Fees Debt Collectors Can Charge: Understanding Collection Fees and Interest

Can Debt Collectors Add Fees to Your Debt?

Whether a debt collector can add fees and interest to your original debt depends on the terms of your original agreement with the creditor and your state law. In general, debt collectors can only collect the amount you owed to the original creditor plus any fees and interest that were authorized by the original agreement.

If your original credit card agreement or loan contract specifies that collection costs, attorney fees, or late fees may be added to the balance, the collector can typically charge these amounts. However, the collector must be able to demonstrate that these fees are authorized by the contract and permitted by state law.

If the original agreement does not authorize additional fees, the debt collector cannot add them. Any fees added without contractual or legal authority are a violation of the FDCPA, and you have the right to dispute them.

Common Fees Debt Collectors Try to Charge

Collection costs and attorney fees are the most common additional charges. These fees are typically authorized in the original credit agreement, but the amount must be reasonable and actually incurred. A debt collector cannot simply add an arbitrary collection fee without documentation.

Late fees and interest continue to accrue on the debt according to the terms of the original agreement. However, the total amount of interest and fees cannot exceed the maximum allowed by your state usury laws. Some states have strict limits on the total amount of interest and fees that can be charged.

Court costs and filing fees may be added if the debt collector has filed a lawsuit against you and incurred actual court costs. These fees must be documented and directly related to the legal proceedings. A debt collector cannot add hypothetical or anticipated court costs.

How to Challenge Unauthorized Fees

Request an itemized accounting of all fees and interest charged to your account. The debt collector should be able to provide a detailed breakdown showing the original principal, each fee added, the date each fee was charged, and the contractual or legal basis for each fee.

Compare the fee breakdown with your original credit agreement. If any fees are not authorized by the agreement or are not permitted by state law, dispute them in writing with the debt collector. Include a copy of the relevant section of your original agreement that does not authorize the disputed fees.

If the debt collector refuses to remove unauthorized fees, file a complaint with the Consumer Financial Protection Bureau and consider consulting a consumer rights attorney. Adding unauthorized fees to a debt is a violation of the FDCPA and may entitle you to damages.

State Law Variations

State laws vary significantly regarding what fees debt collectors can charge. Some states have strict caps on collection fees, while others allow collectors to charge any fees authorized by the original contract. Some states prohibit debt collectors from adding any fees beyond the original balance.

Check your state law to understand what fees are permitted. Your state attorney general website or a consumer rights attorney in your state can provide specific information about fee limitations in your jurisdiction.

If a debt collector is charging fees that exceed your state legal limits, you have grounds for a complaint and potentially a lawsuit. State consumer protection laws often provide additional remedies beyond the FDCPA.