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Debt collection fees?


Mithryl
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The FTC website said debt collectors may not "try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge", the collection agency (asset acceptance) has bought the account from the original creditor, does this still apply and how does it work? I am asking because this account is now almost $1000 more then it was when it first went into collections in 2009.

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It's my opinion that they just throw fees on at random, there is no rhyme or reason on how they charge.  I've seen $2000 in original fees go to $6000 in 3 years.  That is just plain usury.  In addition, they usually pay pennies on the dollar for collections, so this is all pure profit.  

 

If you force their hand to court, they will be required to show how they calculated the fees.  Until or unless you do that, it's their word against yours.  

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It also depends on who owns the debt.  If the OC still owns it, they can continue to charge penalty and interest, which the CA working for them can report.   (NOTE: CAs don't buy debts...Junk Debt Buyers (JDBs) buy debts).

 

If, on the otherr hand, the OC has sold the debt to a JDB (your credit report will show "sold to another lender" and the OC's balance will be $0), then the CA is working for a JDB and as big sys, the CA can claim just about anything.  Legal?  Probably not, but you'll have to sue them to find out.

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It's my opinion that they just throw fees on at random

 

That is so true. I have a couple that have almost tripled the original amount since they "purchased" the accounts. I think they do this for those who give in to settlement. Say the original amount is 1,000. that they paid $30. for. They sit on it for a while and send a letter demanding 3,000. Then they send a letter to settle for 50% of 3,000. The person freaks out and settles the account for 500.00 more than the original amount and they make a 1,400+ profit. Easy money, even if only a small percentage go for it. 

 

Many people have a black out period of severe depression when a financial disaster hits them. They forget everything and then these people contact them a few years later after the smoke has cleared. They say "look I'm giving you a huge break and only charging you half of what I might sue you for". 

"Lets just be friends and get this over with." That is truly the reason they do it. Not to mention all of the inflated default judgments they get in court.

 

I currently have a case or two out there making them prove how and why they charged me "interest and fees". Hopefully I'll have a legal answer soon!

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I read a post on this site that stated interest added by a JDB could depend upon the terms of the assignment (sale from the OC).   I need to find that post.

 

If the sale contract gives the JDB the same rights as the OC in regard to fees and interest, then the JDB could add interest.   If no such right is provided, then they can't.

 

This would be a good argument for requesting the ALLEGED sale contract between the OC and JDB.  If the JDB refuses to provide it, they can't prove they have the right to add pre-judgment interest.  Of course, you also need to find out if and how your courts have ruled on the issue.

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If the sale contract gives the JDB the same rights as the OC in regard to fees and interest, then the JDB could add interest.  

 

 

It is also important to remember that when a debt buyer files suit based on common law counts (not breach of contract), they're seeking equitable relief. By seeking equitable relief, they're, in essence, admitting that no contract exists. (Equitable relief may only be awarded in absence of contract).

 

If there is no contract, it follows that there can be no contractual provision regarding the imposition of interest and fees. That being the case, it begins to become apparent that a debt buyer cannot both (1) be the assignee of a valid contract, and (2) prevail on a common law count which requires the absence of a contract. The two are mutually exclusive.

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