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Debtors' Rights: Dealing with Collection Agencies

Authored By: Northwest Justice Project LSC Funded
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0200EN - Read this to understand debt collection practices and your rights when dealing with debt collectors. Includes form letters you can use to mail to debt collectors requesting that they stop contacting you.

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Collection agencies are calling me nonstop. What can I do?

Read this for help understanding debt collection practices and your rights. If a collection agency is suing you OR there is already a judgment against you, see Debtors' Rights in a Lawsuit or packets on How to Answer a Lawsuit for Debt Collection or How to Claim Personal Property Exemptions. Get these at our websitewww.washingtonlawhelp.org.

What is a collection agency?

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 large department store or car dealership, or a bank that issues credit cards and attempts to collect a debt, is not a "collection agency" within the meaning of the law. Collection of debts is not their main business.

*Lawyers who regularly collect consumer debt are also "debt collectors" who must comply with the federal law.

There are both federal and state laws protecting debtors whom collection agencies contact. In Washington, these laws are the "Collection Agency Act" (RCW 19.16.100) and the "Consumer Protection Act" (RCW 19.86.010). The federal act is the "Fair Debt Collection Practices Act" (15 U.S.C. 1692). You can find these laws at your local library or online.

*Under state law, a collection agency also includes someone trying to enforce a medical lien (a claim against your property stemming from an unpaid medical or ambulance bill).

What if I do not think I owe the debt?

When a collection agency first contacts you in writing about a debt, its notice must have certain information in it. (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:

  • 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 you get 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 receiving the notice) that you dispute the debt, the collection agency will mail you verification of the debt

*Every communication from a collector must clearly state that the purpose of the communication is to collect a debt, and it will use any info it gets from you for that purpose.

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. See Form Letter #1.

Some examples of disputes of debts:

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

  • You already paid the debt

  • You had medical coupons, and the creditor should have billed the state

  • You were hospitalized, you told the hospital you could not pay for care, and 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. Otherwise it is "time-barred."  This means the claim has expired. The collection agency waited too long and cannot bring the claim now.

The exact time limitation will depend on the basis for the debt or type of claim being made. Most claims based on written contracts or accounts receivable governed by WA law must be begun within six years. Most claims based on oral contracts or accounts receivable must be begun within three years.    

Can I stop the collection agency from contacting me?

Mostly. Under the Fair Debt Collection Practices Act, if you notify the collection agency IN WRITING you want it to stop further communication with you, they can only contact you again to advise you

  • that it will stop trying to collect from you OR

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

This law applies even if you do owe the debt.

If you write the collection agency such a letter, 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 Fair Debt Collection Practices Act

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

See Form Letter #2. KEEP A COPY OF THIS LETTER. Mail the original to the collection agency. Mail a copy to the original creditor.

YOU MUST SEND THE COLLECTION AGENCY THE LETTER. If, after you send it, the collection agency contacts you again for some reason other than the two reasons stated above, they have violated the Fair Debt Collection Practices Act. Under this law, you may 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.

Which property and income does the law protect from debt collection?

The kinds of income that cannot be taken are: 

  • Social Security

  • Supplemental Security Income (SSI)

  • Temporary Assistance for Needy Families (TANF)

  • All pensions (private, federal and civil service) once deposited into your bank account or cashed

  • Labor & Industries disability payments

  • Unemployment Compensation

Some of your wages are also exempt:  The greater of 35 times the current federal minimum wage or 75% of your net wages. ("Net wages" is gross pay minus taxes, Social Security, and other mandatory deductions.)  Call the Department of Labor to find out the current federal minimum wage, or check herehttp://www.dol.gov/whd/flsa/index.htm. Then multiply that amount by 35.

*Example:  As of 2017, the federal minimum wage is $7.25 an hour. If you make less than $253.75 a week net, all your wages are exempt. If you make $400 a week, $300 is ex­empt (since $300 is 75% of your wages, and that amount is more than $253.75).

*This income is usually not exempt from garnish­ment for child support payments or taxes.

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 just that in your letter. You should also put this info in all your other written correspondence to the agency. (Example: a "cease communication" letter, meaning you tell 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 the collection agency successfully sues you and then garnishes your bank account containing exempt funds, you may be able to sue the collection agency.

This property cannot be taken to collect a debt:

  • $125,000 equity in your home

  • Your car, if it is of limited value

  • Your personal belongings, up to a certain monetary limit

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

What are unlawful practices?

Both 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 you a collection agency has unreasonably harassed or misled you, you can sue it. If you win, you can collect damages and lawyer fees. Here are some examples of violations:

  • The collection agency threatens to or actually does tell 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 (example:  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 a telegraphic or emergency message.

  • The debt collector asks for a postdated check in order to threaten 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 state or federal 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 Act are:

Department of Licensing
Collection Agency Board
PO Box 9034
Olympia, WA 98507-9034
Phone: 800-451-7985
FAX: 360-750-6699
Email: BLS@dol.wa.gov

Federal Trade Commission
915 Second Avenue, Room 2806
Seattle, Washington 98174

Mail to the Consumer Resource Center nearest you:

 

Bellingham - Island, San Juan, Skagit and Whatcom Counties
103 E. Holly Suite 308
Bellingham, WA. 98225
Telephone: 360-676-2037
Fax: 360-738-6190

Kennewick - Southeast Washington
8127 W. Klamath Ct.
Building 6, Ste. A
Kennewick, WA. 99336-2607
Telephone: 509-734-7140
Fax: 509-734-7285

Seattle - King, Snohomish, Clallam and Jefferson Counties
800 5th Ave., Suite 2000
Seattle, WA. 98104
Telephone: 206-464-7744
Fax: 206-464-6451

Spokane - Northeast Washington
1116 W. Riverside
Spokane, WA. 99201-1194
Telephone: 509-456-3123
Fax: 509-458-3548

Tacoma - Pierce, Mason, Grays Harbor and Kitsap Counties
1250 Pacific Ave., Ste. 105
Tacoma, WA 98402
Telephone: 253-593-2904
Fax: 253-593-2449


Vancouver - Thurston, Lewis, Pacific, Cowlitz, Skamania, Clark and Wahkiakum
1220 Main St. Suite 510
Vancouver, WA. 98660
Telephone: 360-759-2100
Fax: 360-759-2159

What can I do on my own?

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 the date, time, content, and names of people involved in the conversations.

  • If you learn thecollection agency has contacted anyone other than you, make notes of the same info.

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

 

0200EN

This publication provides general information concerning your rights and responsibilities.  It is not intended as a substitute for specific legal advice. 
This information is current as of January 2017.

© 2017 Northwest Justice Project -- 1-888-201-1014.
(Permission for copying and distribution granted to the Alliance for Equal Justice and to individuals for non-commercial purposes only.)

Form Letter #1

Form Letter #2

Last Review and Update: Feb 28, 2017
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