Can a debt collection agency add fees to the original debt?
Whether you're a debtor seeking answers or a business owner weighing options, this is a crucial crossroads. The good news? Unraveling the fee maze isn't as complex as it seems. Here's the key:
Debt collectors themselves cannot arbitrarily add fees to your debt. They're simply the messengers, relaying the terms already set by the original creditor. But that doesn't mean you're off the hook for additional charges. The FDCPA prohibits debt collection agencies from collecting interest, fees, charges, or expenses on the debt unless that amount is expressly authorized by the agreement creating the debt or permitted by law.
The devil, as they say, is in the details. If the original contract stipulated late fees, interest accrual, or even collection costs, then those charges are fair game for the collector as long as they stay within the authorized limits. Think of it like inheriting a treasure map – the collector follows the path laid out by the creditor, not forging their own.
If you're unsure whether a contract allows for additional fees, it's time to grab your magnifying glass and dissect the fine print. Look for clauses like:
Late payment fees: These are typically charged for missed payments exceeding a specific grace period.
Interest rate increase: Some contracts allow for an interest rate hike upon default or delinquency.
Collection costs: These may include reasonable expenses incurred by the debt collector in recouping the debt, such as phone calls, postage, or legal fees.