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Promissory Note and Collection Fees: what are the Federal rules and regulations?What requirements a promissory note

New York, NY |

should have for the creditor to charge a very high collection fee "retro-actively"?Promissory note says to pay amount within a certain date, other wise there will be a late payment fee, without specifying how many days after the due date account can go to collection. Promissory note only vaguely states that debtor is responsible for court fees and collection fees if debt is sent to collection.Debt was sent to external collection and collection fee was added. After 6 months was sent back to original creditor (or original creditor took it back) and debt was entirely paid to original creditor in full. A new statement by original creditor is then created a month later with solely a collection fee to be paid. Creditor refuses to reinstate account if collection fee is not paid.

Attorney Answers 2

Posted

State law may apply or may not you don't give any facts as to where the parties are etc. the note controls the terms if they are unclear then the judge interprets against the drafter of the note or tries to figure intent of the note. Terms of the note also control whether the collection fee must be paid. Also a contract or agreement you signed with the creditor controls a lot of these issues. No one can guess at it without reading it.

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5 comments

Asker

Posted

Thank You. There was no previous contract nor specific agreement, there was just one promissory note.

Marc Gregory Wagman

Marc Gregory Wagman

Posted

A lawyer should review the promissory note

Marc Gregory Wagman

Marc Gregory Wagman

Posted

State law likely does apply not federal unless there is diversity between the two parties i.e you are in different states, or the amount of the note is over $75K....

Asker

Posted

We are in different States...I didn't think it would matter though. Amount of promissory note has been already fully paid. They re-billed me with solely a collection fee for $900 on original debt of $2500.

Marc Gregory Wagman

Marc Gregory Wagman

Posted

The promissory note must say that it can charge late fee's or interest for you to have paid more than the original note. Or had a provision that you pay their collections or costs of collections etc. If not you can send a letter and demand an accounting and/or then sue them on the accounting asking for what you overpaid plus attorney fee's.

Posted

The terms of the Note control. If the rate stated is too high the note might be void under usury laws. There is no requirement for a grace period, so if a payment is not made on the due date ithe late fee would apply. You should have an attorney review the note. No offense, but just saying the terms seem vague does not mean that they are not going to be enforceable. However, if they are ambiguous the terms will be construed against the drafter of the note.

The fact that the principal has been fully repaid may give you some room to negotiate about reinstating the account, but it is not clear if you must pay the collection fee. It will require a closer look at the note. Also, if no collection fee was actually paid by the creditor tey may not be entitked to collect any amount for that from you. Again, the note is very important.

Finally, you may not be able to get all the facts from the note maker without a lawsuit.

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2 comments

Asker

Posted

Thank You. The note simply says "I am liable for all collections, attorney and court costs if account is assigned to collection" without specifying internal or external collection. There is no interest rate specified and no costs specified other than the late payment fee, but then again it doesn't say after how many days after the due date the payment will be considered late. Account went to external collection for 6 months and then wet back to original creditor. I paid the balance online through my account, I didn't deal with the internal collection agency. On the new statement they created there is just the collection fee to be paid, not the late payment fee. Collection fee happens to be $900 on a $2500 balance that has been already paid. I am trying to understand if I have a case and if a lawyer can help for sure.

David M. Kasell

David M. Kasell

Posted

I would suggest trying to negotiate with them. You could hire an attorney and still end up mowing the collection fee mount. Although that amount seems very high it does not appear that there is a limit to the collection costs that you might be liable for, based on what you have described. Read the note very carefully to see if you have any other options.

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