Debt Recovery

Collecting a debt can be a complicated process. Whether someone owes you money under a contract or you’ve obtained a court money judgment against someone, several tested tactics can get you paid. When it comes to collections, success requires an organized, well-managed, and thorough process. There are no secret tricks or little-known tips, although some ingenuity in obtaining information is helpful. Ultimately, collection success follows diligence and focus.

Here are ten of the most effective collections tactics and how to apply each to increase your collections cash flow:

1. Use all the information you already have on your debtor

If the debt is from a contract or a loan, you probably have an application or some other preliminary documentation on your debtor. Loan applications ask for extensive contact and employment information, and while some of that information is part of an approval process, it’s also used for collections. Start with the debtor’s address and employment information listed on the application or other documentation.

2. Search online and on social media

Chances are, your debtor has some digital footprint, and online information can be a source of contact information and other insight into the debtor’s affairs. Check social media accounts for the debtor, and then look for employment clues, or details on where the individual lives, works, and who they associate with.

3. Check those credit references

If you asked for credit references as part of a loan or rental application, this is the time to reach out to the listed people. In general, you can only ask these references for information about the debtor’s location and cannot discuss the debt details. Contacting references serves two purposes: it alerts the debtor (since the reference may contact them) and can be the source of new information on the debtor.

4. Contact, contact, contact

Once you have basic contact information from your documentation, online sources, or references, begin a scheduled and persistent process of contacting the debtor. Begin with a phone call and a letter. Use certified mail with the first mailing attempt, as this can confirm a debtor’s address and can be evidence that you alerted the debtor of the amount owed. Be persistent and firm, but tell the debtor you want to work with them to resolve the matter.

5. Uncover banking information

If you are collecting on a money judgment, you may be able to enforce the judgment using bank account garnishments, but the key to this tactic is knowing where your debtor keeps their money. You may have this information already from any payments the debtor may have previously made. Also, if you paid the debtor via a check, see which bank processed the payment. Go back and check social accounts, too. Your debtor may follow the social media feed of their financial institution.

6. Find out if the debtor owns a vehicle

Many state motor vehicle departments allow third parties to request information on vehicles registered to an individual. Like bank accounts, a car or other vehicle can potentially provide a source for payment.

7. Ask the debtor, and others, to provide information

If you have a judgment, you can invoke your standing as a judgment creditor to compel disclosure of information on the debtor. An information subpoena is a simple list of questions such as:

• Where do you bank?
• Do you have any cash on hand?
• Where do you work?

An information subpoena can also be sent to third parties, such as banks and certain individuals, to find answers to the same questions.

8. Offer a payment plan

It’s possible — likely, even — that a debtor hasn’t paid you because they cannot. Offering a payment plan may be a tactic to get some cash flowing and create a more friendly relationship that can result in more payments. A payment plan can also take the form of a Confession of Judgment, which can speed up the process of converting the collection account to a judgment if necessary.

9. Be open to settlement

When it comes to collecting a debt, getting some amount is preferable to getting nothing. Use the information that you have collected to assess whether or not the debtor has assets or means to pay the debt. Extend a discounted offer to accept a smaller sum in full, and reduce the amount of your losses.

10. Document Everything

Keep records of all communications and agreements made with the debtor. This includes phone calls, emails, and written correspondence.

11. Hire professionals

Professional debt collectors know how to orchestrate all that’s required for a successful collection. They often take a percentage of what they collect, so there’s little or no out-of-pocket expense. They know all these tactics and more and can help manage the process and guide you to more money. Debt collectors recover money from unpaid invoices all day long. That’s their job, their debt recovery tactics cannot be matched by regular folks. As a last resort, reporting the debt to credit bureaus can sometimes incentivize payment, as it affects the debtor’s credit rating. Make sure that you are compliant with laws and regulations when doing this.

Cash Flow is Reality: Why AR Matters

You provided the service. You delivered the product. You deserve to be paid. Yet, in 2025, 50% of all B2B invoices in the US are currently overdue.

For a small business, “later” often means “never.” A skipped payment isn’t just an annoyance; it is a direct hit to your payroll, inventory, and growth.

This guide updates standard collection advice with modern strategies to protect your revenue without ruining customer relationships.

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1. The “Golden Window” Has Shrunk

Old advice said “wait 90 days.” In 2025, that is too late. Data shows that after 90 days, the probability of collecting a debt drops to 69%. By 6 months, it plummets to 52%.

The New Rule: Speed is your best leverage.

• Day 1: Invoice sent (ideally automated).

• Day 33: First polite reminder (Email/SMS).

• Day 45: First phone call.

• Day 60: Critical Junction. If they haven’t paid by now, they are likely stalling.

• Day 90+:  Hire a collection agency.

2. Prevention is Cheaper Than Cure (Pro-Tips)

The best way to collect debt is to stop it from happening. Most disputes arise from “grey areas” in your paperwork.

Tighten Your Ship:

• Get it Signed: Never rely on a handshake. Ensure you have a signed contract or purchase order that explicitly states payment terms (e.g., “Net 30”).

• The “Collection Clause”: Add one sentence to your contract: “Client agrees to pay all reasonable costs of collection, including attorney fees and agency fees, in the event of default.” This gives you massive leverage later.

• Collect Data Upfront: A name and phone number isn’t enough. Get a physical address, email, and (for B2B) a Tax ID. You can’t sue a ghost.

3. Modernize Your Payment Portals

If you are still waiting for checks in the mail, you are choosing to be paid last.

• Friction Kills Payment: 75% of small businesses have shifted to fintech or digital lenders because they need speed. Your customers are the same.

• The Fix: Offer a “Pay Now” link on every digital invoice. If they can pay you at 10 PM on their phone, they will. If they have to find a stamp, they won’t.

4. The “Small Balance” Strategy ($50 – $500)

Small unpaid bills are a trap. You can’t justify suing for $100, and you can’t spend 5 hours chasing it. But if you ignore them, they add up to thousands in lost profit.

How to recover small amounts without losing money:

• Avoid “Contingency” for Small Debts: Standard agencies often charge 50% commission on debts under $500 because they require the same labor as large debts. If they recover $100, you only keep $50.

• The Solution: “Fixed-Fee” Recovery: For balances between $50 and $500, use a Fixed-Fee (Pre-Collect) service. You pay a flat rate (typically ~$15 per account) for a series of professional demand letters.

  • The Math: If you recover a $300 debt using a $15 flat fee, you keep $285. If you use a contingency agency (40%), you keep only $180.

• Protect Your Reputation: Small debts are often due to forgetfulness, not malice. A Fixed-Fee letter service is diplomatic—it reminds the customer formally without the aggression of a phone collector, preserving the relationship for future business.

5. Important Law Update: What is “Regulation F”?

You might think federal laws only apply to big agencies. Think again. While Regulation F (Reg F) primarily governs third-party collectors, smart business owners align with it to avoid harassment claims.

The “7-in-7” Rule: Under modern standards, calling a debtor more than 7 times in a 7-day period is considered potential harassment.

• Why this matters: If you (or your staff) call a customer 10 times in a week out of frustration, you could be opening yourself up to a counterclaim.

• Best Practice: Log every call. Be polite. Be consistent. Never harass.

6. When to “Stop the Bleeding” (Outsourcing)

Many small business owners hold onto bad debt for too long because they don’t want to pay a commission.

The Reality Check:

• Collecting 80% of a debt is better than collecting 0% of a debt.

• Your time is worth more than $100/hour. If you spend 10 hours chasing a $500 invoice, you have already lost money.

The Strategy: Set a hard deadline (e.g., 90 days). If an account hits that mark, automatically send it to a professional agency. This removes the emotion and lets you focus on customers who do pay.

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Ready to clear your books? Stop chasing ghosts. Let the professionals handle it while you focus on growing your business.

Are you tired of chasing clients for payments? A debt collection agency can recover unpaid bills of small amounts by using their collection demands service. Recovery of bills may require a combination of collection demands, calls, or even filing a legal suit. Need a Collection Agency that serves Small Amounts too? Contact Us

 

While customers may dread receiving calls for payments, businesses are equally wary of hiring a debt collection agency for variety of reasons, biggest being loss of reputation and clients. Collection Agencies focus on maintaining positive relationships between businesses and consumers.

The first section of the articles focuses on the myths that debtors have and the later half talks about the myths that creditors/businesses have about Collection Agencies.

Common misconceptions that Debtors have

If you have outstanding debts, you either already have experience dealing with debt collection agencies, or you will at some point. Debt collection can be a complex process. It combines law with aspects of finance, accounting and tackling with various debtor excuses to avoid payments. There is also be some degree of pressure involved since the debt collector’s job is to pursue many options to satisfy amounts owed.

We’ve identified and busted several myths about debt collection agencies.

Myth #1

Burying your head in the sand will make debts go away

This first myth is one of the biggest misconceptions in debt collection. Creditors and debt collectors do not simply move on to the next account if debtors ignore phone calls and letters. Ignoring debt is not a solution to a debt problem. In fact, a debtor may miss excellent opportunities to settle debt by refusing to face their unpaid bills. Once an account is with a debt collector, the music has just begun and they will continue to pursue recovering debt in one way or the other, in a legally complaint manner. If you cannot effort to pay in full in one go, negotiate for a payment plan.

Myth #2

People can become “judgment proof”

This myth is also common, but it is not the top misconception because there are some circumstances when it can be true that a person can become insolvent. Insolvency simply means that a person’s debts outweigh their assets. However, unless an individual legally declares bankruptcy and obtains a discharge of debt in bankruptcy, a debt collector may be able to wait until the individual begins accumulating assets again, and then collect. Some people believe that if they have no money in the bank, do not own property, and live paycheck to paycheck, then they are “judgment proof.” This is not the case, and a collector may find ways to collect on a debt.

Myth #3

Debt collectors are shady and use underhanded tactics

Collecting debts is a professional service governed by laws and regulations. While there are examples of debt collectors violating consumer protection laws, these incidents are often isolated incidents and not the norm. Debtors should know their rights and be on the alert for violations of debt collection laws, but should not use these protections as a reason to avoid working with a collector to resolve a debt. Debt collectors are required to work within various laws, the most prominent being the FDCPA.

Myth #4

Debt collectors are bullies

Similar to the fear that debt collectors are shady is the misconception that they are bullies that only have the goal of forcing a debtor to pay. Professional debt collectors are results-oriented and want to resolve a file, not ruin someone’s life or make a sport out of someone else’s misery. Most debt collectors work with you to resolve the debt in an amicable manner, rather than unnecessarily harass or threaten you.

Myth #5

Small debts don’t matter

Some debtors believe that their debts are too small. Maybe they owe a medical practice $100 for an unpaid copay and think it unlikely that the medical practice will seek to recover the bill. Businesses that often have small individual accounts receivable amounts do not always write those debts off of their books. The trend for many companies is to leverage technology and automation to pursue these amounts. The bottom line — debtors can never tell if a creditor is going to write off debt or not. How much the collection amount has to be assigned is entirely up to the creditor, and there is no minimum amount for commencing the collection process.

Myth #6:

Paying a debt collector doesn’t impact credit score

Many debtors believe that once their accounts have gone into collection, their credit is shot and there simply is no hope. This misconception often fuels ignoring collector calls and deciding to not pay even small amounts that the debtor can afford. However, collection status does not stop credit reporting in every case, and credit standing can continue to degrade. Working with the collector to make payment arrangements can be the start of repairing one’s credit.

Myth #7

Debt collectors are relentless; all they want is money

This myth also causes debtors to avoid communicating with debt collectors. The truth is, while in many cases the desired goal of a debt collector is to get payment from a debtor, often they just want to resolve the case. Sometimes that means entering into a repayment plan or other programs to satisfy debt. The goals of debtors and collectors can, and frequently do, align.

Myth #8

Debtors should avoid debt collectors and should pay the creditor directly

In many cases, once a debt has been placed with a debt collector, the original creditor no longer has an interest in the account. Banks, medical practices, and other businesses that can have accounts receivables sometimes sell or otherwise transfer their collection accounts to other companies. For this reason, debtors should deal directly with the debt collector. Large institutions, such as a commercial bank, might not immediately know that the debt has been transferred, so payment can end up in limbo.

Myth #9

Debt collectors will come to my home or at my workplace

99.99% of the time a debt collector never visits the home or workplace of the debtor. Only in the rarest of rarest conditions where a legal judgment has been passed to seize some of the debtor’s assets, something like this may happen.

Myth #10

Partial Payment will stop those collection calls

No, the calls resume soon after some of the promised installments are not made. It is the debtor’s responsibility to pay the debt in full unless a lower amount is agreed upon explicitly to settle the matter.

Common misconceptions that Creditors / Businesses have

Myth #1

Debt collection is too costly for my business

Most debt collection agencies operate on a contingency fee basis, meaning they only get paid when they collect. Some have different business models that may call for a flat fee for their service. Professional debt collection firms strive to provide measurable value to their customers and work to collect money so that the creditor lowers account receivables. Collecting some debts may not be financially feasible, but professional debt collection services are usually reasonably priced.

Myth #2

Businesses are better off taking a tax write-off than collecting

Charging off debt may be a good option for a creditor for accounting purposes, but it doesn’t return cash to the creditor’s business. Collecting can create cash flow where none existed before.

Myth #3

Collection Agencies will make me lose clients

Collection Agencies follow a very diplomatic approach, they know that debtors are not too happy once they get to know that their account has been forwarded to a collection agency. Seasoned debt collectors work with your debtors/clients in a very amicable yet firm manner. Their diplomatic approach ensures that clearing your debt becomes their number one priority. A debt collector has many strategies to help you close the account in an amicable fashion. They are trained well to ensure that your brand image is not tarnished. Well no one can guarantee, but an amicable collection agency attempts to preserve relationships.

Myth #4

Collection Agencies are cumbersome to work with

It is exactly the opposite, Collection Agencies are designed to take away your accounts receivable headaches. Most good collection agencies have a website, using which the accounts can be submitted. They can deposit money in your bank account or send a check once payment is collected. Collection agencies work as an extension to your accounting department and an experienced representative who will answer all your queries.

The most basic premise of business is that it needs to get paid for the products or services they provide. Most of the time, this is not a problem and customers pay either before the transaction is finished or shortly after.

However, there are occasions when bills are not paid on time or at all. In these cases, businesses have two options. They can pursue the debt themselves, which takes time and more money they may not have or want to spend, or they can turn it over to a debt collection agency. In this case, one of the most important things for a business to consider is selecting an ethical debt collection agency. If not, it can lead to the debt not being collected or, worse, legal issues for the company. Here are the reasons why it is so vital to select an ethical debt collection agency.

Why Ethical Debt Collection is Important

The biggest reason that selecting an ethical debt collection agency is so important is that, like any other vendor you work with in business, they are a reflection of you and your company. A rude debt collector may not only ruin your own company’s reputation, but after a rude conversation, most debtors would become adamant and angry and would not even pay even if they had the means to clear the bill. Highest performing debt collectors get results by working amicably with debtors, not against them. Harassing a debtor is against Federal laws anyway (FDCPA Laws).

Online reputation. In 2020, the internet makes business incredibly transparent and connected. If someone is the victim of unethical debt collection practices, there is a good chance they will put that online (Google or Yelp reviews). This can severely damage the reputation of your business and become one of the first things people see when they Google your company. Remember, the debt collector is collecting a debt incurred with your company. This means that if people get upset about the practice and decide to write about it online, they will most likely mention your company instead of putting the blame squarely on the debt collector.

Ruining relationships. The other thing to consider is the long-term health of your business. Just because a customer falls into debt and must be turned over to a debt collector does not mean they will never be able to be your client again. Chances are, you have already spent time and money developing a relationship with that client. If you turn them over to an unethical debt collector, all that investment will go out the window. If/when the customer gets over whatever issue is preventing payment, they may become a valuable customer again. Even when pursuing a debt, burning bridges in business is never a good idea.

Business ethics. While every business has a different tolerance for moral and ethical issues, no business wants to be seen as being completely unethical. This will not only hurt your reputation with consumers but can also affect your company in other areas. Vendors may be less likely to want to work with companies that are believed to be unethical. A company with this reputation may also have a hard time keeping or attracting new employees.

Need a Cost Effective + Ethical Collection Agency? Contact Us

Federal Debt Collection Regulations

All debt collectors are subject to the Consumer Credit Protection Act and the Fair Debt Collection Practices Act. The former was established by the federal government in 1968 and the latter was created in 1977 as an amendment to the Consumer Credit Protection Act and has been amended multiple times since. The Fair Debt Collection Practices Act ( or FDCPA) speaks specifically to what debt collectors must do and may not do while pursuing a debt.

The law states that the following when trying to collect a debt with a consumer:

• Identify themselves and notify the consumer
• Give the name and address of the original creditor
• Notify the consumer of their right to dispute the debt
• Provide verification of the debt
• File a lawsuit in a proper venue

In addition to having to follow these regulations, the Act also lays out multiple practices that are not acceptable or specific regulations that must be followed. These include:

• Only making contact during specified hours
• Must cease communication upon request
• Cannot engage in excessive or abusive conversations or telephone calls
• Cannot call consumers at work
• Cannot contact a consumer if you know they have retained an attorney
• Cannot communicate with the consumer after the request for validation has been made
• Cannot misrepresent yourself or deceive the consumer
• Cannot publish the consumer’s name or address
• Cannot seek unjustified amounts
• Cannot threaten arrest or legal action
• Cannot use abusive or profane language
• Cannot reveal or discuss the debt with a third party
• Cannot contact using embarrassing media
• Cannot report false information on a credit report

How to Choose an Ethical Debt Collection Agency

There are over 5,000 debt collecting companies in the United States alone. With any industry this large, there are bound to be some great companies, some very bad ones and many that are somewhere in between. So, how do you find an ethical debt collection company among the thousands available?

Read the reviews. Just like people will look online for information about your company’s reputation and service before doing business with you, you should do the same when looking for a debt collection company. Sites like Trustpilot or ConsumerAffairs compile reviews from around the internet and put them in one place to make it easy to gather information.

Look for accreditation. Some organizations vet companies’ ethics, standards, and practices as well. The Better Business Bureau (BBB) gives companies ratings ranging from A+ to F based on the number of complaints filed, transparency, time in business, and more. They even give their seal of approval to the best companies in each industry.

Ask questions. Once you understand the federal and state requirements for debt collection in your area, it is fair to ask questions about the company you are considering working with. Ask about their philosophy, how they go about their business, and how they handle disputes. Remember, they will be an extension of your company, so you want to vet them thoroughly.

Conclusion 

Collecting debt from customers is never a pleasant process, but it is a necessity in business. If done ethically, it does not have to be a terrible experience for you or the customer in debt. When you select an ethical debt collection company, you will protect your business’ reputation, recover the debts that are owed, and maybe even be able to hold on to customers even after the process is complete.

Need a Good Collection Agency: Contact us

 

For School Business Officials (SBOs) and Superintendents, the cafeteria balance sheet is becoming a crisis point. Since the expiration of federal pandemic-era universal free meals, districts across the nation have seen unpaid meal charges skyrocket. This isn’t just an accounting error; it is a hole in the General Fund that threatens resources for textbooks, facilities, and teachers.

But the challenge isn’t just financial—it’s political. Schools must walk a tightrope: How do you recover thousands of dollars in unpaid fees without triggering a “lunch shaming” PR nightmare?

The Numbers Don’t Lie: A National Crisis

If your district is in the red, you are not alone.

• $19 Million+: According to recent School Nutrition Association (SNA) surveys, median unpaid meal debt has risen significantly, with national totals estimated in the tens of millions.

• 75% of Districts: Reports indicate that over three-quarters of schools actively carry unpaid meal debt.

• The “Sandwich” Gap: The average debt per student varies, but when multiplied by 5,000+ students, a district can easily find itself carrying $50,000 to $100,000 in bad debt annually.

Need an Ethical Collection Agency? Contact us

The “Lunch Shaming” Trap: What NOT To Do

In the past, schools used tactics like “cheese sandwich alternatives,” wristbands, or hand stamps to identify children with unpaid balances. These tactics are dangerous. Many states (including California, New Mexico, and others) have passed strict laws banning “stigmatizing” treatment of students. Even in states without specific bans, a viral social media post about a child being denied a hot meal can cost a district far more in reputation than the $3.50 lunch debt.

The Golden Rule: Never involve the child in the financial dispute. The conversation must be strictly between the school (or its agent) and the parent.

The Solution: “Diplomatic” Fixed-Fee Recovery

Most unpaid lunch debt isn’t due to poverty—families in true financial distress usually qualify for Free/Reduced Lunch. Much of the debt comes from busy working families who simply lose track of the balance.

They don’t need a debt collector calling them; they need a formal, professional notification.

Why Smart Districts Choose “Fixed-Fee” (Pre-Collect): Instead of hiring an aggressive agency that takes 40% of the money, use our Fixed-Fee Notification Service.

• Flat Rate: You pay a low flat fee (approx. $15 per account) regardless of the debt size.

• You Keep 100%: The parent pays the school portal directly. We never touch the funds.

• Gentle Tone: Our letters look like formal administrative notices. They serve as a serious “final reminder” without the aggression of a collection call.

• The ROI: If you recover a $60 balance for a $15 fee, the district keeps $45. With a traditional 40% agency, you would only keep $36.

Proactive Measures: Fix the Leak Before it Floods

Before sending accounts to collections, districts should aggressively utilize federal programs to reduce the debt load at the source.

1. Community Eligibility Provision (CEP)
The CEP allows schools in high-poverty areas to serve free meals to all students without collecting individual applications.

• The Stat: Participation increased by over 14% in recent years, serving millions of children.

• The Benefit: If your district qualifies, opting in eliminates the concept of “meal debt” entirely for those schools.

2. Direct Certification (The “Auto-Match”)
Don’t wait for parents to fill out a form.

• Students in households receiving SNAP, TANF, or Medicaid (in demonstration states) should be automatically certified.

• Foster, Migrant, & Homeless: Ensure your liaison is sharing data with the nutrition department weekly. These students are categorically eligible.

3. The “Sibling Link”
If one child is identified via Direct Certification, ensure your software links all children in that household. Often, a high schooler is missed even when their elementary sibling is approved.

Best Practices for Recovery

If you must collect, do it ethically:

1. Retroactive Application: If a family applies for Free Lunch in November, check if you can retroactively forgive September/October debt based on your district policy.

2. 30-Day Carry Over: Ensure you are carrying over eligibility from the previous school year for the first 30 days to prevent a gap in coverage.

3. Communication Blitz: Send text and email alerts when a balance hits $5.00, not $50.00. Small balances are paid; large balances are ignored.

Conclusion: Balance the Books with Dignity

You don’t have to choose between financial responsibility and student welfare. By combining maximizing federal programs (CEP/SNAP) with a low-cost, fixed-fee recovery strategy, you can clear your books without shaming your students.

Is your district carrying dead weight in the cafeteria fund? Contact us today to learn about our School-Specific Recovery Programs that respect families and recover revenue.

Serving Schools Nationwide Cost-effective recovery of unpaid student lunches: Contact us We understand that schools are tight on budget.

 

Yes, a debt collector can sue a borrower/debtor in court on behalf of a creditor to recover money that has not been paid. A debt collector cannot outright threaten the borrower of legal action during the recovery process, however he can amicably explain the steps he may take if the debt is not paid off, especially if the borrower asks what steps will be taken next if the amount is not paid off.

There are several factors that play a huge role, whether or not the debt collector can go ahead to the court or not.

1)   Does the collector have sufficient documentation to prove that you indeed owe the debt and how much. Do not ignore a court notice, because if you do not go to court the judge may pass a default judgment against you. It is the borrower’s/debtor’s right to ask the debt collector for the backup documentation.

2)  Depending on which state the debtor resides in, there are laws that prevent a debt collector from suing a debtor after a certain number of years. These are called the Statute of Limitations or in other words, how old is the debt? For example in California, if a debt is more than 4 years old a debt collector cannot sue the debtor in court.

Also, there are different time limits if there was an oral contract or a written contract, or promissory note, or an open-ended debt like the credit card debt.

A debt collector can continue to attempt recovering money but he cannot do much beyond that once the Statute of Limitations ceiling hits. Therefore most debt collectors will not even attempt to recover money if a debt has crossed the Statute of Limitations.

There are many factors that can reset the age of an account, for example, if you agree to make a small payment against the debt, or sign a new contract to make the payment, then the Statute of Limitation resets. If your debt is very old, you can always ask the debt collector to check and explain to you if the Statute of Limitation has been reached or not.

3)  A debt collector will typically not sue until a debt has been over 180 days past due for medical bills and 120 days for non-medical debt. Patients get a 180-day grace period to resolve their medical debt before it shows up on their credit reports.

4)  A debt collector may attempt to add his court/lawyer fees and interest on top of the original debt owed, however it is up to the judge to approve it or not.

If you indeed get sued then do appear in the court and if you think if any of your legal right (like the FDCPA laws) is violated then fight against it.

Again: Once a debt collector sues the borrower in court, it is important for the debtor to respond to the notice or appear for the court hearings otherwise there is a high possibility that the judge may pass a default judgment in favor of the creditor/collection agency. Failing to appear in court is a huge error and can be a costly one.