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Some state laws and some contracts allow interest to be charged and costs to be added. The interest rate or fees charged on your debt may be raised if your original loan or credit agreement permits it. The Consumer Financial Protection Bureau has offered the following guidance as to whether debt collectors are permitted to collect interest on charged off debts:Ī debt collector may not collect any interest or fee not authorized by the agreement or by law. The second issue is interpreting a debt collector’s responsibilities under the FDCPA regarding providing the debtor with information as to the accrual of interest. One pressing issue is whether a debt collector may collect interest on a debt in a situation where the creditor had stopped charging interest. Many creditors will not collect interest on a charged off debt even if they have the right to do so. A creditor will usually “charge off” a debt when a consumer fails to make monthly payments for six consecutive months, at which point the account is closed to future charges, although the consumer still owes the debt. The debt collection community has been concerned with whether a debt collector can charge interest under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.
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