Can a Collection Agency Charge Interest on a Debt?

If you are suffering from financial troubles and are unable to pay off your debts, debt collectors may end up calling. There is a chance your original creditor hired a collection agency to help them recover the money, or they might have sold the debt account to a debt buyer.

Regardless, when a debt collector contacts you about a debt you supposedly owe, you might notice the amount you previously owed has gone up. This may be because of added interest. You’re probably wondering, This is legal, but a collection agency is only allowed to charge interest on a debt that you owe according to what is the original creditor agreement.

In this article, we’ll break down everything you should know about debt collectors charging interest. Let’s get right to it.

Use SoloSuit to make a defense against debt collectors and win your case.

Collection agencies can charge interest on a debt

When debt collectors come calling, you may find yourself asking, “do collection agencies charge interest?”

According to the Consumer Financial Protection Bureau, a debt collection agency can collect interest on a debt only if the original loan or credit agreement allows it and there are no laws in place that prevent such fees.

If the original agreement doesn’t mention anything about interest or fees, debt collectors cannot charge anything more than the original debt amount (and potentially court costs, if a debt lawsuit is in question).

How much interest can a collection agency charge?

The answer is simple: whatever was outlined in the agreement. If the interest rate was 5% when you signed a credit card agreement, then collections agencies can most likely charge the same amount, but nothing more.

So, can collection agencies charge more than you owe? The answer is yes, they can charge what you owe plus interest, but only as outlined in your original agreement.

That being said, it’s important to check your state laws on interest rates and fees, especially in connection with debt collectors. Interest rate laws vary by state.

Can collection agencies charge interest on medical bills?

Medical bills rarely charge interest, so if a debt collector claims you owe a medical debt plus interest, they’re probably lying.

The only circumstance in which a medical bill might include interest is if you’ve signed up for a medical loan with entities such as AccessOne, MedCredit Financial Services, the CareCredit credit card, or anything similar. These are some examples of predatory medical lending that can result in medical bills that accrue huge interest rates—some as high as 27%.

Be careful when you make any agreements to pay off medical bills. Typically, hospitals cannot charge interest unless you sign up for an agreement that includes it. Be careful when considering payment plans and options for medical bills.

Dealing with health concerns on top of medical debt is stressful and can lead to further health problems. You don’t have to fight medical debt alone. SoloSuit can help.

Your rights as a consumer

As a consumer with debt, you need to know that you have rights. There are a few reasons why you might feel stressed about debt, whether it is contentious, you believe it does not belong to you, or if it is extremely high. Despite all the negative feelings that come with owing debt, knowing your rights will help you handle it more easily and give you a great peace of mind.

For example, although a debt collector does have a right to collect on a debt that they owe, they still need to abide by the Fair Debt Collection Practices Act (FDCPA). These are laws that govern how debt collectors are allowed to operate, act, and speak to you.

Here are some debt collection rules outlined in the FDCPA:

• Debt collectors cannot call you before 8 a.m. or after 9 p.m. to discuss a debt.
• Debt collectors cannot use vulgar, obscene, or threatening language to intimidate you into paying off a debt.
• Debt collectors cannot discuss your debt with your friends or family members.
• Debt collectors cannot call you at your workplace.
• Debt collectors cannot pretend to be law enforcement or government workers.
• Debt collectors cannot threaten to take legal action that they cannot, or do not plan to, take.

Below, we outline a few other laws by which debt collectors must abide. You can use these laws to your advantage and protect yourself from unfair practices.

You can use the statute of limitations

One thing that debt collectors do not want you to know is that your debt is subject to the statute of limitations. This is a law that specifies how long you can be sued for debt and brought to court. Each state has its own time frame, which is typically around four to six years. It is also important to know that if you make a payment on the account, it will start this period over again. If you get a call regarding an old debt, be sure to check the statute of limitations in your state.

You are not responsible for zombie debts

Collection accounts are often resold more than once. This means that you might receive a call from a debt collector that is outside of the statute of limitations or one that you do not even owe. This is illegal if you no longer owe a debt, but they still might attempt to get you to pay. Be sure to get all the details before admitting you owed a debt, otherwise it might restart the time frame on that debt.

Pick the right affirmative defense with SoloSuit.

You can ask for proof of the debt

The FDCPA requires a debt collector to send a statement that explains all the specifics of the debt within five days of contacting you. This is important because this will help you determine if you actually owe the debt.

You can also always ask for the debt collector to prove that you do owe the debt by sending a Debt Validation Letter. This forces the debt collector to prove the exact amount of money you owe, how much interest should be fairly charged according to the original contract, the name of the original creditor, and what actions you should take if you want to contest the debt.

Watch this video to learn more about how a Debt Validation Letter can help you stop debt collectors in their tracks:

You can ask a debt collector to stop calling you

According to the FDCPA, a debt collector must stop contacting you if you request that they do so. This is typically done in the form of a letter. Although you will still need to pay for your debt if you owe it, it can stop the constant phone calls. If a debt collector is constantly calling you, it might already violate the FDCPA. Under these laws, the debt collector cannot call too many times per day, and only between the hours of 8 am and 9 pm. Otherwise, they are directly violating your rights.

If you are looking to avoid your debt going to collections in the first place, you need to make sure that you do not fall behind on your payments. Despite this, if you do, be sure to keep an eye on your mail, and anything you receive from debt collectors. They are allowed to require you to pay interest, but only what is allowed by law, and in your original contract.

Use SoloSuit to beat debt collectors in court

If you’ve ended up being sued by a debt collector, don’t lose hope. You still have options.

The first step to defending yourself in court against a debt collector is to respond to the lawsuit. You can do this by filing an Answer into the case. Here’s how.

Follow these three steps to respond to a debt collection lawsuit:

1. Answer each claim against you, as listed in the Complaint. When you get sued, you should receive a Summons and Complaint (also known as a Petition in some states). The Complaint lists all the specific claims against you. The first section of your Answer should focus on responding to each claim as listed in the Complaint. You can admit, deny, or deny due to lack of knowledge. Most attorneys recommend denying as many claims as possible to give yourself a strong case.


2. Assert your affirmative defenses. This is where you get to tell your side of the story. An affirmative defense is any legal reason that you shouldn’t be charged or have a judgment entered against you. Earlier in this article, we discussed the statute of limitations. This is one of the most common defenses for a debt collection case. Click here to learn more about other affirmative defenses you could use.


3. File your Answer with the court, and send a copy to the opposing lawyer. Once you’ve drafted your Answer, be sure to file it with the court and send a copy to the opposing attorney. Send everything via USPS certified mail with a return receipt requested.

Now, let’s take a look at an example.

You can learn more about these three steps in this video:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

• Absolute Resolutions Investments LLC
• Accredited Collection Services
• Alliance One
• Amcol Clmbia
• American Recovery Service
• Asset Acceptance LLC
• Asset Recovery Solutions
• Associated Credit Services
• Autovest LLC
• Cach LLC
• Cavalry SPV I LLC
• Cerastes LLC
• Colinfobur
• Covington Credit
• Crown Asset Management
• CTC Debt Collector
• Cypress Financial Recoveries
• Delanor Kemper & Associates
• Eagle Loan of Ohio
• Educap
• Estate Information Services
• FIA Card Services
• Forster & Garbus
• Freshview Solutions
• Fulton Friedman & Gullace LLP
• Harvest Credit Management
• Howard Lee Schiff
• Hudson & Keyse LLC
• Integras Capital Recovery LLC
• Javitch Block
• Jefferson Capital Systems LLC
• LVNV Funding
• Mannbracken
• Mariner Finance
• Medicredit
• Michael J Adams PC
• Michael J Scott
• Midland Funding LLC
• Mullooly, Jeffrey, Rooney & Flynn
• Mountain Land Collections
• MRS Associates
• National Collegiate Trust
• Nationstar Foreclosure
• Northstar Capital Acquisition
• NCEP LLC
• NRC Collection Agency
• OneMain Financial
• Palisades Collection LLC
• Pallida LLC
• Paragon Revenue Group
• Pinnacle Collections Agency
• PMAB LLC
• Portfolio Recovery Associates
• Provest Law
• PYOD LLC
• Reunion Student Loan Finance Corporation
• Revenue Group
• Regents and Associates
• RSIEH
• Salander Enterprises LLC
• Second Round Sub LLC
• Security Credit Services
• Sherman Financial Group
• Suttell and Hammer
• T-Mobile
• Transworld Systems
• Tulsa Teachers Credit Union
• UCB Collection
• Velo Law Office
• Velocity Investments
• Waypoint Resource Group
• Weinberg and Associates
• Wolpoff & Abramson

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

• Bank of America
• Capital One
• Chase
• Credit One Bank
• PayPal Synchrony Card
• SYNCB/PPEXTR
• Synchrony Bank
• Target National Bank
• Wells Fargo

Going to Court for Credit Card Debt — Key Tips

How to Negotiate Credit Card Debts

How to Settle a Credit Card Debt Lawsuit — Ultimate Guide

Get answers to these FAQs

Need more info on statutes of limitations? Read our 50-state guide.

Why do debt collectors block their phone numbers?

How long do debt collectors take to respond to debt validation letters?

What are the biggest debt collector companies in the US?

Is Zombie Debt Still a Problem in 2019?

SoloSuit FAQ

If a car is repossessed, do I still owe the debt?

Is Portfolio Recovery Associates Legit?

Is There a Judgment Against Me Without my Knowledge?

Should I File Bankruptcy Before or After a Judgment?

What is a default judgment?— What do I do?

Summoned to Court for Medical Bills — What Do I Do?

What Happens If Someone Sues You and You Have No Money?

What Happens If You Never Answer Debt Collectors?

What Happens When a Debt Is Sold to a Collection Agency

What is a Stipulated Judgment?

What is the Deadline for a Defendants Answer to Avoid a Default Judgment?

Can a Judgement Creditor Take my Car?

Can I Settle a Debt After Being Served?

Can I Stop Wage Garnishment?

Can You Appeal a Default Judgement?

Do I Need a Debt Collection Defense Attorney?

Do I Need a Payday Loans Lawyer?

Do student loans go away after 7 years? — Student Loan Debt Guide

Am I Responsible for My Spouses Medical Debt?

Should I Marry Someone With Debt?

Can a Debt Collector Leave a Voicemail?

How Does Debt Assignment Work?

What Happens If a Defendant Does Not Pay a Judgment?

How Does Debt Assignment Work?

Can You Serve Someone with a Collections Lawsuit at Their Work?

What Is a Warrant in Debt?

How Many Times Can a Judgment be Renewed in Oklahoma?

Can an Eviction Be Reversed?

Does Debt Consolidation Have Risks?

What Happens If You Avoid Getting Served Court Papers?

Does Student Debt Die With You?

Can Debt Collectors Call You at Work in Texas?

How Much Do You Have to Be in Debt to File for Chapter 7?

What Is the Statute of Limitations on Debt in Washington?

How Long Does a Judgment Last?

Can Private Disability Payments Be Garnished?

Can Debt Collectors Call From Local Numbers?

Does the Fair Credit Reporting Act Work in Florida?

The Truth: Should You Never Pay a Debt Collection Agency?

Should You Communicate with a Debt Collector in Writing or by Telephone?

Do I Need a Debt Negotiator?

What Happens After a Motion for Default Is Filed?

Can a Process Server Leave a Summons Taped to My Door?

Learn More With These Additional Resources:

Need help managing your finances? Check out these resources.

How to Make a Debt Validation Letter - The Ultimate Guide

How to Make a Motion to Compel Arbitration Without an Attorney

How to Stop Wage Garnishment — Everything You Need to Know

How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)

Defending Yourself in Court Against a Debt Collector

Tips on you can to file an FDCPA lawsuit against a debt collection agency

Advice on how to answer a summons for debt collection.

Effective strategies for how to get back on track after a debt lawsuit

New Hampshire Statute of Limitations on Debt

Sample Cease and Desist Letter Against Debt Collectors

The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah

West Virginia Statute of Limitations on Debt

What debt collectors cannot do — FDCPA explained

Defending Yourself in Court Against Debt Collector

How to Liquidate Debt

Arkansas Statute of Limitations on Debt

Youre Drowning in Debt — Heres How to Swim

Help! Im Being Sued by My Debt Collector

How to Make a Motion to Vacate Judgment

How to Answer Summons for Debt Collection in Vermont

North Dakota Statute of Limitations on Debt

ClearPoint Debt Management Review

Indiana Statute of Limitations on Debt

Oregon Eviction Laws - What They Say

CuraDebt Debt Settlement Review

How to Write a Re-Aging Debt Letter

How to Appear in Court by Phone

How to Use the Doctrine of Unclean Hands

Debt Consolidation in Eugene, Oregon

Summoned to Court for Medical Bills? What to Do Next

How to Make a Debt Settlement Agreement

Received a 3-Day Eviction Notice? Heres What to Do

How to Answer a Lawsuit for Debt Collection

Tips for Leaving the Country With Unpaid Credit Card Debt

Kansas Statute of Limitations on Debt Collection

How to File in Small Claims Court in Iowa

How to File a Civil Answer in Kings County Supreme Court

Roseland Associates Debt Consolidation Review

How to Stop a Garnishment

Debt Eraser Review

Do Debt Collectors Ever Give Up?

Can They Garnish Your Wages for Credit Card Debt?

How Often Do Credit Card Companies Sue for Non-Payment?

How Long Does a Judgement Last?

​​How Long Before a Creditor Can Garnish Wages?

How to Beat a Bill Collector in Court