Debtors' Rights: Dealing with Collection Agencies

Read this for help understanding debt collection practices and your rights. If a collection agency is suing you OR already has a judgment against you, see our packets on How do I Answer a Lawsuit for Debt Collection or How to Claim Personal Property Exemptions.

Federal and Washington state laws define a collection agency as a business or organization whose principal purpose is collecting debts. This does not include the credit or collection office of a business whose primary 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 whom collection agencies contact. Washington’s laws are the Collection Agency Act (CAA) (RCW 19.16.100) and Consumer Protection Act (CPA) (RCW 19.86.010). The federal law is the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. 1692). You can find these laws at your local library or online.

A collection agency is required to contact you in writing about a debt.  The notice must have certain information in it. If they first contact you by phone, you should insist they contact you in writing.

The first written notice from a collection agency must have all of 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 dispute the debt within 30 days after getting the notice, the agency will assume the debt is valid

• A statement that, if you request it within 30 days, the collector will provide 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 verification of the debt

If the debt is medical debt, the notice must also state:

• Your right to request the original account number assigned to the debt

• Your right to request the date of your last payment

• Your right to request an itemized statement that gives you all of these:

  • the name and address of the medical creditor,

  • the dates of service,

  • the services the provider claims it provided you,

  • the amount of principal owed on the debt,

  • any adjustment to the bill, the amount of any payments received from you or anyone else,

  • any interest or fees, and

  • if you were found eligible for Charity Care and if Charity Care payments were applied to the debt

A collection agency may not report information about medical debt to a credit bureau for at least 180 days from the date the collection agency received the information about the debt. See Can I Get Charity Care Benefits To Pay For My Hospital Bill?

You must notify 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 the collection agency. Whenever possible, use certified mail, return receipt requested. SeeSee Form Letter #1.

Some examples of disputes of debts:

• You do not believe you owe the debt or stated amount

• 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 six 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 three years of default.   

If you make a payment on the account within the statute of limitations time period, the time period restarts. The creditor will get another six or three 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, a payment will NOT restart the time period.

Examples: 

• The deadline to file a lawsuit on a credit card debt is September 15, 2019 (six years from the date of default on the account). The debtor makes a payment on August 15, 2019.

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

• The deadline to file a lawsuit on a credit card debt is September 15, 2019. The creditor or collection agency fails to file a lawsuit before the deadline. The debtor makes a payment on September 30, 2019.

The creditor or collection agency may not ever file a lawsuit. The claim has expired.

Mostly. Under the Fair Debt Collection Practices Act (FDCPA), if you notify 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 intends 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.

This will not stop the collection agency from suing you. It only stops them from calling and sending you letters.

Examples of the kinds of income that cannot be taken are: 

• Social Security

• Supplemental Security Income (SSI)

• Veterans benefits

• Temporary Assistance for Needy Families (TANF)

• Child support you receive

• Most pensions (private, federal and civil service)

• Unemployment Compensation

• Federal student loans

Some of your wages are also exempt:  for consumer debt, the greater of 35 times the current state minimum wage or 80% of your net wages. ("Net wages" is gross pay minus taxes, Social Security, and other mandatory deductions.) 

If your income is exempt from garnishment, let the collection agency know in writing. Keep a copy of the letter.

Example:  Your only income is Social Security, which is exempt by federal law from garnishment. You would put that in your letter. You should also put this information in all your other written correspondence to the agency.

(Example: a “cease communication” letter, telling the agency to stop contacting you.)

This is not a defense to the underlying claim. It does let the collection agency know your only income is exempt from garnishment. If they successfully sue you and then garnish your bank account containing exempt funds, you can file an exemption claim to get the money back.

This property cannot be taken to collect a debt:

Your home, where the equity value is the greater of (a) $125,000; or (b) the county median sale price of a single-family home in the preceding calendar year.

• Your car, if it is of limited value

• Your personal belongings, up to a certain limit

• Your cell phone, personal computer, and printer

If a creditor or collector is trying to garnish your income or property, see How to Claim Personal Property Exemptions.

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.