Old debt could resurface due to Federal Reserve regulations
While many consumers believed recent Congressional laws and Federal Reserve regulations provided them greater protection from lenders, some cardholders in California are beginning to see old credit card debt come back to haunt them.
Capital One has been issuing bills to a number of consumers in recent weeks for the interest payments on old debt. The company says these actions are in compliance with Federal Reserve Regulation Z.
Much of this debt represents past charge offs that have already passed the state’s statute of limitations, and some defendants argue they cannot be charged these fees for this reason, The Los Angeles Times reports. However, the company says that while the debt will remain uncollectable, consumers can still be charged interest on these payments.
“If they want me to pay the original amount, I would do that,” Frank Cavestani, who recently received a $5,000 bill from the lender, told the news source. “But they charged off the account and stopped sending me bills. I don’t think I should now have to pay all that interest.”
Federal Reserve Regulation Z requires lenders to send out a statement for each billing cycle, though it remains to be seen whether the use of this clause by lenders would hold up in a court case.