Debt Collectors Charge Attorneys Fees – When is it legal?

Many consumers are facing lawsuits from debt collectors. 
Justice _scaleThe collection courts are filled with consumers
being sued  by creditors and companies that have bought the
debt.  Many times, these lawsuits ask for attorney fees to be
paid as part of the lawsuit.  This leads consumers to ask
us:  Can we be held responsible for the attorney fees of
the collector on top of the debt?

The Fair Debt Collection Practices Act
provides the starting
point of an answer – and the protection a consumer needs as
well.  Under the FDCPA, it is improper for any collector (and
this includes attorneys collecting a debt) to charge any money
beyond the principal of the debt UNLESS (1) it is permitted by law,
or (2) it is permitted by the underlying agreement. 

Attorney Fees Permitted by Law:  The
“American Rule” is a common adage in law that provides that each
party to a lawsuit has to pay their own way and their own attorneys
unless a particular statute provides that attorneys fees are to be
paid by the losing party.  The
itself is one of those statutes – that provides that the
Defendant will have to pay the Plaintiff’s fees in the event of a
Plaintiff victory.  However, in the common breach of contract
case (which is what a collection suit is) in most states there is
no law providing for the payment of fees.  As such, in an
overwhelming majority of cases, the collector cannot collect his
fees from the debtor in a lawsuit because of a law. 

Attorney Fees Permitted by the Underlying
If at the time the consumer enters into
the agreement with the creditor, the agreement itself provides that
the consumer will have to pay attorneys fees if the creditor is
forced to pursue the debt in collections, then the collector will
be allowed to.  Thus, it is most important to keep the
agreement you have with the creditor in case they attempt to sue
and collect fees.  If there is nothing on the agreement that
states that the creditor can collect fees, then the lawyer has no
right to ask for them.  Moreover, to attempt to collect such
fees would violate the FDCPA as it is a violation to misrepresent
the amount that is owed or to collect money incidental to the

However, the inquiry does not necessarily end there.  A
careful reading of the agreement is in order.  Many times the
agreement will say that fees can be collected in the event a
lawsuit is filed.  Often times, a lawyer is given the debt to
collect, but they only write letters or make phone calls – no
lawsuit is filed. Yet, in those letters, they seek to collect
attorneys fees.  If the contract itself says that fees can be
collected in the event of a lawsuit, then a lawyer cannot collect
fees just because they were hired.  They can collect fees only
if they file the lawsuit.  As such, the attempt to collect
fees for simply writing letters may run afoul of the

When you’re being pursued by debt collectors, you have
rights,  and we’re here to help.  SmithMarco, P.C. has been protecting
consumer rights since 2005. If you feel that you’re rights have
been violated, please contact us for a
free case review.