Can a law group acting as a collection agency charge interest on top of total debt owed?

If so, what the max amount? They are charging me 29.99% interest on top of my total debt, which is now $2,401.49. I was never told about interest being taken, and didn’t know that this was even allowed at this point. I have been paying ($50) on time every month, yet my monthly balance is increasing. According to the person I spoke with at the law group, my only option is to pay more. I’m am a college student, and I’m doing all I can to pay off my debts before I start nursing school. I hope that you can tell me if they are in violation of anything?

Asked on September 6, 2011 under Bankruptcy Law, Georgia


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

In all states in this country an unpaid judgment runs accrued interest at the legal rate established by statute. In California the legal rate of interest on an unpaid judgment is ten percent (10%) per annum.

You need to review the amount of the total judgment that you owe and when the judgment was entered. Interest starts accruing from the date of entry of the judgment. The 29.99% amount charged on your unpaid judgment seems excessive and if a third party collection company is charging you this amount, it may be engaging in an unfair business practice or an unfair debt collection practice.

If there is "legal aid"in your county you should consult with that group to assist you. Likewise, consult your local county bar association to see if it provides a program to assist people like you.

Do some online research as to what the legal rate is on a judgment in Georgia. I suspect that it will be in its civil code and it should not be much more than ten percent (10%) per annum.

Good luck.

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