Legal Question in Credit and Debt Law in Virginia

Re: How much by law may a collection agency charge for debt recovery to a debtor

The collection agency (or an attorney) can only charge a fee according to the original contract. In other words, you can only be asked to pay what you AGREED in the contract to pay. Most such contracts say that you agree to pay "reasonable attorneys fees" or "reasonable collection and attorneys fees." Most Counties in Virginia say that "reasonable" means 25% of the principal, although the court will also want to see proof that the attorney or collection agency actually put in that much time. So for example on a $100,000 debt, the contract might technically allow for $25,000 in attorneys fees but if the attorney only worked for 10 hours at $200 per hour, the attorney can only collect $2,000, regardless of the upper limit of 25%. Other Counties say that "reasonable" is a maximum of 20%.

Now, the court filing fee can also be charged to you. And your question did not make clear whether this is before or after a lawsuit and court judgment. If it is AFTER a court judgment, you may get charged for additional fees for garnishments, etc. But these should only be for the actual cost to the court of filing any further actions, and NOT any profit for the attorney or collection agency. Whether they have already won a court judgment is also important in terms of whether you have a right to challenge an error or whether it is already too late. Also, if there has NOT been a lawsuit yet, you need to make sure they have your CORRECT address at your home. In other States, it helps you if they do not know your latest address. In Virginia it can hurt you very badly if they deliver the lawsuit to a previous address where you used to live. You can then lose by default and never have a chance to contest the errors and mistakes. So the worst thing that can happen to you in Virginia is if they don't know your newest address and so you don't know about court hearings. You can lose without having a chance to give your side of the story.