Can debt purchasers continue to charge and increase the original debt? – Dennise
I have an old credit card bill. I am not sure when, but do recall the that original creditor, first reduced my credit limit, then closed my account. The Limit was $5000K, they reduced it to $3,000.00K. I owed about the full amount of $3000 on it. I do know that it has gone through several collection agencies and each time the amount has incresed. There was NO activity on the account, as they CLOSED it, so I am not sure how interest could have continued.
Can Debt purchasers continue to charge and increase the original debt?
—Dennise
Your original agreement with the creditor would have outlined how your account can be treated after default. In many instances, your agreement with the creditor will allow for interest to continue to accumulate during the collection process. This, and the late fees and over limit charges, cause the original balance to increase. Your question assumes your debt was purchased. Have you verified that with your original credit card lender? Have you received collection calls and letters that indicate a debt buyer now owns the account?
You do want to be aware of the fees that are being added, and how they were calculated. You can request this information from a debt collector contact you, but you will want to do that in writing.
You can call the original creditor and ask how they are applying interest to the account (if they still own it). If your credit card issuer sold the debt off to a debt purchaser, the debt buyer will often have a hard time getting their hands on the agreement you had with your creditor in order to show the validity of how the balance on the debt is increasing from month to month.
Call your creditor first and find out if the debt was sold.
Do you have a strategy to resolve this debt? Who was the original creditor?
Post answers and additional questions in a comment reply below.
Any reader with questions about this topic is welcome to post in the comments for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi Michael,
Thank you for your response.
Here is situation, in 2000, Citibank reduced my credit limit (and I was in good standing with them), to $3000.00 shortly, lost my job and used my card to the max to which they closed it completely. I received a number of collection calls, etc. advised them of my lack of employment. Everything went dark until about 2 years ago, I got a letter from a Collection agency, stating that I owe them $11,000.00, it said that the account was with citibank. Nothing else, no other details. I did send a letter asking them to prove it was my debt (I cannot imagine that if an account is closed, there is continued late fees and over limit charges)…since I knew that I owed $3000. It is listed on my credit report, twice, two different collection agencies, same amount and reflects last activity in 2010, which is not true. I have tried to get it removed, but no luck, Which is why I asked the question.
Here is a hoot, though, I got a check from Citibank stating that I was entitled to a refund because of some credit protection that I purchased and never received, but was billed for.
Thanks for the information.
Dennise
Charging allowable interest and fees that were contained in your agreements is permissible after the sale of a debt. It was quite common place. But debt collectors and debt buyers were often unable to prove up how those fees and interest were applied in observance of your original credit agreement. That problem persists today, but some debt buyers are ceasing the practice of adding any dollar amount to the balances once they receive them.
If you defaulted in 2000 with Citibank, all credit report entries related to that account should be off your credit reports. The two collections companies with the inflated balances should not be on there at all. If you disputed these entries with the collection companies and the credit bureaus with no result, file a detailed credit reporting and/or debt collection complaint with the CFPB here: https://www.consumerfinance.gov/complaint/
what is the statue of limitations on credit card debt?
Ben – Each state sets their own statute of limitations to legitimately sue in order to collect on an unpaid credit card debt. I looked up your IP address and see that you are posting from Texas. Texas SOL is 4 years.