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Closed Accounts and Sold Accounts
If I had a charged-off account years ago and the bank sold the account years later, is the new owner of the account allowed to charge interest on the oustanding amount owed, if interest is backdated to the charge-off date? Is this a common practice in banking? I can't find anything stipulating the terms if the account is sold, and the bank has not been helpful at all with providing a closed account disclosure or terms for the account on a sold account.
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 The key is not that the loan was sold, but what the terms of your contract were. Charging off an account and selling it is an administrative issue and has little or nothing to do with the fact that money is still owed and that interest is allowed to accrue at some stated rate.
Your state laws dictated what your interest rate could have been and what it would be post maturity. If the loan has matured or was accelerated, the post maturity rate can differ from what the rate was when you originally borrowed. That depends on your state laws. Also, it could be that after seven years, or some other number, interest would no longer accrue. Again, that is a question for someone knowledgeable about the rates of interest in your state.
When a loan is sold, that can be a prime opportunity to recognize that the owner believes the loan is worth less than face value it has. You may be able to have them show it as paid in full for half or less than is owed, but yes, the total debt owed is still the unpaid amount borrowed, interest, fees and even collection costs when allowed.
Published on BankingQuestions.com 10/09/08
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