Can you refuse to pay a collection fee after you paid the debt?

The answer to this question really depends upon the terms of the contract that gave rise to the debt. Some contracts state that if your payments go into default – that is, you fail to make payments when they are due – you will be responsible for any costs incurred by the creditor in attempting to collect the debt from you. This could include fees paid by the creditor to a collection agency. It could also include attorney fees if the account is sent to a lawyer for collection, and court costs if the creditor files a lawsuit against you to collect the debt. However, it is possible that you could negotiate a reduction in the amount due with the collection agency or law firm and save yourself those additional fees.

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from collecting any amount – including interest, fees, charges or expenses over the principal amount of the debt you owe – if those amounts are not authorized by the agreement creating the debt, unless such a charge is authorized by law. It is therefore illegal for a debt collector to try to recover its collection fees from you if the contract which created the debt does not specifically allow for that. Many of the debts in collection these days are delinquent credit card accounts. Usually when you apply for a credit card, especially if the application is done in writing as opposed to online, you will not have a full copy of that agreement at the time you apply. It will usually be mailed to you later, after your application has been approved.

On the other hand, if you have already paid the debt in full before it was referred to a collection agency, you should not be responsible for any collection fees. If this happened to you, you should call the creditor immediately and request a statement showing that you paid the debt in full. You should also demand that the account be removed from collection status. In addition, send your proof of payment of the debt to the debt collector as soon as possible and notify the debt collector in writing that you are disputing the debt. 

If a debt collector has failed to provide you with the notifications required by law, or a debt collector has made any false representations or notifications to you, then you could be entitled to up to $1000 in damages under the FDCPA, plus payment of your attorneys fees and litigation costs. If you think a debt collector has contacted you in violation of the law, or even if you are not sure, call to speak with one of our experienced fair debt collection attorneys for a free case review.