Legal Question in Credit and Debt Law in California
interest on a collection debt
A debt of $2000 is owed. Collection agcy is charging $700 interest. Does CA law require that the interest be paid, or just the principal? Sent a check for $2000 to agcy, they demand that the interest be paid as well. They said that they would take legal action if interest was not paid as well. They will not negotiate. Any suggestions?
2 Answers from Attorneys
Re: interest on a collection debt
The collection agency may be charging interest at a rate higher than law. We would be happy to review your documentation. Please call us if you need any further assistance.
Re: interest on a collection debt
Since the debt has been paid, and legal interest at 10% annually is simple interest (unless the written agreement specifies otherwise), you can decide whether you want to take your chances that they won't sue for the interest.
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