Debtors' Rights: Dealing with Collection Agencies

If you live in Washington State, read this to get help understanding debt collection practices and your rights. If a collection agency is suing you or already has a judgment against you, our packets on How do I Answer a Lawsuit for Debt Collection or How to Claim Personal Property Exemptions have forms, instructions, and advice you can use.   

Federal and Washington state laws define a collection agency as a business or an organization whose main purpose is collecting debts. Under this definition, lawyers who regularly collect consumer debt are debt collectors. They also must follow state and federal law.

This definition does not include the credit or collection office of a business whose main purpose is not debt collection. Example: The credit office of a department store or car dealership, or a bank that issues credit cards and tries to collect a debt, is not a "collection agency" within the law's meaning. Collecting debts is not their main business.

Federal and state laws protect debtors who are contacted by collection agencies. Washington's laws are the Collection Agency Act (CAA)) and Consumer Protection Act (CPA). You can read these laws at RCW 19.16.100 and RCW 19.86.010. The federal law is the Fair Debt Collection Practices Act (FDCPA). You can read it at 15 U.S.C. 1692.

A collection agency is required to contact you in writing about a debt. If the collection agency first contacts you by phone, you should insist they contact you in writing.

The first written notice from a collection agency must have all this information:

• The collection agency's name and address

• The debt amount, stating the original debt and a breakdown of other costs or interest

• The name of the creditor you owe

• A statement that unless you disagree with (you dispute) the debt within 30 days after getting the notice, the agency will assume the debt is valid

• A statement that, if you ask for it within 30 days, the collector will give you the original creditor's name, if different from the collector

• A statement that if you notify the debt collector in writing within 30 days of getting the notice that you dispute the debt, the collection agency will mail you proof (verification) of the debt

You must tell the collection agency in writing within the 30-day period described above if you disagree that you owe any of the debt. Once the collection agency gets your written notice that you dispute the debt, it must stop collection until it sends you its proof that you do owe it.

Keep copies of what you send to the collection agency. Whenever you can, use certified mail, return receipt requested. See Form Letter #1.

Here are some examples of disputes of debts:

• You do not believe you owe the debt, or you owe something, but not the amount claimed.

• You paid the debt.

• You had medical coupons. The creditor should have billed the Washington State Health Care Authority.

• You were hospitalized. You told the hospital you could not pay for care. The hospital should have considered payment under a charitable care policy.

• You believe collection of the debt is time-barred. See below.

A collection agency must start a legal claim against you within certain legal time limitations, called the statute of limitations. If it does not, it is "time-barred."  The claim has expired. The collection agency waited too long. It cannot bring the claim now.

The exact time limit depends on the basis for the debt or type of claim. Most claims based on written contracts governed by Washington law must be begun within 6 years of the date of default on the account (usually the date of the first missed payment). Most claims based on oral contracts must be begun within 3 years of default.   

If you make a payment on the account within the statute of limitations period, the time period restarts. The creditor will get another 6 or 3 years (depending on the kind of contract it is) to file a lawsuit.

If you make a payment after the statute of limitations time has expired, that will not restart the time period.

Examples: 

1. The deadline to file a lawsuit on a credit card debt is September 15, 2023 (6 years from the date of default on the account). The debtor makes a payment on August 15, 2023.

2. The creditor or collection agency has 6 years from the date of the next default to file a lawsuit.

3. The deadline to file a lawsuit on credit card debt is September 15, 2023. The creditor or collection agency fails to file a lawsuit before the deadline. The debtor makes a payment on September 30, 2023.

In this situation, the creditor or collection agency may not ever file a lawsuit. The claim has expired.

Under the Fair Debt Collection Practices Act (FDCPA), if you tell the collection agency in writing to stop communicating with you, they can only contact you again to advise you

• it will stop trying to collect from you

• it plans to take action against you, such as filing a lawsuit

This law applies even if you do owe the debt.

You must include:

• Your name and address

• If available, the account number on the collection agency's statement

• The date

• A statement that you are exercising your rights under the FDCPA

• A statement that you want the collection agency to stop calling or writing, or both

See Form Letter #2. Keep a copy of this letter. Mail the collection agency the original. Mail the original creditor a copy.

You must send the collection agency the letter by U.S. mail. Get proof of delivery from the post office by online tracking or certified mail. Keep a copy of your letter and proof of delivery. If, after sending it, the collection agency contacts you again, they have violated the FDCPA. You can sue the collection agency for money damages and lawyer fees.

Here are some examples of the kinds of income that cannot be taken: 

• Social Security

• Supplemental Security Income (SSI)

• Veterans benefits

• Temporary Assistance for Needy Families (TANF)

• Child support you get

• Most pensions (private, federal and civil service)

• Unemployment Compensation

• Federal student loans

Some of your wages are also protected (are exempt):  for consumer debt, the greater of 35 times the current state minimum wage or 80% of your net pay. ("Net pay" is gross pay minus taxes, Social Security, and other mandatory deductions.) Different exemptions apply for taxes, child support, private student loan judgments, and judgments that do not fall into any of those categories.

The Washington Collection Agency Act and federal Fair Debt Collection Practices Act prohibit harassment, false or misleading statements and unfair practices by collection agencies. If you believe a collection agency has unreasonably harassed or misled you, you can sue it. You could win damages and lawyer fees. Here are some examples of violations:

• The collection agency threatens to tell or tells your employer or neighbors about the debt.

• The collection agency calls at hours defined by law as “unreasonable:” 9:00 p.m. - 8:00 a.m. under federal law; 9:00 p.m. –7:30 a.m. under state law.

• The collection agency threatens you with illegal action, such as threatening to take money out of your Social Security check, taking other exempt property, or threatening arrest or jail.

• The debt collector communicates with you or anyone in your household in a harassing, intimidating, threatening, or embarrassing way.

• The debt collector communicates with you or your spouse more than three times in one week.

• The debt collector sends you notices that deliberately look like government documents or an emergency message.

• The debt collector asks for a postdated check or threatens you with criminal prosecution.

• The debt collector deposits a postdated check before the date on the check. A collector’s acceptance of your postdated check violates the law unless you had three to ten business days’ notice before the collector deposited the check.

If you believe a collection agency has violated your rights under the law, or a collection agency sues you on a debt you do not believe is valid, contact a lawyer. Agencies taking complaints about violations of the Fair Debt Collection Practices Act and the Washington Collection Agency Act are:

Make sure you have strong proof that the collection agency violated the law. You should:

• Set up a place to keep everything you get from the collection agency, including envelopes.

• Make notes of every phone call from the collection agency, including date, time, content, and names of people involved in the conversations.

• If you learn thecollection agency has contacted anyone besides you, make notes of the same information.

• If the stress of dealing with a collection agency causes physical, mental or emotional problems for you, see a counselor or doctor of your choice. Discuss the situation thoroughly with them.