Published Friday, February 10, 2023 by Alan Holdren

I get the question often asked about the addition of “collection costs” on top of a debt owed, so that it will not cost anything to collect the debt. At Atlas Services, our answer have been the same for years, “you can if you get a contract signed allowing you to do it”. Fair Debt Practices Act states (1999 American Collectors Assoc):

(808)1-15

“The collection of any amount (including interest, fee, charge or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”

Section 808 of the FDCPA deals with various types of fees to be added along with court cases discussing and ruling on cases that have been brought before the courts concerning this issue.

My opinion is that you can certainly do this, but you had better have “your ducks in row” before you do. We have had this contested several times over the years and have always prevailed fro our clients only because we would not allow this addition of collection fees without a signed disclaimer clearly allowing for such. The judges in Central Indiana that we deal with have always contended that you need to state specifically what the fees are for and how much is to be tasked on top. Our preferred disclaimer allows for attorney fees, collection agency fees and court costs. We typically do not recommend all three be added every time unless there are circumstances that an attorney feels the need to add all three, we like attorney fees or collection costs one or the other. This only seems fair to the debtor unless the case in drawn out the attorney in looking for additional fees for their time invested.

These opinions should be not being taken as a legal opinion, but that of a Sales Director following the instruction of competent counsel into collection battle with nothing but victories.