While I am sure that this issue has already been dealt with, there are a few things I would like to point out:
1."Allied doesn't sue " I can tell you for certain that if you are talking about Allied International Credit, they do sue. They run a full legal department with a paralegal on staff at all times. They will not sue on small balance accounts.

2. Capital One does have an interest relief program, much like the program with Student Loans, with a few differences. In order to get on board with this program, talk to the collection agent. Tell them that if they agree to freeze the interest (which you know they are capable of doing) you will pay them a 10% downstroke payment and then make monthly payments after this. If $50 is all you can afford then offer them $50 a month after the 10% payment. I know it seems daunthing to make a 10% payment, but it will cease all the interest and fee's on the account.

3. The reason there is still interest accruing on the account is that it is not a "new" or "made up" fee. Your over limit fee's are no longer accumulating, but because you signed a binding contract with Cap1, Allied is allowed to charge the interest. The interest accumulating is a part of the debt owed. There is no law against charging the interest rate as agreed upon by consumer and creditor, only laws against making up fee's or raising the interest rate.

Hope you can get it all worked out!

Yes, Allied does do outsourcing for debts in "arrears" before they are to hit collections.

If that is the status with your Cap1 card then you can just pay the back interest to have it brought up to date.

Even when agencies are told to collect the "arrears" by their clients they will usually say the whole thing is owed because commission on the arrears is so small. So if they can trick some people into paying off the balance they will try...it's a really stupid way for financial companies to outsource their collections and lose customers.

Sometimes collection agencies are hired before it actually goes to collections. This happened with me in regards to a Bell bill. It never did show up on my credit report.

OK, I got a letter in the mail today- from Allied International Credit. It still says all payments should be made to capital one-- perhaps this is a roundabout way to avoid having to stop charging fees? Like, they're hired the collection company to collect the debt, but it's still 'owned' by capital one?

In fact I just viewed their website, It seems that is exactly what they are doing. :( "Early Arrears Collection" to be specific.

I also want to make it clear I feel that I am morally obligated to pay this debt, but I guess I was just hoping for some understanding from Capital One on this issue :(

Thanks again everyone for your information. Hopefully I'll be able to solve this matter with the information learned here.

Allied doesn't sue and you sound broke so don't sweat so much about this.

If the highest interest card is in collections and the others are not and you're struggling to pay those, then let the one that fell off stay in collections. It isn't going anywhere. Pay the creditors you can while you can and let the other go.

The agency is paid to make it sound urgent and that it needs to be paid now, thats why the threats of legal action are always made.

We are paying above the minimums on the other credit cards we have-- but they are in my name. We use them for our phone bill (vonage only takes credit cards) and for buying games online for my husband to review. (he gets reimbursed from one contractor for his game costs, but he has to pay for them up front, and he needs a credit card for that) The available credit is generally less than $100.

He only has 2 other debts in his name- an installment loan with Dell, and his student loans. He has no other credit cards.
Right now we have exhausted all interest relief available on his student loans, and we are currently only paying the interest. (total payments between the two are about $140/ month)

We tried to apply for a consolidation loan last November, as our goal is to be debt free, but we were denied.

It's tough to asses how a law will help you in a chat forum without knowing all the facts - not to mention you really do need a lawyer for legal advice.

Bottom line is if a collection agency is collecting a debt for Capital One and late fees - interest - over limit fees etc. have been all been added already then the agency will accumulate interest at the assigned balance. IE $10k (including prior charges) is assigned at 18.99% then that’s what you pay.

Creditors do that, I know its tough, but that’s how they make money.

Collection agencies can’t create or invent new fees to collect on over and above the assigned balance + interest rate.

Are you paying minimums on your other balances? If so how much do you owe versus the credit limits available?

I don't believe it is capital one. I didn't speak to the collection agency when they first called, and my husband said he thought she identified as a representative from Allied Collections, or something similar. Next time I speak to her, I will clarify who she represents.

Does the law exist?

I wasn't aware of that information about non profit credit counselors. They won't meet with us anyway, because this is one of two debts with a collection company, and the other one we are currently paying on right now, and should be paid off in about 8 months. Everything else has been kept up to date. In fact, this whole issue is so distressing because my husband had very good credit until we had problems with this account. It got a month behind, and that is when the fees were charged. The fees got so high, there was no way for us to pay it under, without shortchanging essential aspects of our monthly budget. :(

Thanks for the information.

If Capital One is collecting the debt and not an agency then that law is a moot point.

Either way, non-profit credit counsellors are not the best place to get debt relief advice from; they are essentially kinder & more friendlier collection agencies for your creditors.

If its just one small debt bothering you then why not try to settle it on your own? There are lots of posts on this site if you do a search.

I apologize in advance if this gets long winded. I'm emotional about this right now, but I'd like to get my issue sorted out.

My husband has an account with capital One, and it is currently 6 months behind. We are very low income, and we would like to make payment arrangements on the debt. I can only afford to make about $50/ month, and even that is going to be difficult. I'm quite adept at budgeting, but there isn't any more to cut to allow me to pay any more than that. The problem is, with the interest, and the over limit fee ($30) they charge every month, the account balance will go up every month, even if I pay the $50.

I have also spoken with the local non profit credit counselors, and they said that collection agencies were not legally allowed to charge interest and fees on the balance, but this company is doing it anyway. I have not found any information online about a law that says they cannot charge interest or fees. The only website the credit counselors gave me was http://www.gov.on.ca/mgs/en/ConsProt/STEL02_175992.html which doesn't provide much information.

With my husband being self employed, and with us being low income, and not having any assets, are we 'judgment proof'?? I would like to pay the bill, but if they can't work with me then I just don't see the point. I know that sounds horrible, but I don't see what other options I have.

Are they legally allowed to charge interest and fees every month on the owing debt?

At what point can they take us to court?

Can I record the conversations, or do I have to obtain the agents permission?

Are there any links to laws (with reference numbers) that you can provide so I can verify the info. Any other links you think may be helpful to me?

Thanks so much for reading through my novel, and thanks in advance for your help and advice.