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Who | Collection Agency Question? |
I've heard conflicting information so I'm looking for some definitive answers. With regard to collection agencies:
1. Can they actually sue you and/or even collect the debt in the first place?
I've heard that only the orginal source can collect and that the only reason collection agencies exist is because believe what the agency tells them and pay out of fear. What would their standing be? Meerly 'purchasing' an account doesn't give them standing does it?
2. If they can collect, can they add on interest?
I've heard its illegal for them to add on interest. |
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Studly
|
Yes, collection agencies can sue you or collect the debt that is owed. However, they MUST be registered in your state to do this. So your first line of defense is to send them a "demand to validate" letter, and demand that they give you evidence they are licensed in your state.
Many times collection agencies will "buy" the debt. As long as proper notice is given to you, it's legal, and they can continue to collect.
They can continue to add on interest, but there are state laws that may govern this. After it has been charged off they may not be able to. And if it results in a judgement, they can only charge what the state mandates, NOT what the original interest rate was.
Sorry, but if you are looking for a loophole out of your debt by disputing the validity of the collection agencies, it's not going to work. You would do better demanding that the "validate" the debt, and force them to prove you have a legal obligation to pay them anything. |
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drinkupmehearties
 |
Yes they can sue you. It will be the original party that the money is owed to but it has happened to me and yes, they added interest until we paid them off AND yes, they filed a lien against our home.
This was a hospital bill. |
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lovefamily_2000
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Depending on how much you owe them, it would probably cost them more on attorney fees than what they will get monthly. For example a judge might order you to pay as little as $10 a month depending on your financial situation and it might cost them hundreds perhaps thousands for lawyer fees, so that rarely happens. The bad news is that they can report it to all 3 credit bureaus and it will effect your credit score. So if you want to keep good credit which helps buying house, cars, credit cards etc then even paying $10 a month will show every month on your reports that you are making monthly payments |
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rweasel6
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To my knowledge it is legal for them to take action to collect the money. They simply purchased a contract from someone and are therefore due that money. Companies buy and sell "Bad Debt" all the time.
They are not allowed to add interest as they purchased a contract with pre stated rights. But if the original contract stipulated that interest could be added if the debt was defaulted on then it would be possible.
Most contracts have collection fee lines that allow a fee to be added if your account goes to collections |
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ShouldBeWorking
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It's difficult to answer these questions because it will depend on the original agreement you signed. For example if you get a loan, and sign that you are aware of these conditions, etc etc etc, then when it goes to collections they have your signature that you were aware of it. Of course they can always collect debts, but the specifics of it will vary not only state by state with laws, but case by case with loan/credit agreements. |
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rae
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1. they could sue you if they really wanted to.. it's a long legal process and they usually don't care to do it... but on rare occasions they do.
2. no.. they can't collect interest since they purchased that debt .. only the original debtor can add interest.. but then again, the original debtor already sold the debt and therefore they have no part in it. |
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Dwight D J
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They can sue, but they need authorization from the initial creditor
Interest depends on what state you live in; chances are, they can collect some amount of interest
Best to work with them, pay what you can consistently (not $10/month on a $10,000 debt, but something reasonable) and be honest with them about any circumstances that keep you from paying the debt |
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Adios
|
Yes. Generally under the Uniform Commercial Code a consumer loan may be assigned to another party. This may not apply if you reside in Louisiana. The original creditor has assigned (sold) your contract to the collection agency. The agency has all the rights of the original contract holder (creditor)
If the original contract allows interest to be added to the original amount, whether as a penalty or as part of the regular agreement, then yes they can add interest.
Good luck! |
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ceprn
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1) yes they can sue, but unless they have a chance of getting something, they won't.
2) they can not add interest, unless it was part of the original contract, but they can add collection costs and legal fees. |
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