Can I collect interest on a debt?
Yes, in California, you can collect interest on a debt if it is specified in the contract or agreement with the borrower. Interest is the amount of money charged for the use of money, often expressed as a percentage rate over a period of time, and is typically paid periodically. Under collection defense law in California, creditors can charge interest if the interest rate is specified in the contract. In California, there are no legal restrictions on the amount of interest that can be charged, but the rate of interest should not be more than ten percent a year. In California, the creditors must provide written notice of the interest rate and the amount due prior to the debt being collected. This notice should be given at least 15 days prior to collecting the debt, and should include the interest rate, the amount due, and the due date. Also, any agreement between the creditor and the borrower regarding the payment of interest must be done in writing, and both parties must agree to the amount of interest. Additionally, a creditor cannot use the interest charged to cover the cost of collecting the debt. They must separately account for the debt and any interest due. In California, creditors may collect interest on any debt they have lent out, provided it is in accordance with state law. For more detailed information regarding collection defense law in California, it is best to consult a lawyer.
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