Interest on a Charged-Off A/C ???

digem007 · 08-30-2006, 05:01 PM

JDB is suing trying to collect on a debt. This debt was charged off by the original creditor. The JDB states that it is now the holder in due course and that interest is continuing to accrue on the debt. Is this legal?

Qtip · 08-30-2006, 05:17 PM

I do nothave the answer to the question. My first impresion would be that if they bought the account, then they should still be entitled to the interest. But others will chime in and give you the right advice.

Meanwhile, take a look at this thread;

TowerRat; JDB's do not buy debt

It will help you understand a JDB.

roybean · 08-30-2006, 05:45 PM

You will need to look at your state laws regarding holder in due course; also, you didn't say if they are suing in state or federal (I'll bet state) because in state court the JDB will claim that they are not a debt collector as per federal laws. If they say they are the holder in due course you need to attack contract. If they come up with an affidavit attesting to the fact that you do indeed owe THEM and that they own the debt, attack the affidavit as well.

Centex is around and knows state court better than me.

roybean · 08-30-2006, 05:47 PM

One more thing...yes they have the right to charge interest, but you should also check your state laws to see what is the legal amount of interest allowed. In my state it is 10%.

digem007 · 08-30-2006, 06:06 PM

They are suing in State court. NC to be exact. All they have shown attached to the complaint is a copy of a credit card agreement. Not one that bears my signature. They haven't went the affidavit route...at least not yet.

centex · 08-30-2006, 06:17 PM

Interest may or may not be permissible. Much will depend on statutes in your state as well as the agreement in effect at the time of the default on the underlying claim. You will also need to look at what communications you previously had with the plaintiff and how you responded to their initial claims (it is rare for the summons to be the initial communication).

Holder in due course is something that different states seem to view in different lights, and I have no idea what the tenor of the courts in NC might be.

Although the blank agreement proves nothing, unless you are claiming ID theft, also be aware that even a signed agreement proves nothing. The issue is not whether you had an account, but what the amount of default was and whether the current litigant can prove up the amount being sought through litigation. This is where your record keeping will also come into play...review your old statements (please tell us you weren't one of those people that tosses them in the trash) and supplemental inserts that modified the terms and conditions. Your records should always provide you with more insight than anything the opposing party can offer through the discovery process.

digem007 · 08-31-2006, 10:09 AM

Quote:

You will also need to look at what communications you previously had with the plaintiff and how you responded to their initial claims (it is rare for the summons to be the initial communication).

The first communication was a letter from the attorney for the JDB. I then dv'd them. The day after they received my letter they filed suit and still, to this day have not validated.

Quote:

Although the blank agreement proves nothing, unless you are claiming ID theft, also be aware that even a signed agreement proves nothing.

It means something to me. I am not admitting to a thing.
Them: "Is this your credit card account?"
Me: "Ah... no sir. Can you prove that its mine?"
Only if they can prove that I signed the agreement will I start to buckle. And from what I have learned JDB's seldom have records and even if they try to introduce evidence from the OC they have a Chain of Custody issue. In the court I'm in this JDB files many cases and almost all of them result in judgement by default so I intend to make it as hard as I can for them and maybe they will move on to other prey.
By all means... please correct me if I'm wrong but shouldn't they have to prove this is my account first and, if so, then prove the amount second?

Quote:

Holder in due course is something that different states seem to view in different lights, and I have no idea what the tenor of the courts in NC might be.

In NC, holder in due course is one who takes an instrument for value, in good faith and without notice that it is overdue or has been dishonored. Since they bought the debt after it defaulted the JDB can't be holder in due course as is stated in their complaint.

Quote:

This is where your record keeping will also come into play...review your old statements

Unfortunately all that I have are my credit reports, the initial letter from them, a copy of my dv letter and return receipt signatures. Statements were destroyed in fire and I have moved several times since.

roybean · 08-31-2006, 10:37 AM

If it were me, I would remove to federal court. Is this debt within the SOL? Any violations on the reports (hard copies, right)?

kaxmaII3 · 08-31-2006, 01:39 PM

This sounds suspiciously like Worldwide Asset Purchasing ......

hannah · 08-31-2006, 01:43 PM

When was DOLA on the alleged account?

You are correct about holder in due course. As a matter of fact, it has been abolished here in WV. You can't even claim it. I will look at NC statutes and see what I can find.

centex · 08-31-2006, 02:19 PM

Quote:

Originally Posted by digem007

It means something to me. I am not admitting to a thing.
Them: "Is this your credit card account?"
Me: "Ah... no sir. Can you prove that its mine?"
Only if they can prove that I signed the agreement will I start to buckle. And from what I have learned JDB's seldom have records and even if they try to introduce evidence from the OC they have a Chain of Custody issue. In the court I'm in this JDB files many cases and almost all of them result in judgement by default so I intend to make it as hard as I can for them and maybe they will move on to other prey.
By all means... please correct me if I'm wrong but shouldn't they have to prove this is my account first and, if so, then prove the amount second?

You need to look at what the RCP in YOUR State requires as accompanying proof of claim at the time of filing. Some states require a lot of materials, while others view proving up the claim a matter for the trier of fact. I don't know what your state requires and I am, quite frankly, not going to look it up as I do no work in that State and I am not going to presuppose to interpret statutes in a state where I have no feel for the tenor of the courts.

You also need to be aware that what is significant to you may not be the same as what is significant in the eyes of the Court. You need to distance yourself from the matter and view it in the manner in which a practitioner would do so...

CtrlAltDelete · 08-31-2006, 04:36 PM

007 - "Only if they can prove that I signed the agreement will I start to buckle."

Don't be so quick to soften. The only thing a signed agreement proves is that some years ago there was a debt. Without a complete accounting of all charges, interest and payments, there is no proof any debt still exists or if it does what the amount is.

fraudfighter · 09-03-2006, 12:50 AM

Quote:

Originally Posted by digem007

JDB is suing trying to collect on a debt. This debt was charged off by the original creditor. The JDB states that it is now the holder in due course and that interest is continuing to accrue on the debt. Is this legal?

You want to assert a Waiver and Estoppel defense in your answer to their complaint. It's very likely that the OC waived further accruing of account interest at charge-off. This is a common OC practice due to the cost of accounting and tax implications which an OC no longer wants to bear on a bad debt writeoff.
When the OC waives accrual of contractual interest, the contractual right is waived for the successor and assigns, which means the JDB, regardless of what the alleged agreement says on the accrual of finance charges.

So, original creditor records that show a full accounting will likely be part of your discovery demand so that you can establish the waiver of contractual interest accrual.

Also, the plaintiff has to establish what the contractual rate of interest is: what rate was the OC charging: it is illegal under assignment law for the JDB assignee to claim a greater right than the OC possessed.

So, raise a lack of foundation for such a claim from admissible evidence defense.

Looks like you need to introduce yourself to a law library or an on-line law website to start mining for NC case law. Or hire an attorney if you can.

Most Rules of Civil Procedure, under the Time rules, allow a party to move for time enlargement to perform some action, such as to file an answer or a motion to dismiss for failure to attach the agreement the claim is based on.

You need to get smart on the Defenses rule of your RCP, to know the rules for preliminary hearing defense motions and then the answer to the complaint.

The opening of your responsive pleading is critical to your case due to the built in waiver of defenses not raised, typcially found in RCPs.

fraudfighter · 09-03-2006, 01:02 AM

Also, most credit cards are issued by National Banks. That makes them federal loans. That means your state's usury laws are preempted and the only thing that limits contractual interest rate claims are the actual agreement: the rate of interest that the OC charged at the end of the account. Some agreements do include a default interest rate which may differ from the finance charge rate imposed when the account was open.

The JDBs use the preemption provisions of the National Bank Act to debt pad with these exorbitant post charge-off-prejudgment "contractual" rate interest claims, that aren't usurious because of the National Bank Act preemption/exportation provisions and the bank's home-state waiver of it's usury law for regulated lenders (the National Bank credit card issuing bank).

Also make note: National Bank Act preemption renders the FDCPA provision for claiming more than allowed by contract or law toothless.

The JDBs simply claim the right to contractual prejudgment interest, instead of the much lower statutory prejudgment interest, by claiming they receive that right as the assignee of the National Bank credit card issuing bank.

The FDCPA is totally ineffective against this. The only way to stop this is for the several state legislatures to pass regulation of trade laws to bar non-financial institutions, which JDBs are, from charging high rates of interest, as a matter of public policy, restricting the right to regulated financial institutions. State regulation of trade laws are the only way to stop this debt padding by these rank debt profiteers since usury laws are preempted, and the FDCPA, in effect, is as well.

Start writing your state legislators.

roybean · 09-03-2006, 01:05 AM

I tell people all of the time to write to their legislators (and not just one letter), but they don't listen to me. People should be involved in their government.