05.14.15 by Andrew Shafer

Collection Agencies and Prejudgment Interest

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On May 12, 2015, the Ninth Circuit Court of Appeals ruled that collection agencies and their clients can demand prejudgment interest without violating 15 U.S.C. 1692f(1).  In Diaz v. Kubler, 785 F.3d 1326, 2015 WL 2214634 (9th Cir 2015). The collection agency (Kubler) demanded payment of the principle plus prejudgment interest at 10%, as permitted by California law.  The court ruled that Kubler’s including prejudgment interest did not violate 1692f(1).  Washington’s law is similar to California’s. RCW 19.52.010 allows creditors to recover prejudgment interest at 12% on liquidated claims where the parties have not agreed to a different rate of interest.  A liquidated debt is one in which the amount is not disputed (such as the balance due on a car loan) or can be calculated arithmetically (such as a COLA adjustment on a commercial lease).