Is it legal for a collection agency to charge a 6% daily interest rate?

Get Legal Help Today

 Secured with SHA-256 Encryption

Is it legal for a collection agency to charge a 6% daily interest rate?

I have been paying on bill for a year and a half and called because it had only gone down $30.That’s when the representative told me my principal is going down but because of the interest rate of 6% daily my balance was still over $3,000. She said we could negotiate the interest once the principal was paid off.

Asked on March 14, 2012 under Bankruptcy Law, Virginia

Answers:

Darren Delafield

Answered 8 years ago | Contributor

If Virginia law applies, Virginia has a complicated set of usury laws which set the maximum rate of interest that may be charged. Lenders have attempted to avoid the Virginia cap on interest rate by alleging that the loan originated from a foreign nation or a native american sovereign nation.

If your loan is from a Virginia lender to a Virginia resident, the maximum rate of interest for a personal loan is 12% per year.  It states in § 6.2-303. Except as otherwise permitted by law, no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year. There is an exception for pay day loans. The Virginia Code states in § 6.2-1817  A licensee may charge and receive on each loan interest at a simple annual rate not to exceed 36 percent.

Busniess loans are governed by another set of laws.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption