No, costs should be borne at the expense of the credit provider. The court can decide to award costs and interest on judgment debts, should the credit provider wish to pursue this course of action. Before the provider does so however they should endeavour to resolve arrears cases with the consumer at the earliest opportunity to ensure there is no overcharging for consumers in default.
If it is to be decided that there are cost-recouping charges on consumer default, then these costs should be clearly indicated within the credit agreement. There should also be a limit on the charges, and a cap put on their accrual and length of time that they accrue for– i.e. a maximum of 4 monthly surcharges after which time the account will go into late-stage arrears, where accruing interest and charges will cease, and the final debt will be crystalised. This will reduce the accruing cost for the borrower who is already in financial difficulty. Should the credit provider revert to legal action to recover the debt, which is their right, then the costs of taking such action will be at the credit provider’s own expense.
The credit provider gives credit at their own risk and should perform the necessary credit worthiness and suitability checks. They are free to set the interest rate it deems necessary to allow for bad debts. The borrower in arrears should not necessarily have their financial difficulty compounded by accruing surcharges and interest, or by costs charged to them by the credit provider to recoup the debt. Credit accounts that are in arrears should not be allowed to accrue interest and charges indefinitely.