Bill Past Due Notice

Past due notice with calculator and only a small amount of loose change available.

OLYMPIA, Wash. -- Consumer protections in debt collections are on the docket for Washington state lawmakers this session.

One House bill would establish more regulations on debt buyers, the companies that purchase debt from creditors at a discount. Louise Stromberg was pursued by a debt buyer for around $200 in credit card debt after her husband died. Servers sent legal documents to an old address and, before she knew it, Stromberg said, the debt-buying company had won a judgment against her and filed to garnish her wages. She eventually got the case dismissed, but said she believes the debt-buying industry is predatory.\

"It's a terrible system, because it preys on the people that are most financially fragile, and it's very painful," she said, "and emotionally, it's very stressful knowing that someone's trying to 'get' you."

House Bill 2476 would put a greater onus on companies to explain who the original debt holder is. Often, folks aren't sure who's trying to collect money from them. It also would require companies to explain the basis of the lawsuit.

Scott Kinkley, an attorney in the Northwest Justice Project's Spokane office, said debt buyers have an assembly-line style method for sending lawsuits to court, overwhelming some judges. He noted that the suits often contain mistakes because of the speed with which they're put together.

"There's no incentive for anyone in the debt-buyer market to seriously examine each individual case to see if the data is accurate," he said, "and the agreements that they're sold by very frequently say that the original creditor is disclaiming accuracy."

Another bill in the Legislature, HB 2635, could add an extra fee for consumers paying back their debt. It would allow collection agencies to charge 2.35% or up to $35 for credit-card transactions. Kinkley said this would put a squeeze on primarily low-income folks, both by the creditor and the collection agency.

"It almost feels like they're getting kicked while they're down," he said. "If they're trying to resolve debts, now they're being asked to offset the collection agency's business expenses."

The texts of House Bills 2476 and 2635 are online.

(1) comment

John Newburn

HB 2635 should be tossed. Also if the debt-buyer buys a debt at lets say 50% of the original debt that debt buyer should be locked at collecting only what they paid for the debt with no interest or additional fees. On top of that if a debt buyer purchases the debt them all the negative remarks against the original person owing the debt should be removed and listed as paid as agreed.

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