I’m being sued by a company called Advance Financial in Tennessee. Two years ago, I took out a “flexible” line of credit with them, borrowing about $4,000. I have already paid around $5,000, yet according to a letter from a law firm, I now owe $5,477.21 plus lawyer fees of $1,825.73.
Advance Financial has transferred my debt to a law firm called Cheadle Law, also in Tennessee. My questions are:
Am I obligated to pay the lawyer fees that have been added to my debt?
What is the best course of action to resolve this lawsuit?
Any advice or assistance would be greatly appreciated!
They are asking you to cover their legal expenses in recovering the debt you owe. Typically, loan agreements stipulate that you are liable for any legal costs incurred in enforcing the debt. You can contest these fees before a judge, but if you signed the loan documents, you likely agreed to pay these fees.
For instance, if you borrowed $4000 two years ago, have paid $5000 already, and still owe over $5000 (excluding lawyer fees), this suggests they’ve been charging you an effective interest rate exceeding 50%, which is illegal under Tennessee law (where the maximum interest rate on amounts under $5000 is 30% annually).
It’s essential to carefully review your payments and statements they’ve provided, and request verification of the debt. If they have indeed charged you more than the legally permitted interest rate, you would have a strong case. In any scenario, it’s advisable to engage a debt attorney to represent you in court.