Legal Question in Credit and Debt Law in North Carolina

Payday loans are indeed illegal in North Carolina. It was my understanding that any loans that were in progress at the time the ban was announced could only collect principal and no late fees or interest. Here is a link to the NC Attorney Generals's pronouncement:

http://www.attorneygeneral.gov/uploadedFiles/Consumers/ConsumerProtectionLaw.pdf

Where did you get the information that the interest rates were limited to 8%? 8% is the legal rate of interest which judgments carry. However, consumer loans of this type usually can have interest rates of up to 16%. If you have something other than a recitation of the statute that specifically relates to payday lenders, I would be interested in seeing it.

There is no question stated - I am not sure what you are looking for in the way of advice.

I would agree with you that you should not repay the debt any further. And never enter into an agreement with a debt collection company to take money out of your bank account.

The debt collector can threaten but they cannot do much else. Many debt collectors have similar sounding names. Confirm that it is IAG and get their address (you can Google the phone number and sometimes you can get the address that way or you can try the Better Business Bureau). Send them a letter advising that payday lopans are illegal in NC, that you have repaid the principal if full (send a copy of your check) and that they are not to contact you any further regarding the debt. Also demand that they report that you have paid to the credit bureaus.

Payday loans are helpful in a pinch but they ultimately spell trouble as you have learned. If it is at all possible, try not to take out any more of these loans.