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Collections Law/collection agency adding processing fee?


I live in KY and have 2 medical bills in collections from a local hospital. I set up a payment plan with the agency to withdraw $25 from my checking account every month (they would not accept a check) and I have recently learned that only $20 of this amount is posting to the creditor. When I called to find out why, I was told that $5 of that was a "processing fee." We had no agreement to such a fee, and at this rate, the bills will never get paid off.  I am wondering if this practice is common, and even legal? I've had a number of issues with this agency, and am not sure what to do next.  Thank you.


According to the FDCPA, you must be informed of any additional charges or fees in connection of the collection of a debt.  The collection agency has to be able to prove they informed of this or they will have to apply any fees collected so far to your debt. Be sure to look over any paperwork they have sent to make sure this notification is not on there. If it is, it has to be printed in the same boldness and font as the rest of the letter.

If you have not been informed of these additional charges and they refuse to refund them on your debt, tell them that you are going to report them to the BBB, Consumer Affairs and your states Attorney General. If this fails, get an Attorney and sue them for a FDCPA violation. You may want to contact an Attorney anyway since each violation will cost the Agency $1,000.  I certainly hope this helps and good luck with this situation.

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Ray A Miller


I am qualified to answer questions on the following subjects: FDCPA, FCRA and HIPAA as well as medical collections, general collections and collection agency related issues. I trained these subjects at a nationwide collection agency and customer service call center and audited around 150 representatives for compliance to the laws. I have been in the Collections Industry for over 30 years. I feel that everyone deserves to be treated fairly and with compassion and that is the way I trained collectors. Even though I worked for a Collection Agency, I get great satisfaction in helping those who have been mistreated or in need of help with these confusing issues.


I was the Compliance Administrator with a nationwide collection agency and customer service call center-I have trained hundreds of collectors on the above referenced topics. I have been in the medical collections industry for over twenty years and research these topics on a daily basis.

ACA International

Some college ACA Certified Collection Specialist

Past/Present Clients
I am retired due to medical conditions and spend a good deal of time keeping current on collection issues.

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