Dear Consumer Ed:

I'm in grad school and had some medical care that I was told was covered by my insurance. The insurance company wouldn't pay and now the doctors say that it's been turned over to a collection agency and there's an additional 38% fee. That's another $400. Is that legal?      

Consumer Ed says: 

If a bill goes unpaid, it is common for the original party to sell the debt to a third-party collection agency after a reasonable period of time.  Your doctors are legally permitted to turn over your debt to a collection agency without giving you any notice.  Turning debts over to collection agencies enables the original party to focus on their business instead of chasing their delinquent clients or customers. 

What might be illegal is the 38% fee that the agency added onto your debt.  Debt collectors can add reasonable charges to your debt, but only if you agreed to pay collection costs in your original contract with your doctors.  To determine whether these fees are reasonable, you will need to know why you are being charged the additional 38% fee.  You are entitled to an explanation of this fee from the collection agency.  Some examples of reasonable charges are for attorney fees, court costs and legal fees as allowed by state law.

Debt collection is regulated by the Federal Fair Debt Collection Practices Act (FDCPA).  If the collection agency is trying to collect unreasonable fees or fees to which you never agreed, they are in violation of that Act.  In that case, you have the right to sue them through a private attorney in state or federal court within one year from the date of the violation.  If you win, you may recover damages in the amount of any losses you suffered as a result of the violation, plus an additional amount of up to $1,000.00.  You may also be able to recover court costs and attorney fees.  However, please remember, even if the debt collector violates the FDCPA, that does not erase the legitimate debt that you owe.

If the collection agency has violated the FDCPA, you may also file a complaint with the Governor’s Office of Consumer Protection (OCP), provided that the debt collector is not an attorney licensed in this State.  You can contact OCP at www.consumer.ga.gov  or by calling 404-651-8600 or 1-800-869-1123 (toll-free in Georgia, outside of the metro Atlanta calling area).  You should also file a complaint with the FTC.  You can contact the FTC at www.ftc.gov or by calling 877-FTC-HELP.  If the debt collector is an attorney, you should contact the State Bar of Georgia at www.gabar.org or by calling 404-527-8700.

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