Debt Collectors May Cost You More Than You Owe

By Amy E. Feldman

PHILADELPHIA (CBS) - If you lose a lawsuit brought by a debt collector, is there a limit on how much you can be charged?

A mother in the state of Washington may have to pay almost $700 after she bounced a $30 check to pay for her two kids' school lunches. That is a LOT of mystery meat and potato sticks.

Is that even legal?

The answer is yes.

While the law protects you from some unfair debt collection practices like preventing collectors from harassing you repeatedly if you tell them not to call you, make false claims or threaten to have you arrested if you don't pay a debt, it is generally legal for a creditor or debt collector to sue you to collect for the amount of the debt plus court costs and debt collection fees - even if the costs and fees far outstrip the amount of the debt owed in the first place.

If they win, the collector can get a garnishment order against you, which is a legal document that directs a third party, like your bank or your employer, to turn over funds from your account or paycheck to pay the debt.

Obviously if you don't owe the debt, it's worth fighting, but if you know you owe a debt and are contacted by the creditor or collection agency, don't ignore the calls. Set up a payment plan that you can live with rather than winding up with a huge judgment against you that will make you sick to your stomach.