Legal Question in Criminal Law in California

A collector has added on a 41% collection fee---is this legal?

I have recently been sent to collection for past due university tuition. The principle balance is $7,827.34 and the creditor is charging a contingency fee of $3,354.57. This fee was not agreed upon in the contract I signed with the university if the tuition and fees were not paid. My question is, what governs these collection fees? How much is too much? Does the percentage vary from state to state?The collector will not tell me where these fees have come from and how the agency came up with the 41% and I have battled with him about this on various occassions. It just seems excessive to me. In the mean time, I have sent the collector a payment of $1200 along with a cerified letter stating that payment is to be applied toward the principle balance only. This was to help protect me from paying these fees until I know if they are legal or not.

Thank you in advance for any help you may be able to give.

AS


Asked on 9/12/02, 12:17 am

3 Answers from Attorneys
Alden Knisbacher knisbacher law offices

Re: A collector has added on a 41% collection fee---is this legal?

The collection is probably for a student loan that you received. Have you checked the student loan documents; most of them say that if you fail to pay, they can collect fees for collection services; you may have an argument that the fee is excessive if it is not spelled out in the contract.

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Answered on 9/13/02, 4:29 am
Bonnie Selby Bonnie J. Selby, Attorney at Law

Re: A collector has added on a 41% collection fee---is this legal?

Once the loan goes into default, the interest and fees go berserk. . .your best opportunity to get some of them cut is to open a dialogue w/someone in the school loan agency and offer a 'lump sum' payment. In the meantime, get the payments on track so that more interest and fees are not accruing.

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Answered on 9/12/02, 7:40 am
Larry Rothman Larry Rothman & Associates

Re: A collector has added on a 41% collection fee---is this legal?

The fee seems excessive. You may have a lawsuit against the collection agency under the Federal and State Fair Dept Collection Act. If you fax me your documentation to 714 363 0229, I will provide you with free consultation.

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Answered on 9/12/02, 9:06 am


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