UNITED STATES OF AMERICA
July 13, 1994
Frank D. Gibson, Esquire
Dear Mr. Gibson:
This is in reply to your letter of June 6, 1994, concerning a suit for interest and attorney's fees. You ask whether it is permissible under the enclosed Fair Debt Collection Practices Act for a collection agency to sue a debtor for interest and attorney's fees, based on a promissory note given by the debt collection agency to the debtor which provides for interest and attorney's fees.
First, the Act does not attempt to regulate the contents of a complaint filed in court, whether the issue is payment of a debt or otherwise. Thus, under the Act, a party can sue for any thing it wants. The Act does address, however, what are commonly regarded as traditional collection activities engaged in by debt collection agencies, such as sending dunning letters and making telephone calls. In this regard, Section 808 is relevant to the question of whether the debt collector can try to collect the interest and attorney's fees at issue, based on the note. All this, of course, assumes that the debt collector had the authority to execute the note initially and that the note itself is valid under state contract law.
Section 808 prohibits the collection of any surcharges (other than the debt itself) unless they are expressly authorized by the debt agreement (in this case, the note) or permitted by law. We have interpreted this provision to permit collection of such charges if they are provided for in the debt contract (note) and are not prohibited by state law. This appears to be your situation. If, however, they are prohibited by state law, they are not permitted by the Act, regardless of what the contract says.
I hope this has been helpful.
John F. LeFevre