Can A Collection Agency Charge Interest?

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Mark CappelDec 23, 2009
Can a collection agency continue to charge interest on a charged off account?

Can a 3rd party collection agency continue to charge interest on a charged off account?

Yes, a third party collection agent can continue to charge interest on a charged off account. At the write-off point, the creditor will transfer the debt to a late-accounts department, or has the option to sell the debt to a collection agent. The collection agent will buy the debt at a discount. However, the collection agent has the right to collect the entire balance due plus interest. Writing-off a debt, or charging off, does not mean the debtor is no longer responsible for the debt, or that collection efforts cease.

I encourage you to read an article I wrote which discusses collections advice and information in detail.

I hope this information helps you Find. Learn & Save.



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JJason, Aug, 2012
I had a garnishment that was levied against me, and paid in full to the court in February. The court didn't send the funds to the collection agent until August. After receiving the check from the courthouse, the agency told me that I still have a balance of about $150 due to interest that's accumulated since the garnishment was filed. Can they legally do this? They told me that it's not their fault that it took the court 6 months to send them a check, and that I'm responsible for the interest that's accrued in the meantime. Do I have any way of fighting this? It's frustrating to me, to say the least.
BBill, Aug, 2012
From what I have heard, this is more common than one would think. Unfortunately, my research shows that you are responsible for the interest, despite the fact that the court held on to the payment. Even though the late payment is not your fault, it also isn't the fault of the judgment-holder.

It is unfair and brutal that you take the hit for the court's inaction, but this is the world we live in.
LLilly, Feb, 2011
Is there a maximum APR a collections agency may charge on a CA account?
BBill, Feb, 2011
In California, the maximum rate for a collection account is 12%. The maximum rate a judgment-creditor can charge is 10%.