Can a Collection Agency Add Interest to an Old Cell Phone Bill?

When a person incurs any kind of debt, either through a bill or a loan, he is obligated to pay it according to the terms that he agreed to when he signed the contract leading to the incursion of the debt. In most cases, debts, even debts drawn from cell phone bills, can be sold to outside parties, including collection agencies. These parties may attempt to collect on the debt, but cannot charge the debtor additional interest.

Collection Agency

Collection agencies often purchase debt from companies that do not wish to pursue collection of the debt themselves. In some cases, companies will also hire debt collectors on commission, paying them a percentage of the money that they collect. Whether a company hires a collection or sells the debt to them, the collection agency is allowed to pursue collection of the debt in the same way as the original creditor was allowed to. He cannot, however, attach any additional charges.

Transfer of Debt

When a debt is transfered, the person buying the debt is, in essence, taking the place of the original creditor. Just as the original creditor cannot choose to charge the borrower interest or other fees that are not specified in the contract, the buyer cannot decide to charge the borrower any additional money. This is true for any kind of debt, including cell phone bills, which may or may not allow creditors to charge debtor's interest.

Bill Terms

Some bills will specify that the creditor is allowed to charge the debtor interest. This is particularly true for late payments on a bill. It is not uncommon for cell phone companies to require customers to sign a contract allowing the company to charge late fees for late payments. A collection agency can add interest to an old cell phone bill if the cell phone contract allows the creditor to assess interest on outstanding debt.

Considerations

Under no circumstances can a creditor add interest, fees or any other kind of additional payment that are not specified in the contract that the borrower originally signed. Doing so is a violation of the Fair Debt Collection Practices Act, a federal law. Creditors who do this can face not just civil penalties, but may be sued for damages by the debtor.