Can a debt collector charge more than the original debt?
Debt collectors themselves cannot arbitrarily add fees to your debt. They're simply the messengers, relaying the terms already set by the original creditor. But that doesn't mean you're off the hook for additional charges.
So it's pretty upsetting to learn that yes, in certain circ*mstances debt collectors are within their rights to continue adding fees to your debt after they've purchased it.
Debt collection agencies are legally allowed to add additional interest and fees to your overall balance. This eventually leads to the total amount being more than what you owed to the original creditor. There are federal and state laws that govern how collections are handled.
If the collector owns the debt, it keeps the money, which usually ends up being a profit. Before you make an offer, though, decide your maximum amount and stick to it. Once the collector sees you'll pay something, it will try to talk you into paying more. Don't agree to pay more than you can afford.
A debt collector may not collect any interest or fee not authorized by the agreement or by law. The interest rate or fees charged on your debt may be increased if your original loan or credit agreement permits it and no law prohibits the increase, or if state law expressly permits the interest or fee.
Debt collectors cannot harass or abuse you. They cannot swear, threaten to illegally harm you or your property, threaten you with illegal actions, or falsely threaten you with actions they do not intend to take. They also cannot make repeated calls over a short period to annoy or harass you.
Generally, paying the original creditor rather than a debt collector is better. The creditor has more discretion and flexibility in negotiating payment terms with you. And because that company might see you as a former and possibly future customer, it might be more willing to offer you a deal.
They gave you the money, and you should pay. The same is true even if the debt is sold and belongs to someone else. However, you have every right to dispute the debt if details are lost during the transition from the original creditor to the debt collection agency.
A debt collector must stop all collection activity on a debt if you send them a written dispute about the debt, generally within 30 days after your initial communication with them. Collection activities can restart, though, after the debt collector sends verification responding to the dispute.
Not responding to a properly served lawsuit – even if you're unsure whether you owe the debt – can result in the court issuing a judgment against you, which could limit your ability to dispute the debt, even if it's already been paid or you don't owe it.
Why not to pay debt collectors?
By paying the collection agency directly, the notification of the debt could stay on your credit report longer than if you attempt to use another option, like filing for bankruptcy. When institutions check your credit report and see this information on it, it may harm your ability to obtain loans.
In some cases, you may be able to settle for much less than that 48% average. Collectors holding old debts may be willing to settle for 20% or even less. The statute of limitations clock starts from the date the debt first became delinquent.
- Misrepresenting the nature of the debt, including the amount owed.
- Falsely claiming that the person contacting you is an attorney.
- Threatening to have you arrested.
The FDCPA prohibits debt collection agencies from collecting interest, fees, charges, or expenses on the debt unless that amount is expressly authorized by the agreement creating the debt or permitted by law.
The 7-year rule means that each negative remark remains on your report for 7 years (possibly more depending on the remark). However, after that period has ended, a remark will most probably fall off of your report.
Yes, you can be sued for a debt that has been charged off.
However, a charge-off means that one creditor has written the debt off and either sold it or gave it to another debt collection agency to collect on. If your debt has been charged off, you do owe the balance.
Lack of current information on debtors. Difficulty identifying and contacting debtors. Difficulty in accessing the most valuable information. Takes too long to locate debtors when sorting through all the data.
Importantly, people can sue debt collectors who break the law by lying or providing wrong information. The Consumer Financial Protection Bureau is the administrator and a primary enforcer of the Fair Debt Collection Practices Act.
In order to win a court case, a debt collector must prove that they have proper ownership of the debt, that you actually owe the debt, and that the amount they claim you owe is correct.
If you have delinquent debt that's been sent to collections, there might be options. In some cases, you may still be able to negotiate repayment directly with your lender. Working with your original creditor instead of a debt collector can be beneficial. However, this approach won't work for everyone.
Do I have to pay a debt if it has been sold?
Once your debt has been sold you owe the buyer money, not the original creditor. The debt purchaser must follow the same rules as your original creditor. You keep all the same legal rights. They cannot add interest or charges unless they are in the terms of your original credit agreement.
You can sue the debt collector for violating the FDCPA. If you sue under the FDCPA and win, the debt collector must generally pay your attorney's fees and may also have to pay you damages. If you're having trouble with debt collection, you can submit a complaint with the CFPB.
Specifically, section 609 of the FCRA gives you the authority to request detailed information about items on your credit report. If the credit reporting agencies can't substantiate a claim on your credit report, they must remove it or correct it.
State | Written | Oral |
---|---|---|
Alaska | 6 years | 6 |
Arizona | 5 years | 3 |
Arkansas | 6 years | 3 |
California | 4 years | 2 |
At a minimum, it must produce: A copy of the original written agreement between the parties, such as the loan note or credit card agreement, preferably signed by you. If the account has been sold to another creditor, that creditor must prove that it has the right to sue to collect the debt.
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