introduce one at a later date.

Even if they do have the lease i bet you any thing the court will not allow daily compounded interest if yo0u motion for a judge to make a decision as to the legality of it. File it in a motion for consideration.

comes now the defendant ________ and asks the court to consider whether or not the interest charged by the Plaintiff is legal according to state statutes.

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Just my 2 cents, but I think we're getting off track if we focus on the statutes. This is a contract (a lease). The terms of the contract control and are binding on both parties, and by extension to the CA.

If the lease states there is interest for back due rent and damages, then so be it. If it isn't there, then they can't then say they're owed interest. If they wanted it, then the landlord should have drafted it in the document.

Regarding simple interest vs. compound interest, this is a secondary question that only gets asked if question #1 is resolved in favor of the CA. And general contract law in every state is to resolve contract ambiguities in favor of the nondrafter (the tenant in this case), so if they just stated "interest" then you argue that this is ambiguous and that your understanding was that this is simple interest, so that ambiguity should be resolved against the drafter (in your favor). But in general, the difference between simple and daily compounding interest isn't a big deal really. Focus on the interest in general before you get bogged down with this point.

Stick it to this CA. Do you think the landlord used a standard lease form? Many landlords use the standard lease form put out there by your state's realtor's group. You can usually find it online. Did you DV these guys to see why they think they're entitled to interest?

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Just my 2 cents, but I think we're getting off track if we focus on the statutes. This is a contract (a lease). The terms of the contract control and are binding on both parties, and by extension to the CA.

If the lease states there is interest for back due rent and damages, then so be it. If it isn't there, then they can't then say they're owed interest. If they wanted it, then the landlord should have drafted it in the document.

Regarding simple interest vs. compound interest, this is a secondary question that only gets asked if question #1 is resolved in favor of the CA. And general contract law in every state is to resolve contract ambiguities in favor of the nondrafter (the tenant in this case), so if they just stated "interest" then you argue that this is ambiguous and that your understanding was that this is simple interest, so that ambiguity should be resolved against the drafter (in your favor). But in general, the difference between simple and daily compounding interest isn't a big deal really. Focus on the interest in general before you get bogged down with this point.

Stick it to this CA. Do you think the landlord used a standard lease form? Many landlords use the standard lease form put out there by your state's realtor's group. You can usually find it online. Did you DV these guys to see why they think they're entitled to interest?

Sorry it took so long to reply. I did DV the CA about the issue. The only statement I got back from them was an itemized inventory from the apartment complex, and their sheet stating the original debt with the current charges for interest. There was nothing in there stating their right to collect on charges. There was a third sheet which just looked like a general fact sheet that contained caveat's for each state they operate in. As far as the contract the more than likely used their own due to the corporation owning multi-state properties. I spoke with the Apartment about obtaining a copy they do not have one as this incident took place 2 years ago and they sent their records off to a document warehouse for storage. That being said I highly doubt the CA has a copy as well.

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