Can a third party collection agency that bought a charged off debt continue to charge interest on that debt?

Answer 1

Yes. If they decide to pursue legal remedies, such as a lawsuit. They may also, in some instances, recover legal expenses incurred in the process.

Under Section 808 Unfair Practices of the Fair Debt Collection Practices Act under the Consumer Credit Protection Act, federal law prohibits a debt collector from collecting any amount (including any interest, fees, charge, or expense incidental to the principal obligation) unless such amount is expressly authoized by the agreement creating the debt or permitted by law.

If a debt collection agency owns your account, and you did not expressly enter an agreement to pay interest and fees to that collection agency, than they cannot charge you anymore than what the already existing balance is.

The above is putting words in...if the agreement authorizes interest payments, and or other charges, (like expenses in collection or enforcing the agreement)...they are absolutely part of the rights another purchaser (the collection agency) may and does purchase. These terms are virtually always included in any loan agreement.

There is no such requirement that any future owner of the rights be named in the original agreement..for obvious reasons (like that requires knowing who the buyer, maybe years in the future, would be....loans of all natures are bought and sold, or transferred between companies for their own accounting/finance purposes all the time...daily). And rightfully so, as who you owe it too is entirely irrelevant to your obligation to pay, and pay the losses they incur.