Can a collection agency charge interest on a medical/dental bill?

Question

A few years ago, my husband required oral surgery. At the time, we had unexpectedly been unable to pay the bill. We owe $203 for the debt that had gone into collections. I had made payment arrangements for $50 per month and per my conversation with the collections agent, I would be paying the total due, meaning $203.

I've paid $200 so far, and am expecting to now only owe $3. I called the agency and the service rep said that I still owe $97 because of interest charges. This is not what I was told originally when I spoke with this company. Is this legal? What should I do at this point?

Answer 1

Section 808 of the Fair Debt Collections Act:

Section 808. Unfair practices [15 USC 1692f]

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any 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.

So, unless you agreed to the interest charges in the original agreement, you cannot be charged interest.  Call them back, cite the FDCPA Section 808 and tell them if they try to collect, you will report them to the FTC.  Go to the FTC's web site for more info.

Answer 2

The agency can not charge interest.  Additional Fees (collection fees) may be added but actual interest,  no.  Send them a check/money order for 3 dollars (or whatever you feel the balance is) with Paid In Full written on it.  They will cash it and your done.

Answer 3

I just want to add this to the above referenced section of the FDCPA regarding interest.

That section does NOT prohibit interest charges.

It states that unless it is stipulated and is expressly authorized by the agreement creating the debt  (this is the consent form you signed at the dentist office) interest may be charged.   Many medical practices include in their contracts to provide services a little clause that states if the client fails to make full payment, then the debt will be setteled in collections and any interest and fees may be included.  If you can get a copy of the original signed permission form from the dentist, look it over to see what it says.

Also your state law may allow for this practice as per the FDCPA

15 U.S.C. § 1692n. Relation to State laws

This subchapter does not annul, alter, or affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this

subchapter, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this subchapter if the protection such law affords any consumer is

greater than the protection provided by this subchapter.

So you can see this a double edged sword.  If your agreement with the collection agency was verbal only, you are out of luck, if they sent you any paperwork showing the payment arangements, you may want to read and look at it very close.

If this debt went as far as to become a legal judgment, then interest is limited by state law.

Hope this answers your question

LEGAL DISCLAIMER:  The advice contained herein is for informational purposes only.  It is not to be construed as Legal Counsel nor Legal Advice.