Problem with Collection Agency

[Anonymous]

I signed an agreement with Monarch Recovery in January to make payments towards what I owe Citi Bank.  The agreement gave the full amount owed, the amount I would pay every month and the date the payments were to be received by Monarch.  Since January, I have made all the payments on time with automatic withdrawals.  I had a call from them today saying "we just received a notice from Citi that they're charging interest every month on your account."  Well, when I signed the agreement with them, there was no mention made about additional interest being added every month.  I assumed that the amount stated on the payment agreement was all I owed.  Shouldn't the agreement that I signed in January have stated that interest would be charged every month and that the amount owed would change every month?  I don't receive statements from Monarch.  They just take the money out of my account on the due date.  I called Citi and they said that interest is being charged every month. 

Not sure where to go with this.  It seems to me that if there were going to be additional charges every month, that Monarch should have disclosed this in the agreement I signed.  Any suggestions?  Thanks. 

[HoldingOntoHope]

I hope you have a copy of the agreement. Read it carefully and see if they state anywhere in there that the amount of the agreement will be considered payment in full for the debt. If it simply states that the amount is the current amount due you are probably stuck. Just because the account with Citi has gone delinquent does not preclude them charging additional interest. And to top it off you are probably paying the default interest rate which is the highest they charge. I'm sure those provisions are going to be in your original account agreement with Citi.

Be careful of defaulting on your current payments. If the balance is enough they may go to court and get a judgment for the past due debt. And that will add significant costs to the debt for legal fees, processing and of course interest accruing on the judgment. If you think you have a case against Citi or Monarch for misrepresentation or a breach of contract you should get legal help and not rely on an internet forum advice. I am not a lawyer and I only speak from my past negative experience with debt collectors.

[RobertEG]

You have an issue under FDCPA 808(1), which reads:

"Unfair Practices.  A debt collector may not use unfair of unconscionable means to collect or attempt to collect any debt.  Without limiting the general application of the forgoing, the following conduct is a violation of this section"

    (1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."

If your account agreement did not expressly authorize such interest, then the only way it would be permitted is if there is some specific provision of law in your jurisdiction that permits such a charge.  I would ask them under what specific provision of law they are permitted to attempt to collect on that interest.  I doubt they can provide one.

Until such time as they can show that collection on that interest is permitted by law, I would inform them that they are conducting an unfair collection practice under FDCPA 808(1).  Even if now untimely, I would follow up with a DV request, asking for such verification.

[HoldingOntoHope]

RobertEG I respect your knowledge on these matters so I will ask for myself as well as the OP. If Monarch is merely collecting for Citi (Assigned not purchased) then wouldn't the original agreement with Citi prevail as to whether interest may be charged?

[RobertEG]

Yes.  The statute makes specific reference to "the agreement creating the debt." 

Even if purchased, the debt collector was not a party to the agreement creating the debt.  Only the consumer and the OC were.

[Anonymous]

Thanks for all the input.  My question is this:  When I made the agreement with Monarch in January, there was no mention of interest charges accruing from Citi Bank.  Didn't they have an obligation to state that interest would continue to accue?  The agreement I signed with Monarch clearly said Total Amout Owed.  Monarch does not own the account.  Therefore, I presume they are contracting directly with Citi.  And if that's the case, if interest is accuing and they are collecting for Citi, how can they state that I owe "x" amount when it's actually "x + interest"?  Isn't that misrepresenting the actual amount owed?  Even if the interest and fees were stated in the original Citi contract, I'm now under a new contract with Monarch to pay the bill.  My monthly payments do not cover the interest that they say is accruing every month.  So I'm accomplishing nothing by paying - I'm not reducing the principle and only paying down some of this interest.  Not sure what to do here.  Thanks again for your replies.

[RobertEG]

I dont think Monarch is the decision maker here.  The statute clearly bases the authority to collect interest must be established in  the contract that established the debt.

That was with CITI.  It is CITI's obligation, if they assert interest is due, to show that it was provided for under the terms of your contract with them that established the debt.

However, if Monarch is asserting that the payment agreement you signed with them established a new debt, they would have to show that you signed a new agreement that included the explicit provision for your obligation for whatever interest they are now attempting to collect.  I would presume that your payment agreement only related to the terms of payment of the debt established with CITI, and was not a new agreement that altered the basic terms of your account agreement, or established a new account agreement with them.....?

[Anonymous]

Hi - I was able to resolve the issue directly with Monarch.  I finally called a manager, explained the situation and he researched it.  Apparently, the interest was supposed to be stopped when I signed the agreement.  Although Monarch does not own the debt, the type of contract I had with Citi allows for the interest to be stopped.  He said it was an error on their part that the interest wasn't stopped and the agent with whom I was dealing didn't understand what happened.  They've stopped the interest accrual and had Citi deduct the interest charges since I signed the agreement in January.  So problem solved.

Thanks to all who replied to my problem!