Can a Collection Agency Collect More Than the Original Amount?

Instead of attempting to convince a person who owes them money to pay up, many creditors choose to farm debts out to professional debt collectors. These collection agencies specialize in collecting debts from individuals. Creditors typically either pay the collection agencies fees based on the amount of money they are able to collect from the debtor or sell the entire debt to them outright. In no case is a debt collector allowed to charge more than the debt contract calls for.

Collection Agencies

When a debt is sold or a creditor hires another party to attempt to collect a debt for him, the new party has as much legal right to collect on the debt as the original creditor. In essence, the debt remains unchanged, but the debtor merely owes the money to someone else. Transferring a debt or using a representative to collect on the debt does not allow a creditor to change the terms of the original contract.

Debt Contract

Debt contracts--the contracts that form the basis of the debt--are legally protected. The only way that the terms of a contract can be changed are if both parties agree to it. This means that a collection agency cannot decide to raise the amount of interest on the debt that the debtor pays or the fees that he must pay unless these increases are allowed for in the contract.

Fair Debt Collection Practices Act

Under the Fair Debt Collection Practices Act, a federal law, creditors are not allowed to arbitrarily raise the amount of money that a debtor owes, even to cover the cost of collecting the debt. If a creditor or collection agency attempts to pass on collection fees to the debtor, he is in violation of this act and may face civil penalties, which he may have to pay to the debtor.

Considerations

Some debt contracts specify that the debtor must pay a certain amount of interest or other fees if the debt is not paid back on time. In such cases, the collection agency is allowed to collect this money, as it is part of the contract. In addition, if a collection agency sues the debtor in court, a judge could order the debtor to pay the legal fees of the collection agency.