Published Friday, February 10, 2023 by Alan Holdren

At Atlas Services, we're 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. Our answer has been the same for years, “you can if you get a signed contract allowing you to do it”.

Fair Debt Practices Act states (1999 American Collectors Assoc) – Section 808-1

“…the following conduct is a violation of this section:

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.”

Our approach 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 for our clients only because we would not allow this addition of collection fees without a signed disclaimer. Several judges in central Indiana have always contended that you need to state specifically what the fees are for and how much is to be added to the account balance. Our preferred disclaimer allows for attorney fees, collection agency fees, and court costs. We typically do not recommend all three be added unless there are circumstances that our attorney feels warrants, or allows such action. Atlas Services typically adds attorney costs or collections fees. 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 are not intended as legal advice. Please consult with your legal counsel if you would also like to begin collecting on such costs.