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Can a collection agency add monthly interest on an unpaid balance?

April 26, 2017agency Balance collection unpaid

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Can a collection agency add monthly interest on an unpaid balance?

2 Answers

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Michael Smathers Posted

The Fair Debt Collection Practices Act section 808(1) prohibits a debt collection agency from adding any charges to the original debt you owe, unless they have the legal right to do so within the confines of your original contract with your creditor. "Original charges" includes the amount you owe plus any charges for returned checks, collection charges, interest, or late fees. These amounts have to be provided for in your original contract or terms of service.

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(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.