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CP week tip of the day: Dealing with debt and collectors

CP week tip of the day: Dealing with debt and collectors

(Credit and Money Matters, National Consumer Protection Week) Permanent link

It’s National Consumer Protection Week and in a short while, our office will release our list of industries that received the most consumer complaints in 2010. I’ll give you a hint – there’s a good reason why today’s tip focuses on dealing with collection agencies and debt.


If you are struggling with credit card debt and haven’t yet met with a legitimate, nonprofit credit counselor, do it now.  Credit counselors help you develop a personalized money-management plan. Pick a program with an office in your community. The U.S. Trustee Program provides a list of government-approved credit counseling agencies. The National Foundation for Consumer Counseling provides a list of member agencies online at or call 1-800-388-2227 for a 24-hour automated message with office listings. Compare a couple of services for costs and to get a feel for how they operate. Be aware that just because an organization says it is “nonprofit” doesn’t guarantee that its services are free or affordable.


creditcardsIf you’re being hounded by calls from collection agencies, you should know that you have rights. State and federal laws require that debt collectors treat you fairly.

They can contact you three times a week – no more than that – but no calls before 8 a.m. or after 9 p.m. They can't call you at work if they know your employer prohibits it. If you don’t have an attorney, a collector may contact other people only to find out your address, your phone number, and where you work. [updated]

If you want the calls to stop, you need to write. Once a collector receives your letter, the law says the business can't call again except to notify you of legal action. And if an attorney is representing you about the debt, the debt collector must contact the attorney instead of you.

Banks and businesses collecting for their own accounts are exempted under Washington State’s Collection Agency statute, however.


If you don't pay your bills, you can be sued. If you are sued over a debt, don't ignore it. A default judgment could be entered against you, allowing the creditor or collector to garnish your wages. You can have bigger problems if you fail to appear in court -- people have been jailed.

Consumers occassionally ask me about "zombie debts," also known as time-barred debts. Basically, they’re debts that are so old they are beyond the point at which a creditor or collection agency may sue you to collect. Collection agencies typically have six years to seek an outstanding payment; that’s when Washington’s statute of limitations to sue expires. If the consumer makes a payment within the six years, the clock starts ticking again. According to the Federal Trade Commission, most courts that have addressed the issue have ruled that the Fair Debt Collection Practices Act does not prohibit debt collectors from trying to collect time-barred debts — as long as they don't threaten to sue you. If a debt collector sues you to collect a time-barred debt or one that has been discharged through bankruptcy, you can have the suit dismissed.


Many companies promise to help you reduce the amount of debt you owe. But be careful about where you seek help. Last week, we announced a settlement with a company called Freedom Debt Relief concerning allegations that the company charged customers more than the state’s Debt Adjusting Act allows and sometimes failed to adequately inform them about how the program works.

Recent changes to the federal Telemarketing Sales Rule prohibit companies that sell debt relief services over the phone from charging a fee before they settle or reduce your debt.

Debt consolidation programs offered by legitimate credit counselors can be helpful to some consumers. These programs combine your existing debts into a single loan with a lower interest rate.  You deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees if you’re working with a reputable program, but it can still take several years to complete the program.

But watch out for debt negotiation programs that claim they can work out a deal with your creditors to lower the amount you owe. These programs can be risky and may have a negative impact on your credit report and, in turn, your ability to be approved for new credit. Additional risks exist if you are unable to save enough money to satisfy your creditors or are successfully sued and your creditors garnish your wages.   

Remember, the best way to avoid calls from collection agencies is to pay your bills on time. Outstanding debt can lower your credit score, which lenders use to determine if you’re a good risk for a car loan, mortgage or credit card.


Posted by Kristin Alexander All Consuming Blog Moderator at 07/19/2011 02:32:08 PM | 

As a debt collector I have some concerns regarding your statement that a debt collector "can't call you at work if your employer prohibits it." It seems to me that this statement might cause some confusion amoung consumers. While I realize that the next paragraph gives this statement some context I think it is important that you point out that a debt collector cannot call the place of employement if they know or have reason to know that it is prohibited or inconvenient. A debt collector can, of course, call a consumer at their place of employement, even if prohibited by their employer, if we have no notice of that prohibition. Thanks for considering my comment.


Michael O'Meara
Attorney at Law
[ALL CONSUMING MODERATOR'S RESPONSE: That is correct. Thanks, Michael. I will also note that attorneys are exempt from our statute concerning collection agencies.]
Posted by: Michael O'Meara ( Email ) at 3/8/2011 10:40 AM

While I realize that the next paragraph gives this statement some context I think it is important that you point out that a debt collector cannot call the place of employement if they know or have reason to know that it is prohibited or inconvenient. A debt collector can, of course, call a consumer at their place of employement, even if prohibited by their employer, if we have no notice of that prohibition.
Posted by: adamj ( Email ) at 12/5/2011 10:33 PM

What is the best/easiest way to find out when a particular debt became/becomes "time-barred"? [ALL CONSUMING MODERATOR'S RESPONSE: You can contact the FTC and review their collections information at You might also want to contact a private attorney for specific debts.]
Posted by: Don McIntyre ( Email ) at 10/18/2012 3:13 PM

How can I locate a state-verified credible debt consolidation company? [ALL CONSUMING MODERATOR'S RESPONSE: The US Department of Justice has a list of approved list of credit counseling and debt education organizations. Their phone number is: 202-514-4100, email, and website is]
Posted by: Patty Roberts ( Email ) at 11/13/2012 12:01 PM

I have medical bills-they say they will turn over to a collection agency. If I send them some money and they accept it, can they still turn it over for collection? [ALL CONSUMING MODERATOR'S RESPONSE: Generally speaking, creditors can send unpaid bills to a collection agency at any time once the bill becomes delinquent even if partial payments are received. Our office recommends contacting your creditor and request a payment plan and a hold on sending the account to collections. If your creditor is unwilling to do so and you receive a bill from a collection agency you can request a payment arrangement with the collection agency within 30 days of receiving their letter or disputing the debt.]
Posted by: Sharon Tolman ( Email ) at 5/24/2013 2:46 PM

1) I received a "form" letter from a collection agency for what they say is an unpaid payday loan from August 2011. This is the first contact I have received from anyone regarding this. I requested in our phone call that they provide me with written documentation. They out right refused; said they would provide me with proof in court when they filed a lawsuit. Am I not entitled to receive this information from them? [All Consuming Blog Moderator Response: Thank you for your question. Under the Fair Debt Collections Practices Act (FDCPA) you may dispute a debt with a collection agency within 30 days of the date on your letter. You should send your dispute in writing with some form of tracking number. The collection agency should then stop any collection activities and request verification from the creditor and provide that to you. If you are not able to resolve the issue with the collection agency or they are not willing to provide the requested information, you may file a complaint with our office via our website at

There are currently several Phishing scams operating that purport to be a “collection agency” collecting often on a payday loan or very old debt and will often threaten the consumer with criminal prosecution, imprisonment or other legal actions if the consumer does not immediately pay the debt with a credit card, wire transfers, and or bank account information. If this description fits the form letter or phone calls you have received, do not respond to the caller or provide any information as the caller is trying to bully you into providing financial information or money.]
Posted by: Kathy Pope ( Email ) at 9/13/2013 6:04 AM

So i know i have money in collections i owe from tickets, maybe court and a car accident i havnt responded to a while back because i dont live at home. How do i find out how much i owe? if i can make payments? and whats the worse that can happen because im scared. ive been unemployed seeking employment and i come from a low income family with my dad only working.
Blog Post Manager Comment (lw) You can get a free credit report from each of the 3 major credit reporting agencies once a year by federal law. This most likely will show any debt you owe and then you can contact your creditors to work out a payment plan.
Posted by: shawn ( Email ) at 10/15/2013 5:36 PM

I was served papers by a collection agency for medical dept that the SOL will be up in 5 months. If I agree to a stipulated judgement do I still have to pay legal fees that they are asking even though we do not go to court?

Blog Post Comment Manager (KD): The Washington State Attorney General’s Office is prohibited by law from providing legal advice to private citizens. As a consequence, we cannot offer advice regarding pending or potential lawsuits.

Citizens who are in need of these services should seek the advice of a private attorney. If you need assistance in locating a private attorney, you may contact one of the many local attorney bar associations from the list below:

Clark County: 360-695-0599
King County: 206-623-2551
Lewis County: 360-748-0430
Pierce County: 253-383-3432
Snohomish County: 425-388-3018
Spokane County: 509-477-6032
Thurston County: 360-923-4844
In King County you may also contact 211 at; or by dialing 211.

If you cannot afford an attorney, and since you have a non-criminal legal problem, you may qualify for assistance from the NW Justice Project’s CLEAR Coordinated Legal Advice, which can be reached Toll Free at 1-888-201-1014 or online at the following website: In addition, if you are 60 or over, you may call CLEAR SENIOR at 1-888-387-7111 regardless of income.
Posted by: Linda Herrold ( Email ) at 11/13/2013 11:53 AM

I need to speak to you regarding IQ Data International. Please contact me at (817) 812-7040.
Posted by: Diana Tijerina ( Email ) at 11/20/2013 9:27 AM

With regards to Sharon Tolman's post on 5/24/2013 concerning sending partial payments to medical creditors, you mention 'once the bill is delinquent.' If you send along partial payments on time, do they still have the option of turning you over to collection whenever they want?
AGO Blog Manager Comment (lw): Please contact our Consumer Protection Division at 800-551-4636 between 10 am and 3 pm for help with this question
Posted by: w. dunbar ( Email ) at 2/19/2014 5:16 PM

Debt is all about putting people out of their miserable lives, your article is pretty interesting.
Posted by: Toby McGuire ( Email ) at 6/16/2014 3:50 PM

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Posted by: florida lawsuit loans ( Email ) at 12/2/2014 11:47 PM

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