What penalties or interest can creditors charge when settling debt?

Creditors in Delaware are allowed to charge penalties and interest when settling debt. Penalties and interest can vary from creditor to creditor. Some creditors may charge a flat penalty for settling an unpaid debt. This fee is typically a percentage of the total amount owed, not to exceed the principal balance. Other creditors may apply compound interest to past-due debt. Compound interest is when interest is charged not only on the principal balance, but also on any added interest that is not paid on time. Compound interest continues to be added until the debt is fully paid. Delaware also allows creditors to add a late payment fee onto unpaid debt. The late payment fee is usually a flat fee or a percentage of the original debt. This fee is usually assessed when a payment is more than 30 days past due. Lastly, creditors are allowed to pursue legal action to collect their debt. If a creditor obtains a judgment from a court, they can add attorney fees and court costs to the amount owed. Additionally, the court could order wage garnishment or put a lien on the debtor’s property. In general, penalties and interest charged by creditors in Delaware can be a significant burden on the debtor. Therefore, it is important for debtors to understand their rights and to keep up on their debt payments to avoid accumulating additional fees and costs.

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What penalties or interest can creditors charge when settling debt?

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