What is considered a reasonable collection fee?

In New York, the law regarding collection fees is outlined in the General Obligations Law. It states that a reasonable collection fee is considered any fee that is equal to or less than 25% of the total amount due, including overdue balances and interest. The total collection fee must not exceed the balance due, including the principal amount and any interest charges. This amount is considered a reasonable fee for collection activities, such as filing a lawsuit, obtaining a judgement, submitting a payment plan or other legal actions necessary for the collection of a debt. Collection fees can vary depending on the type of debt and the level of collection activity necessary. For example, a collection fee for a credit card debt may be slightly higher than a collection fee for a medical debt, as credit card debt often involves more complex collection activity. Additionally, the collection fee cannot exceed a certain percentage regardless of the type of debt or collection activity. In New York, it is illegal for debt collectors to require consumers to pay more than 25% of the amount due as a collection fee. If a debt collector attempts to charge an unreasonable fee or any fee in excess of 25%, the consumer has the right to challenge the fee. Consumers should be vigilant to ensure that they are not charged any unreasonable or excessive fees by debt collectors.

Related FAQs

How do I know if a letter from a debt collector is legitimate?
What types of cases does a collection defense lawyer handle?
How do I know if I am being pursued by a legitimate debt collector?
What can I do if I am being threatened by a debt collection agency?
What type of damages can I recover for a collection defense lawsuit?
Can I counter sue a debt collector?
What can I do if a debt collector has obtained a judgment against me without my consent?
What are my rights when dealing with a debt collector?
How do I negotiate with a debt collector?
What rights do I have under the Fair Debt Collection Practices Act (FDCPA)?

What is considered a reasonable collection fee?

Related FAQs

Related Blog Posts