Do We Still Have to Pay Debt Collection Costs if the Debtor Only Pays the Principal Sum?

Do We Still Have to Pay Debt Collection Costs if the Debtor Only Pays the Principal Sum?

If you have come across this article, then we assume you have read our articles about adding costs and interest to the debt.

If not, you can find the articles below:

Can Debt Collection Costs be Added to the Debt?

Can Interest be Added to the Debt When Instructing a Debt Collection Agency?

So, now that you are familiar with how debt collection costs and interest are applied to debts, the only other question is what happens if the debtor pays the principal debt but does not pay costs or interest? And are you liable to pay these costs to the debt collection agency?

These are both great questions!

In this article, we'll break this down for you and by the time you're done reading this, not only will you have a clear sense of how the process works, but you'll finally be on that path of getting your debt recovered – and be well informed! Let's dive in.

So, just to be upfront and to clarify...

  • No Collection, No Commission
  • No Contracts to Sign
  • No Upfront Payments
  • No Monthly or Annual fees
  • Commission Rate Agreed Upfront
  • Commission Rates From 5% (Lowest Industry Standards)
  • No Additional Costs Unless Approved By You

What happens if the debtor pays the principal debt but does not pay costs or interest?

As mentioned in the other articles and assuming you are entitled to claim debt collection costs and interest then you can issue legal proceedings to claim these back. This should be a relatively straight forward process and difficult to challenge by the debtor on the basis they have paid the principal debt therefore by association they have admitted liability to costs and interest you have applied in accordance with your contractual or statutory rights. That said, it doesn’t stop them from arguing the point and therefore, due consideration should be given to whether it is economical to take this course of action (eg depending on the amount of costs you are looking to recover then it may not be economical to pursue).

Are you liable for paying these costs to the debt collection agency?

Technically speaking you are liable for paying the debt collection agency's costs because you have engaged with the debt collection agency and therefore your engagement is with them. The debt collection agency cannot legally chase your debtor for their costs because the debt collection agency never entered into contract with your debtor. In essence the debt collection agency is recovering the costs that you are legally entitled to recover. Regardless of whether the debtor pays the costs or not, the debt collection agency will still expect to be paid their fees for providing their services and successfully recovering the principal sum hence, why you will need to consider whether it is economical or not to take legal action to recover these.

Sometimes creditors will decide not to pursue costs and interest and in turn absorb those costs in order to maintain the ongoing customer relationship however, others are determined to recover these on the basis that the relationship is well and truly over. Ultimately the decision lies with you but the Debt Collection Agency will expect to be paid their fees regardless.

To do this in any other way would not be sustainable for the debt collection agency to run a profitable business and you should be wary of those that say otherwise. We would strongly recommend you look at their terms and conditions closely to ensure there are no hidden fees.

What is the commission rate for collecting outstanding debts? We will cover this in a separate article which you can find here.

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