My question involves collection proceedings in the State of: Minnesota
I have a Private (CitiAssist) student loan taken out in 2003 that has been sold a few times. I have now received a summons from a local lawyer for this debt, and as part of the verification of the debt, past account statements were sent to me. My question is: If my Promissory Note outlined a specific interest rate for the loan, but (at least one of) the companies who purchased the loan charged a different interest rate, is this something I can benefit from?
The Promissory Note on my original loan states “Interest on this Note will be calculated at the Variable Rate (as defined below)...” and “The “Variable Rate” is the sum of the Prime Rate published in the Wall Street Journal under the “Money Rates” section for the day which is 30 days prior to the first day of January, April, July and October of each year (the “Index”) plus 0.25% per annum, rounded to the nearest quarter.”
Then, in a section titled “Default” on the Note, “If I default, I will be required to pay interest on this Loan which accumulates after default. The interest rate after default or after notice of demand for payment will be subject to adjustment in the same manner as prior to the default.”
So, after reading this, I researched the Prime Rate history, and compared it to one of the Account Statements I got. From what I understand, the company that had my loan from 06/2008 until 10/2014 charged interest rates above the 3.25% Prime Rate (has been 3.25% since Jan 2009), even if you add the 0.25% allowed from the Promissory Note. To be more specific, the majority of the time this company had the loan, they charged 5.25% interest, even up until 10/2013.
However, the ending balance from that Account Statement, $26909.46, is not the amount the collection agency is claiming the debt is, so I'm not sure if the Usury law would apply?
That being said, the amount the collection agency is claiming, $24849.34, is not an accurate amount when the original loan balance is calculated with the Prime Rate during those dates. And, now that I think about it, that amount isn't listed on any documents I have, and how it was calculated has never been shown to me. Detailed calculations I got when using the Prime Rates are below:
Initial Loan Balance (also as of June 2, 2008)= 18884.00
x4 months @ 5.5% (Prime rate 5.0% 06/08-10/07/08) (+$346.21)= 19230.21
x 1 month @ 5.0% (Prime rate 4.5% 10/08/08-10/29/08) (+$80.13)= 19310.34
x1.5 months @ 4.5% (Prime rate 4.0% 10/29/08-12/08) (+$108.62)= 19418.96
x74 months @ 3.5% (Prime rate 3.25% 01/09 to current) (+4191.26)= $23610.22
I have a Private (CitiAssist) student loan taken out in 2003 that has been sold a few times. I have now received a summons from a local lawyer for this debt, and as part of the verification of the debt, past account statements were sent to me. My question is: If my Promissory Note outlined a specific interest rate for the loan, but (at least one of) the companies who purchased the loan charged a different interest rate, is this something I can benefit from?
The Promissory Note on my original loan states “Interest on this Note will be calculated at the Variable Rate (as defined below)...” and “The “Variable Rate” is the sum of the Prime Rate published in the Wall Street Journal under the “Money Rates” section for the day which is 30 days prior to the first day of January, April, July and October of each year (the “Index”) plus 0.25% per annum, rounded to the nearest quarter.”
Then, in a section titled “Default” on the Note, “If I default, I will be required to pay interest on this Loan which accumulates after default. The interest rate after default or after notice of demand for payment will be subject to adjustment in the same manner as prior to the default.”
So, after reading this, I researched the Prime Rate history, and compared it to one of the Account Statements I got. From what I understand, the company that had my loan from 06/2008 until 10/2014 charged interest rates above the 3.25% Prime Rate (has been 3.25% since Jan 2009), even if you add the 0.25% allowed from the Promissory Note. To be more specific, the majority of the time this company had the loan, they charged 5.25% interest, even up until 10/2013.
However, the ending balance from that Account Statement, $26909.46, is not the amount the collection agency is claiming the debt is, so I'm not sure if the Usury law would apply?
That being said, the amount the collection agency is claiming, $24849.34, is not an accurate amount when the original loan balance is calculated with the Prime Rate during those dates. And, now that I think about it, that amount isn't listed on any documents I have, and how it was calculated has never been shown to me. Detailed calculations I got when using the Prime Rates are below:
Initial Loan Balance (also as of June 2, 2008)= 18884.00
x4 months @ 5.5% (Prime rate 5.0% 06/08-10/07/08) (+$346.21)= 19230.21
x 1 month @ 5.0% (Prime rate 4.5% 10/08/08-10/29/08) (+$80.13)= 19310.34
x1.5 months @ 4.5% (Prime rate 4.0% 10/29/08-12/08) (+$108.62)= 19418.96
x74 months @ 3.5% (Prime rate 3.25% 01/09 to current) (+4191.26)= $23610.22
Interest Rates: Charged Higher Rates Than Outlined in Promissory Note
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