Thanks to the passage of a flurry of consumer protection bills on Monday, April 15, Washingtonians will now see more robust and transparent laws regarding debt collection and debt repayment than ever before. This is a huge step forward for Washington state, as it has historically had some of the most “punishing” laws regarding debt and collections in the country, as noted by this Seattle Times article. A post-judgment interest rate of 12%, the practice of garnishing wages and bank accounts, and frequent civil court cases have trapped thousands of Washingtonians in a cycle of debt.
But now that a suite of bills directly aimed at strengthening consumer protections, easing the post-judgment interest rate, and creating firmer laws around the collection of medical debt have passed, Washingtonians can breathe a little easier. The following are the list of bills and the changes that they usher in:
Tax Lien Foreclosure (House Bill 1105): Tax lien foreclosures happen when people are unable to pay the property taxes on their home. This is often a symptom of gentrification and it disproportionately affects seniors, people of color, and people on fixed or low-incomes. This bill will help prevent such home foreclosures by requiring that counties alert homeowners to home foreclosure resources and services, making it easier for homeowners to set up payment plans to pay outstanding property taxes, and creating a process where counties will forgive late fees and interest to income-eligible home owners.
Pocket Service (House Bill 1066): Before the passage of this bill, debt collectors were allowed to serve a person with a lawsuit for an outstanding debt without actually filing that suit in court first, a practice known as “pocket service.” This bill outlaws this practice, allowing Washington to join the ranks of the other 42 states which do not allow pocket service.
Medical Debt Protections (House Bill 1531): Medical debt is a huge problem, both locally in our state, and more broadly throughout the US. 9% of Washington’s population owes money on their medical bills, a total of $700 million dollars. This bill offers some relief by placing regulations and restrictions on interest accumulated on medical debt (the pre-judgement interest rate has been lowered from 12% to 9%), eliminating bench warrants for outstanding medical debt, and requiring that collectors provide people with information about how to access Charity Care, which provides low-income patients with free or reduced-cost care.
Zombie Debt (House Bill 1730): Thanks to the passage of this bill, it is now illegal for a debt collector to attempt to collect on debts for which the collection period has expired!
Regulating Debt Collection (House Bill 1602): Debt collectors have traditionally relied on a high post-judgment interest rate and large sums of money garnished from bank accounts or paychecks. This bill lowers the interest rate to 9% (originally 12%), and increases garnishment exemptions to a far more considerate level (bank account exemptions have been increased from $500 to $2,000 and wage garnishments are increased to the greater of 35 times the state minimum wage or 80% of disposable earnings).