State Legislature passes trio of bills restricting debt collectors

The Washington Legislature recently moved forward on a trio of debt-related bills with the aim of relieving pressure on residents struggling to make ends meet.

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KIRO 7 TV reported that the bills fall within a comprehensive consumer debt package that State Sen. Manka Dhingra hopes will give families new protections amid financial troubles.

“All of these bills strike that balance between making sure people are able to collect on their debt, but also make sure that consumers are protected,” said Sen. Dhingra.

A House bill from Rep. Kristine Reeves’ protects 80 percent of a debtor’s wages, and up to $2,000 in money in bank accounts from being garnished. That number jumps to $2,500 for private student loan debts.

“What we’ve heard loud and clear is that folks are suffering, budgets are breaking, and folks are trying to do the right thing by paying their debt, and having a hard time doing that,” said Rep. Reeves.

A bill related to medical debt from Rep. Lori Jinkins prohibits the sale of debt to a collection agency for 120 days, and reporting of debt to credit bureaus for 180 days.

A third bill from Sen. Dhingra prohibits a controversial tactic called pocket service, when collection agencies send a summons to a debtor prior to filing a lawsuit.

The hope is preventing incidents akin to what happened to one woman, who received a court summons, but couldn’t find the case in the court file.

“I just said, ‘you know what, there is no court summons, I spoke to the court, this isn’t my debt, cease and desist, don’t contact me again,” she told KIRO 7 TV.

A few months later, she discovered both her bank account and her son’s savings had been garnished.

Federal law currently allows debt collectors to garnish the higher of either up to 75 percent of employee wages, or 30 times the federal minimum wage from a weekly paycheck.

All three bills were passed out of the Senate in bipartisan votes on Monday. Two will move to Gov. Inslee’s desk to be signed, while the bill concerning wage garnishment heads back to the House for the approval of an amendment.

KIRO Radio staff contributed to this report

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