Can interest continue to accrue on a Charge Off?
Yes – if the terms and conditions of the credit agreement allow for the Original Creditor to charge interest after Charge Off (and when they do, it’s usually at their default rate) then chances are good that they can – unless there’s a conflict with state law. Note: We specifically referred to the Original Creditor being able to charge interest under the specified circumstances. It does not necessarily follow that a debt purchaser has the legal right to charge interest on a Charge Off if they buy the right to collect on the account. When faced with a demanding payment of interest on an alleged debt you may want to demand competent evidence of their legal right to do so, as well as proof that the amount they’re demanding has been arrived at in accordance with all applicable state and federal laws. They should provide this as part of the debt validation (DV) process.
