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Q:
Can an account that has been charged off still accrue interest?

I have a credit card that was reported as a "charge off." Out of nowhere, I received a letter from a collection agency that states this account has been accruing interest. They are now demanding an obscene amount of money or they say they will sue. Can an account that has been charged off still accrue interest? -Shawn

Shawn,

If your contract with the creditor does not set the interest rate, state law dictates how much interest a collection agency can charge prior to obtaining a judgment. To learn your state's laws, contact your local consumer protection office. For a list of state and county consumer protection offices, please visit the Federal Citizen Information Center's Web site.

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