Legal Question in Credit and Debt Law in Illinois
Collections and interest
I had a credit card with a 300 dollar limit that I was unable to pay after moving in part because of the statements continuing to arrive at an old address. About a year ago the account was closed and I believe the final balance due with interest and penalties was around $450 dollars. At the time I lost track of it the card was not maxed out. I have recently been contacted by a collections agency claiming that I owe almost $900 dollars but they would accept around half of that as a settlement.
My question is: Can a collections agency that buys a debt charge interest after an account is closed with the original company? The person that called my house shortly after I received the letter claimed that I should settle immediately instead of requesting proof of debt in writing because it was still gaining interest daily.
1 Answer from Attorneys
Re: Collections and interest
Yes, interest continues to accrue until the debt is paid in full, no matter who owns it. The interest per day cannot be much, though. Even at 35% interest, it would be roughly $0.30 per day or $100 per year. I would get some sort of itemization and proof of ownership of the debt if I were you.
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