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LSDefine
Simple English definitions for legal terms
costs of collection
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A quick definition of costs of collection:
Costs of collection: These are the expenses that someone has to pay when they try to collect money that is owed to them. This can include the fees charged by lawyers who help with the collection process.
A more thorough explanation:
Costs of collection refer to the expenses incurred in the process of receiving payment for a note. This includes any fees or charges associated with the effort to collect the outstanding debt.
- Attorney's fees: If a borrower fails to make payments on a loan, the lender may hire an attorney to help collect the debt. The fees charged by the attorney would be considered costs of collection.
- Collection agency fees: A lender may also hire a collection agency to help recover the outstanding debt. The fees charged by the agency would be considered costs of collection.
- Postage and mailing costs: If a lender sends letters or notices to a borrower regarding the outstanding debt, the postage and mailing costs would be considered costs of collection.
These examples illustrate how costs of collection can add up quickly and become a significant expense for lenders. It is important for borrowers to make timely payments to avoid incurring these additional costs.