Can a collection agency charge interest on medical and/or utility bills?

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Can a collection agency charge interest on medical and/or utility bills?

I have been researching this for a while and can’t get a clear answer. Some sites have said they can in all situations, some have said they can if the original medical or utility bill allows for interest accrual, and some have said they can charge unless the bill specifically says they can’t. The account was assigned to a collection agency and is not a judgment. As far as I can tell so far both my medical and utility bills did not have a provision for interest accrual, only “late fees”.

Asked on April 21, 2011 under Bankruptcy Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Pre-judgment interest, or interest before there is a lawsuit and court judgment against the debtor, can only be charged if there was something in the paperwork or agreement enabling the assessment of interest. (Though note: it may be enough if the invoice or bill stated that if not paid, there would be interest.) Basically, prior to a court judgment, what can be charged is what the sales, service, etc. agreement says can be charged, including potentially interest, late fees, and collection or legal osts.

Post-judgment, or after a winning lawsuit, the laws allow for the winning plaintiff to recover interest (called post-judgment interest) if the damages awarded in the judgment are not paid in a timely fashion. So if there's been a judgment already, a creditor or its collections agency can recover interest even if there nothing to that effect in the agreement.


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