rising_score

Can a JDB continue to charge you interest on your "account" ?

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How do JDBs calculate interest and is there a limit to what they can charge?

If a case filed by a JDB is dismissed without prejudice, can a JDB continue to "charge you interest?" and report it on your credit report? Do they have to notify you they are doing this?

Say a $4,000 case is dismissed without prejudice. Can a JDB wait until just before the SOL runs out and file again for $4,000 plus interest charges that were compounded monthly?

Edited by rising_score

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They allegedly bought the account from the OC, and therefore got to follow the contract as the OC. If your interest rate was say 10% with the OC at time of charge off, it will be the same for the JDB.

And as long as you don’t win in court (dismiss with prejudice), or you sue them for FCRA or something, they will keep reporting, and updating.

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They can charge you the default contract rate because they have allegedly bought the account and all rights under the account contract.

However, a little trick. Ask them via discovery how they are calculating interest and what they are using as their right to charge the interest and the %. Then demand the document to support those charges.

In my case they responded by stating the highest rate allowed under Arkansas law, which is about 20% less than what the contract default rate would have been.

Gee wonder why they recalculated the amount, provided that amount as an answer to my request and then stated they were charging 10% as allowed by Arkansas law and did not have to provide a copy of the law for Arkansas because I had just as much access to it as they did.

It was not because they did not actually have proof that would justify triple my states max allowed was it. ;)

I knew the rate. I had the contract. I just wanted to see if they even had the most basic of required proof and knew they would dance around the issue if I just straight up demanded the contract.

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I believe (not entirely sure) that once an account is charged off, they lose the right to whack you the usual 29.9%. I believe it reverts to whatever judgment interest law is in the particular state. Usually this is in the 8-9% range. I think once an account defaults and breaches the agreement by doing so, they lose the right to enforvce the interest rate part of that agreement.

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Might be right Legal. That might be why they used that rate with me. I just decided not to take any chances either way and just kicked their a$$ to make the issue moot.

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The assignee has no greater rights than the assignor, and must present the same level of evidence as would be required of the original creditor.

For a class project I had to research the National Banking Act.

A lot of debt collectors will suggest that the NBA allowed for the automatic conversion of the charge-off balance into a new principal for the debt-purchaser. That is to say, that the Act allegedly waives any requirement of the assignee(JDB) to establish the original contractual terms, which provided for the higher interest rate, the compounding of any interest, and the charging of the ancillary fees, and simply treat the charge-off balance as all principal. In essence, a newly-created debt to the debt-purchaser.

I searched and searched and searched, and guess what, I found nothing in the NBA which states this. The core of the NBA that relates to credit card companies is found in section 85 of the NBA. It provides that the banks may charge interest at the rates allowed by the laws of the State in which they are located.

The U.S. Supreme Court defined the question, where is a national bank located? Most of us know this, the case of Marquette v. First Omaha, 439 U.S. 299. Under the Marquette doctrine, a national bank (credit card company) is deemed to be located in the State where it is chartered.

Most banks are charted in Delaware or South Dakota., and we all know why. I could not find anything in the NBA that answers the question about interest rates.

First I looked up Supreme Court cases that define interest, I found this case, Smiley v. Citibank, 517

U.S. 735 (1996). In accordance with that decision, and the NBA, interest is deemed to include all of those ancillary charges, such as late fees, NSF fees, over-limit fees, annual fees, membership fees, and so on, ad infinitum.

When the assignee/JDB purchases the old account from the credit card company, is there a law, or federal provision, which provides that the charge-off amount automatically gets converted into a whole new principal? If it does, then the assignee/JDB doesn't have to establish that it has a contractual right to sue for, and collect, the compounded interest amounts, which include ancillary charges from the debtor.

Since the NBA did not provide any provisions for this I went to Delaware law. I did not find jack in the Delaware Code that allows for converting the charged-off amount into pure principal by the JDB.

In fact I found that Delaware law does NOT allow for the compounding of interest without a contract. This contract requirement also extends to requests for attorney's fees, as well as higher interest rates and turning balance into pure principal.

So a good answer would be JDB's can be challenged on the interest rates, and all those other fees that they add onto a credit card account. Just as you can challenge the OC over them you also can the JDB.

That being said I will state this from one of the very first things I learned in Law school. It is inappropriate and unethical for a lawyer to file any lawsuit upon which he knows at the outset he cannot prevail.

Edited by BTO429

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I think this is state law, not federal. The NBA was written in 1865 as I recall, long before credit cards came about. You can't enforce parts of a contract that has been defaulted on, can you? Especially the parts that benefit you. I believe the caedholder agreement nixes this.

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Thanks for all the feedback! I appreciate it.

If the JDB dismissed without prejudice but continues to charge interest, can they sue for a higher amount than the original lawsuit before the SOL runs out?

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I think this is state law, not federal. The NBA was written in 1865 as I recall, long before credit cards came about. You can't enforce parts of a contract that has been defaulted on, can you? Especially the parts that benefit you. I believe the caedholder agreement nixes this.

1864 actually.

adhesion contract ("unconscionable contract") - a one sided contract -- when a consumer argues that s/he didn't have an opportunity to "bargain" the terms of the contract, and thus shouldn't be held to the outrageous terms of a contract.

Parol evidence -- the court will not allow any testimony to change the CLEAR AND UNAMBIGUOUS TERMS of a contract. However, if the court finds the contract term to be unclear, such testimony can come in, along with any prior drafts of the contract.

If you violate the contract provision and then sue the other party no you cannot. I will also take a deeper look into this in my contract class.

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