Is it Legal for Debt Collectors to Charge a Fee?

Debt collectors can charge fees, but only under certain circumstances.

The Fair Debt Collection Practices Act (FDCPA) regulates debt collection practices, including the fees debt collectors can charge.

Debt collectors can charge fees for services like processing payments, sending letters, or making phone calls.

These fees must be clearly disclosed to the consumer in writing, often in a notice that explains the amount of the fee and how it was calculated.

Debt collectors must also obtain the consumer's consent before charging any fees.

Debt collectors have to follow certain laws when trying to get you to pay a debt. The Fair Debt Collection Practices Act (FDCPA) is a federal law that governs how debt collectors can try to collect a debt.

Debt collectors are not allowed to lie or use deceptive tactics to get you to pay. This means they have to be honest and transparent about the debt and the amount they're asking for.

The FDCPA also regulates when debt collectors can call you. They can't call you at any hour of the day, only between 8 am and 9 pm.

You have the right to ask a debt collector to stop contacting you, and they must comply. This is a great way to take control of the situation and reduce the stress of debt collection.

Here are some key points to keep in mind about debt collection laws:

Collection fees and interest can be a complex topic, but it's essential to understand the rules. A debt collector cannot add fees to your debt without permission from the courts.

You'll need to have a judgment placed upon you before any fees are added, except for one main exception: interest. Interest fees may be added to outstanding debt, and the interest rate is clearly stated in your original contract.

It's crucial to keep full copies of your written contractual agreements, as this will provide proof of the fees that can legally be added, including your interest rate. This documentation can be especially helpful in case of any disputes or court proceedings.

A debt collector cannot add fees to your debt without permission from the courts. This means that you will need to have a judgment placed upon you before any fees are added.

The terms of the original contract you signed with your creditor are passed down through the chain of ownership, so the debt collector must follow those terms when collecting the debt.

Debt collectors must comply with Section 1692f(1) of the FDCPA, which prohibits certain types of fees.

The CFPB's advisory opinion may signal scrutiny beyond just debt collectors subject to the FDCPA, including original creditors that collect or use a third-party payment processor.

Original creditors that collect on their own debt, though not subject to the FDCPA, may still be subject to the CFPA's UDAAP prohibitions if they engage in conduct prohibited by the FDCPA.

Institutions must understand their fee assessment practices, including what fees are charged, when, and how they are disclosed.

Interest on outstanding debt can be added to your debt, but only according to the terms of your original contract.

The interest rate is clearly stated in your contract and should be straightforward. This rate is defined and you should be able to easily understand it.

You should keep full copies of your written contractual agreements to prove the fees that can be added, including your interest rate.

The Consumer Financial Protection Bureau (CFPB) has a narrow interpretation of when the Fair Debt Collection Practices Act (FDCPA) allows the collection of convenience fees. This interpretation departs from the view of some courts, but it's the CFPB's position that convenience fees are "amounts" subject to Section 1692f(1) of the FDCPA.

Debt collectors may collect convenience fees under Section 1692f(1) only when the agreement creating the debt expressly permits the charge and some law does not prohibit it, or when some law expressly permits the charge, even if the agreement creating the debt is silent. If the law neither expressly authorizes nor expressly prohibits a fee, it is not "permitted by law", and a debt collector may not collect the fee unless the agreement creating the debt expressly permits the fee.

The CFPB's advisory opinion also rejects the notion that state contract law permits debt collectors to collect fees that are the subject of a separate agreement. According to the CFPB, the FDCPA only permits collecting amounts authorized by contract when the amount is expressly authorized by the contract "creating the debt."

Here are some key implications of the CFPB's advisory opinion: