Legal Question in Credit and Debt Law in Illinois

I'm dealing with a few lenders who have employed 3rd party collectors. In both instances there is additional fees and things over the principle they are requesting. My question is two-fold:

if the original lender is unlicensed in my state, then am I obligated to pay the 3rd party collector anything over the principle?

Also, through some research, I've found this out about 3rd party collectors:

"Under Section 808 Unfair Practices of the Fair Debt Collection Practices Act under the Consumer Credit Protection Act, federal law prohibits a debt collector from collecting any amount (including any interest, fees, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."

If a debt collection agency owns your account, and you did not expressly enter an agreement to pay interest and fees to that collection agency, than they cannot charge you anymore than what the already existing balance is.

My question i this: Eventhough I never signed anything, I initially told them over the phone that I would do some payment installments (of course thinking I had to pay these fees) before I found out otherwise.. Isn't that considered a verbal contract (which they recorded) can they hold me to it even if it violates the Fair Debt Collection Practices Act?

Please advise....


Asked on 10/25/10, 11:13 am

1 Answer from Attorneys
Caroline Palmer Law firm of Caroline Palmer

Whether your original lender needed a license depends on what type of lender you borrowed from and how much you borrowed. If this a payday loan then you are correct.

It is always best to get an agreement in writing. Oral conversations, even recorded ones, are not the best evidence you can have. If you recorded the conversation it might help you in a lawsuit, but if they recorded it, then they can always claim they don't have it.

What the CA can charge you depends on the agreement. Typically, fees don't stop accruing if the creditor sells the account.

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Answered on 10/30/10, 1:26 pm


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