I recently received a letter from a debt collection lawyer in my area regarding a defaulted payday loan, and I want to contact them to set up a payment arrangement. But, along with the amount due they have also included attorney fee's of a little over $700. I want to clear up my balance, but am confused as to why I should have to pay the attorney fee's if we never went to court, and I was never sued?
Generally payment of attorneys fees are determined by the contract or promissory note that you signed. If the contract requires attorney's fees if an attorney is used to collect the debt and state law does not prohibit the collection of attorney's fees, then you are responsible for the fees also even though suit has not been filed.
In Mississippi, attorney's fees on an open account cannot be collected unless suit is filed and the suit is taken to judgment. There may be a similar law in Tennessee with respect to pay day loans.
In most instances in my practice, if my clients are now borrowing money from pay day loans, that is because they have exhausted their ability to borrow from banks and from finance companies. Thus, the pay day loan debt is just a small percentage of their outstanding debt and those clients need to consider filing for relief under the bankruptcy code. If that has happened to you, then you need to take the time to meet with an experienced bankruptcy attorney that handles chapter 7 and chapter 13 cases. Most attorneys will meet with you at no charge for the initial appointment. You can use the Avvo "Find a Lawyer" link at the top of this page to search for an attorney.
You may discover that you are making the right decision to settle with the pay day loan company, but you will be doing that with the knowledge about all of your options.
Answers and comments provided are for general discussion only. My comments are not to be considered legal advice and they do not create an attorney-client relationship.
The rationale for this requirement is to encourage people to pay on time. A lawyer had to be consulted and perform legal services to persuade you to pay. Since your failing to pay on time may have caused the need for the legal services, can you now see why you might be expected to pay this expense? Hope this perspective helps.
I agree with the other response.. In Tennessee, all collection fees not provided by law are prohibited. See Tenn. Code Ann. §62-20-115(b)(2). It might be worth your while to have an experienced consumer law attorney in your area review your case to see if you can get assistance in reducing the amount claimed to be owed. Many attorneys offer free initial consultations. Good luck!
You need to review your loan agreement. It may provide for recovery of collection costs, including reasonable attorney's fees, whether or not suit is filed. These fees do seem high for writing a letter to collect a payday loan (which I assume is no more than $700 since most states cap payday loans at $700).
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