Although it might be difficult to settle an old debt through a collection agency, it is important to remember that they are governed by federal and state laws. These laws often prohibit them from charging debtors various types of fees.
The Facts
Arizona collection agencies must adhere to the state's laws for financial institutions. Under these laws, collection agencies cannot add on any fees to an individual's debt that were not incurred as a result of their contract with a creditor.
Considerations
Although Arizona state laws govern collection agency practices within the state, collection agencies across the country must also adhere to federal laws established under the Fair Debt Collection Practices Act. The FDCPA prohibits collection agencies from attempting to collect interest or any other fees that are not part of the debtor's original agreement with the creditor or that are not legally permitted.
Solution
Debtors should carefully review their loan or credit documents to determine whether a creditor has the right to charge interest on their unpaid debt. Debtors should seek legal advice if they feel that a collection agency is charging them interest or fees they're not responsible for. They may file a complaint with the attorney general, the Arizona Department of Financial Institutions and the Federal Trade Commission to have the agency investigated.
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