how is it possible that a debt collector can charge up to 100 - 500% more for a debt. Is it even legal for them to do so. I believe that for them to do so it should be agreed by me or I should have some say in the process in which they arrive at their conclusion that I owe so much more than the original amount I owed before being turned over to a debt collector.
2007-10-17 12:26:26 · 13 answers · asked by Anonymous in Politics & Government ➔ Law & Ethics
They are allowed to charge late fees, fees associated with collecting the debt, interest on the debt (usually at a higher default rate). If the debt has no payments on it for a long time the amounts owed can skyrocket.
Read this to understand your rights and to give you some ideas to reduce the amount you need to pay to resolve the issue: http://www.fair-debt-collection.com/
By the way you already agreed. Take a look at the contract for the debt.
2007-10-17 12:32:05 · answer #1 · answered by davidmi711 7 · 0⤊ 0⤋
The key thing is to look at the underlying debt. Generally the debt collector buys or receives the rights of the original creditor.
If the original creditor had a right to 18% interest, then the collector will as well. If there is a late fee, again, this follows the debt to the collector. If there is a right to recover costs, then that too follows.
Imagine a check for $20.00 for a monthly payment plan that bounces. The business has a right to a $50.00 bounced check fee, and there is a right to 18% per year interest. Maybe somewhere you signed a contract for monthly payments that adds $20.00 per month for any late payment.
You have a $20.00 check that bounces, so you now owe $70.00. ($20 +$50) If the check is late, then you also owe the $20.00 late fee, for a total of $90.00. You make the next payment on time, but it is actually the prior payment and as a result, you have a second payment that is now late. This is another $20.00 for a late payment. After three months you have three late fees and a $50.00 bounced check fee and still technically are behind one payment of $20.00, and owe $130.00.
If the creditor had a right to costs and fees to collect, just because the debt gets transferred to a debt collector does not shut this down. Interests continues to accrue and they can add on costs and fees to try and get their money back.
Within a year, a single $20.00 check that bounced can be a debt of hundreds of dollars.
Some States have laws that limit such things. They differ state by state. There is the Federal Fair Debt Collection Practices Act as well.
You may want to contact consumer credit counseling or a legal aid clinic for help.
2007-10-17 12:40:59 · answer #2 · answered by inog 2 · 0⤊ 0⤋
in CA the debt collector cannot add additional fees to your debt, unless you did agree to that with the original company you owe too. They also cannot report you to a credit agency, again the company that you owe money to has to do it. Any additional fees being charged should not come from the debt collector. They simply make a commission off of what you pay back through them. If you wanna make them mad, pay the debt back directly to who you owe, then they don't get commission.
2007-10-17 12:31:59 · answer #3 · answered by Anonymous · 0⤊ 0⤋
yes it is legal. first off when sign for a lot of credit items (credit cards, vehicles, loans) you accept the interests rates that are in fine print, rather you pay on time or default and interests rates rise. however when an original creditor turns your account over to a debt collector they then assess their own fees for aquiring the account. they actually pay your original credit what you owe, just to legally own your account. that way they can charge their fees, based on how much you owe. its the only way they can make money.
2007-10-17 12:32:28 · answer #4 · answered by Chocolate_Tai_69 3 · 0⤊ 0⤋
charge off does no longer mean that you now no longer owe the debt. It in basic terms signifies that the creditor is now no longer counting your debt as an asset. this does no longer mean that they could't promote the debt to some different person for pennies on the dollar. That appears to be like what has got here about. Sorry, yet because some different person has offered the debt, you presently owe them.
2016-10-21 08:17:22 · answer #5 · answered by ? 3 · 0⤊ 0⤋
Depends on what kind of debt(s) you're referring to. If it as kind of interest free debt - and I don't know of any, other a loan from a friend or family member - the answer would be no.
If it's a credit card debt, then the answer is yes. My advice, get a good credit counselor before proceeding with this matter.
Sorrowfully,
Wotan
2007-10-17 12:35:05 · answer #6 · answered by Alberich 7 · 0⤊ 0⤋
the collectors are adding on for intrest. you should try contacting the people you owe the money to not the collectors. and see if you can just pay them. most of the time it will work but some times it wont. but if it does you will only have to pay back what you owe.
2007-10-17 12:31:15 · answer #7 · answered by whtbizoy 1 · 0⤊ 0⤋
They can charge interest -- and cost of collection --- which for a small debt may be at least as much as the debt itself.
But they cannot just multiply the amount due -- at least, not unless the contract you signed specifically said they could.
2007-10-17 12:30:16 · answer #8 · answered by coragryph 7 · 1⤊ 0⤋
A debt collector buys your debt for pennies on the dollar and can charge what ever collection fees they want.
2007-10-17 12:29:34 · answer #9 · answered by Deborah S 5 · 2⤊ 1⤋
The size of a debt may be increased by interest fees, penalties and collection fees.
2007-10-17 12:30:39 · answer #10 · answered by DrIG 7 · 0⤊ 0⤋