Can a debt collector add interest charges and fees to your unpaid debts?

When a debt goes unpaid long enough, it often ends up in the hands of a collection agency. For many borrowers, that's when the stress truly begins, starting with calls and letters and eventually escalating to threats of further action, like lawsuits and wage garnishment. Those types of aggressive debt collection tactics can make an already difficult financial situation feel even worse, but the frustration can also grow if you notice the amount owed seems higher than you remember. Maybe the balance has ballooned with new charges or fees that weren't there before. But can debt collectors really do that?

It's a question more delinquent borrowers are asking as consumer debt — and subsequently, the late payments on that debt — continues to climb nationwide. According to the Federal Reserve Bank of New York, total household debt hit $18.59 trillion in the third quarter of 2025, the latest record high. Credit card balances alone now exceed $1.23 trillion, with many borrowers struggling to keep up amid still-elevated interest rates. That combination has led to a surge in accounts being sent to collections and a growing wave of confusion about what debt collectors can legally do once they take over.

The answer depends on a few key factors, and the rules around collection fees and interest charges are often misunderstood. Knowing how these rules work, though, can help you avoid paying more than you owe.

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Can a debt collector add interest charges and fees to your unpaid debts?

Yes, debt collectors can generally continue adding interest charges and fees to your unpaid debts, but there are important limitations to this. When it comes to the legality of these additional charges, the key factor is whether the original contract you signed with your creditor allowed for ongoing interest and fees. If your credit card agreement, loan document or other contract included provisions for continued interest accrual and late fees, those terms typically follow the debt when it's sold or transferred to a collection agency.

However, debt collectors can only charge what was permitted in your original agreement or what's allowed under state law, whichever is less. They cannot arbitrarily decide to add new charges or increase interest rates beyond what was specified in your original borrowing contract. State laws also vary significantly, with some capping interest rates on debts in collections and others allowing interest to continue accruing at the original contract rate.

The Fair Debt Collection Practices Act (FDCPA) also provides important protections here. Under the FDCPA, debt collectors must provide you with a validation notice within five days of first contacting you, which should detail the amount owed, including any interest or fees that have been added. If you dispute the debt in writing within 30 days, the debt collector must verify the debt and justify any additional charges. They cannot, under the FDCPA, add fees that weren't part of your original agreement or that aren't permitted by law, and they face penalties for falsely inflating your balance.

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What to do if your debt keeps growing in collections

After they land in collections, many borrowers see their debts rise due to the addition of ongoing interest charges or collection costs. Unfortunately, that can make repayment feel nearly impossible, and it's one reason why more borrowers are turning to their debt relief options for help.

If you work with a debt relief expert, you may be able to negotiate a lower payoff amount or even settle your balances for less than you owe, often stopping additional interest and fees in the process. Instead of juggling calls from collectors or risking legal action, these experts work directly with your creditors to reach a resolution that's both affordable and final.

Depending on the route you take, there could be a few different options available to you. Here's how a few of the common strategies work:

• Debt settlement: When you take this route, a debt relief company tries to negotiate with your creditors to reduce the total amount owed, often in exchange for a lump-sum payment. While the settlement outcomes can vary, the average debt is reduced by 30% to 50% on average.
• Debt consolidation: When you consolidate your debt, the goal is to combine multiple debts into one new loan, typically at a lower interest rate, simplifying repayment and preventing new late fees from accruing. This can be done on your own or with the help of a debt relief company.
• Debt management: By working with a credit counseling agency, you can get help with creating a tailored debt management plan that rolls all of your debts into one monthly payment obligation. As part of this process, the agency also works to lower your interest rates and stop penalty charges from accruing.

The bottom line

Debt collectors can't arbitrarily inflate your balance, but that doesn't mean the amount you owe won't change once your account goes into collections. That's why it's important to know when those additions are legal and act quickly if something seems off. If your debt keeps growing and you can't catch up, you may also want to consider utilizing the debt relief strategies available to you before the problem worsens. The sooner you take action, the faster you can stop added charges and start rebuilding your financial footing.