Can a Collection Agency Charge More Than the Original Debt?

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Dear Experian,

If a checking account was closed, charged off, and sold to a collections agency, what kind of interest can they charge on that debt? I read that it can't be more interest than was part of your contract with the original creditor. Can the collection agency charge monthly fees for every month they have had the debt? Are there state limits on this interest?


Dear ANK,

When a creditor sells a past due debt to a collection agency, the collection agency becomes the owner of debt. They may add additional interest and fees to the balance as part of their collection efforts, so the collection amount may be greater than the original amount that was written off by your creditor.

Both state laws and federal laws like the Fair Debt Collections Practices Act (FDCPA) regulate the fees a collection agency can charge. Often, the amount of interest is dictated by the interest rate listed in the terms and conditions of the original contract.

If you disagree with the amount a debt collector says you owe, contact them for clarification. If you believe with a collection agency is not complying with the law, contact your state attorney general's office for information about your legal options.

Thanks for asking,
The "Ask Experian" Team