Recovery of Debt Collection Fees in California and Other States

24 Pages Posted: 12 Sep 2011 Last revised: 16 Oct 2015

See all articles by James P. Nehf

James P. Nehf

Indiana University Robert H. McKinney School of Law

Date Written: September 11, 2009

Abstract

Creditors often refer delinquent accounts to debt collection agencies. Frequently the debt collector will attempt to collect a fee in addition to the amount owed. Under the federal Fair Debt Collection Practices Act (FDCPA) debt collectors are prohibited from collecting any amount that the consumer does not owe, but creditors will sometimes include a contract provision stating that the consumer agrees to pay a collection fee if the principal debt is not paid on time. The question arises whether such contracted-for collection fees are enforceable. This issue has been particularly interesting in the State of California, where such fees may be viewed as unlawful liquidated damages provisions. In other states, the issue has often not been addressed directly, so the matter is uncertain. This paper focuses primarily on the recovery of fees in California, but a brief overview of the law in other states is discussed as well.

Keywords: debt collection, collection fees, liquidated damages, Bondanza, creditor, FDCPA, debt collector

Suggested Citation

Nehf, James P., Recovery of Debt Collection Fees in California and Other States (September 11, 2009). Available at SSRN: https://ssrn.com/abstract=1925769 or http://dx.doi.org/10.2139/ssrn.1925769

James P. Nehf (Contact Author)

Indiana University Robert H. McKinney School of Law ( email )

530 West New York Street
Indianapolis, IN 46202
United States

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