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Washington Debt Relief: Your Guide to State Laws and Managing Debt

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Washington, the Evergreen State, is one of the most beautiful parts of the entire country thanks to its diverse landscape of forests, mountains and lakes. But it’s hard to enjoy the scenery when you’re one of the many Washington State residents battling with debt. Because of the state’s expensive cost of living, even someone with a high income can run into financial trouble.

The regulations for debt are set at the state level, so it’s crucial to understand the Washington-specific laws. That way you can better negotiate with creditors and come up with a plan to pay off your bills. Whether you need help managing current debt or you just want to understand the rules, this guide covers what you need to know for Washington debt relief.

Debt in Washington: At a glance

How does Washington compare to the rest of the country in terms of debt? Here’s where it ranks in the most common categories.

Washington debt
Type Per capita balance, 2018 Rank out of 50 states* U.S. per capita balance
Credit card debt $3,510 12 $3,220
Student loan debt $4,270 44 $5,390
Auto debt $4,450 31 $4,700
Mortgage debt** $49,320 5 $33,680
No. 1 is highest*
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019


Washington residents have one of the highest levels of mortgage debt in the United States. This makes sense, given the state’s red-hot housing market. Credit card debt is also on the high side, but Washington residents have relatively low amounts of auto debt and student loans. One concern, though, is that Washington residents saw a significant increase in every single category since 2017.

Debt collection in Washington

If you fall behind on paying a loan or other bill, the creditor will first try to get that money themselves. But if you go too long without making a payment, it could pass that debt on to a collection agency. Credit card companies and banks usually wait 180 days before sending to collections but the amount of time depends on the company.

Collection agencies’ main job is collecting payment on an unpaid debt. Since that’s their complete focus, they can get quite aggressive with their follow through, which is why the government has stepped in to regulate.

In Washington, the state collection agency law is called RCW 19.16, and it outlines the process for how these companies can act. When the debt collection agency first contacts you, it must follow these steps:

  1. It must give you its name and address, along with the name of the original creditor. The agency must be licensed to operate in Washington.
  2. The debt collection agency must tell you, in writing, how much you owe for the original debt, along with any additional interest and fees.
  3. Finally, it must tell you that you have the right to dispute the debt, if you think it is collecting on something you don’t owe.

From that point on, the collection agency can contact you no more than three times per week, by phone or by mail, and only one of those calls can be while you’re at work. The debt collection agency can contact you or your lawyer. If you don’t have an attorney, the agency can contact other people to find out where you live or work, but the agency cannot tell them about your debt.

You can ask to set up a partial payment plan for your debt but the collection agency does not have to accept this option. If you don’t pay the debt, the collection agency could take you to court to try to get payment and/or it could notify the credit reporting bureaus about your debt.

Finally, Washington has several rules for collection agencies’ code of conduct:

  • They cannot call you between 9 p.m. and 8 a.m.
  • They cannot threaten, harass or embarrass you.
  • They cannot threaten violence or criminal action, such as suggesting that you’ll go to jail if you don’t pay your debt. They also cannot pretend to be part of law enforcement of the government.
  • They cannot publish a list of your debts for the public.

If you send the collection agency a written notice telling them to stop contacting you, it must stop calling and writing you letters. This doesn’t get rid of your debt and the collection agency could still take legal action. But it will no longer be allowed to call and send you letters.

Responding to collection letters

When you receive a collection letter, your first step should be to learn more about the situation. Find out what the debt is for, who the original creditor was and whether you are the one who actually owed the debt. You should also get the name, address and phone number of the debt collection agency to verify it is legitimate.

It should provide all of this information in its original collection letter, but if it doesn’t, get this information first before you respond. Then, you can decide on your answer. Some of your options include:

  • Do you need more information about the debt?
  • Do you want to tell the collection agency that you don’t owe the debt?
  • Do you want them to stop contacting you?
  • Do you want them to only contact you in a specific way, like by mail or through your lawyer?

For help creating your response, the Consumer Financial Protection Bureau provides free templates for each one. You just need to plug in your name, the debt collector’s contact information and any specific information you have about the debt.

If you think a debt collection agency is not following the rules with its process, you can file a complaint with the Washington State Department of Licensing. On the other hand, if you think the debt collection agency is a scam, you could report it to the Washington State Department of Financial Institutions, as well as the Federal Trade Commission.

Understanding Washington’s statute of limitations

When you owe money, the creditor only has a limited amount of time where it can take you to court. This is called the statute of limitations. Once your debt gets past this point, the collection agency can still try getting you to pay, by sending letters or making calls, but it is no longer able to sue you to get a lien on your property, garnish your wages, etc.

Each state has different timelines for the statute of limitations. Washington’s are as follows:

Washington Statute of Limitations on Debt
Mortgage debt 6 years
Medical debt 6 years
Credit card 6 years
Auto loan debt 4 years
State tax debt 4 years


If a collection agency calls about an old debt that you think is past these limits, be very careful about paying them. Any payment can reset the statute of limitations, meaning the collector could take you to court again.

Contact a lawyer or credit counselor to see whether you are off the hook. If so, in Washington you can send a letter to demand the collection agency stop contacting you.

Washington debt relief programs

If you are having trouble managing your debt, there are Washington debt relief programs that can help you get back on track. These organizations offer credit counseling where they go over your finances and come up with your best strategy to pay your bills.

They also could offer debt consolidation, where they combine all your bills in one account, and debt negotiation, where they speak with your creditors to get your bills down to a lower payment.

The Washington State Office of the Attorney General recommends that if you need debt relief, you should work with one that has been approved by the U.S. Department of Justice’s U.S. Trustee Program, or one that is a member of the National Foundation for Consumer Counseling.

As of May 2019, there are two Washington-based debt relief agencies on these lists.

Money Management International is located in Mountlake Terrace, north of Seattle. You can schedule appointments with the agency in-person, by phone or online. It offers a range of counseling services for credit, debt management, bankruptcy and student loans. It also offers financial guides and credit report reviews.

American Financial Solutions is a division of the North Seattle Community College Association. It offers debt management plans and counseling programs for credit, student loans, housing and bankruptcy. In addition, it supports North Seattle Community College by providing scholarships and special education programs.

You could also work with a non-Washington based debt relief program on the Department of Justice or NFCC list. However, these may not be as familiar with the Washington debt laws as these two other organizations.

Payday lending laws in Washington

Payday loans are for short-term loans that aren’t secured, meaning you don’t put up any collateral to back up the debt. Since that’s risky for the lenders, they charge high interest rates to borrowers. Payday loans are also regulated at the state level and the rules depend on where you live. In Washington, these are the basic requirements:

  • Maximum loan amount: $700 or 30% of your income, whichever is less.
  • Maximum loan term: 45 days
  • Finance charges: A maximum of 15% on the first $500 borrowed and 10% on the amount over $500.

If you take out a payday loan in Washington, the lender will record it in a statewide database so the information is available for other payday lenders. This is because you can only take out a maximum of eight payday loans per year in Washington.

If you can’t pay back your loan on time, you can request an installment plan. The lender cannot charge an extra fee to set this up. However, you will not be able to take out another payday loan in Washington while on the installment plan.

Washington payday lenders cannot threaten or harass you for repayment. If they do, you can report them to the Washington State Department of Financial Institutions.

LendingTree does not recommend the use of payday loans because of their high interest rate and fees. Consider all your other alternatives before taking out a payday loan.

Tips to tackle debt in Washington

If you’re in debt, there are a few strategies you can use to pay everything off more quickly. We’ve covered some of the more popular options, along with when they could make sense.

Consolidate your debt

If you have multiple outstanding debts (personal loans, medical debt, credit cards, etc.), debt consolidation could simplify your bills. A debt consolidation company pays off all your existing debts and combines them all into one single loan.

This way you only have one bill each month versus keeping track of multiple small payments. In addition, the debt consolidation company could give you a lower interest rate since you owe them more in total, which would lower your monthly payment.

As a result, this strategy can make paying off your bills easier and get you out of debt more quickly. However, you need to be careful not to reborrow through the other accounts after you consolidate. For example, you start spending on your credit card again because the debt consolidation loan paid it off.


When you make a loan payment, part of the money goes toward interest, while the rest pays down your balance. If you have a lower rate, that means the same monthly payment will get you out of debt more quickly because you’re spending less on interest.

Some loans give you the chance to refinance, which means you replace your existing loan with another that usually has a lower interest rate. Mortgages, auto loans and student loans are common examples of debts you could refinance.

Your best bet of qualifying for a refinance is if your credit score has improved since you first borrowed the money. You could also potentially get a better deal if national interest rates have gone down since you took out the loan.

If you plan on refinancing student loan debt, be cautious about replacing your federal student loans with a private loan. After this move, you will lose government benefits like being eligible for student loan forgiveness programs, or the option to delay payments while you’re unemployed. Weigh these potential downsides against the benefit of lower payments from refinancing.
Use a balance transfer card

Some balance transfer credit cards offer a very low, or even a 0%, interest rate as a promotion when you first sign up. This means your entire payment goes toward paying off your debt. You can transfer over balances from other credit cards or loans to the new card so you can pay them off during this promotion.

At the end of the promotional period, which typically lasts about 12 to 21 months, the credit card will start charging interest so your goal should be to pay off as much as possible during this time. If you’re not able to do so, you’re risking ending up with even more debt.

The credit card company could charge a balance transfer fee when you move debt over from another credit card or loan. A typical fee is around 3%. The fee is less than a year of credit card interest, but will still add to your debt. Keep this in mind before using a balance transfer card.

Filing for bankruptcy in Washington

If you don’t think you’ll ever be able to pay off your debts under their current terms, as a last resort you could declare bankruptcy. There are two types of bankruptcy for consumers: Chapter 7 and Chapter 13.

Chapter 7

When you file Chapter 7, you erase your outstanding debts so you don’t pay them back. While there are a few types of debts you can’t walk away from in bankruptcy, like certain tax debts or child support, most of them can be discharged.

If you have any remaining assets, during the Chapter 7 process you’ll need to sell them to repay your debts as much as possible before they are wiped out. There are exemptions so you’ll be able to keep some property after bankruptcy.

In Washington, some of the property you can keep include up to $125,000 of equity in your personal residence, a car and up to $3,000 of personal property like cash, clothes and furniture.

Chapter 13

When you file Chapter 13, you don’t immediately erase your debts. Instead, the bankruptcy court sets up a repayment plan over three to five years that is more manageable under your current income. At the end of the repayment period, whatever debt is left over gets discharged. An added benefit is you don’t have to sell your assets during the Chapter 13 process.

Both moves will hurt your credit score significantly and stay on your credit report for up to seven years for Chapter 13 and 10 years for Chapter 7. This will make it more difficult to borrow again in the future and is not a decision to take lightly. But if you think declaring bankruptcy is the only way to manage your debts, it is an option.

For help researching whether bankruptcy is the right move, the Washington State courts recommend that you speak with an attorney first. On their website, they provide a list of free bankruptcy legal services and also suggest contacting your county bar association for possible lawyer referrals.

The bottom line

Even though debt is a national problem, it’s one that you personally solve at the state and local level. By understanding the rules, trouble spots and resources in this guide, you can put together an effective plan for getting out of debt in Washington.

The information in this article is accurate as of the date of publishing.


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