Walen bill providing debt buying transparency signed into law

OLYMPIA – On Wednesday, March 18, Gov. Jay Inslee signed bipartisan legislation (Substitute House Bill 2476) to provide more transparency around debt collection practices from companies which buy and sell debt at discounted rates. The policy is one of the strongest of its kind in the nation.

“Debt buying practices are often deception, and the ones paying the price are Washington’s working families,” said prime sponsor Rep. Amy Walen, D-Kirkland. “When people fall into debt, they should be supported in paying back that debt without sacrificing basic needs.”

A 2019 report from the Center for Responsible Lending cited that debt collection complaints are the second most common complaint from Washington consumers and that over 80 percent of all debt buyer cases received have resulted in default judgments for the debt buyers.

The 2020 legislation builds upon legislation (House Bill 1730) Walen sponsored last year, which banned “zombie debt,” practices which restarted the clock on the statute of limitations for debt collection and often left people in an endless cycle of debt. The bill provided clarity that the 10-year statute of limitations on debt cannot be unexpectedly revived through unscrupulous debt collection practices.

The 2020 legislation adds provisions to the Collection Agency Act, including:

  • Forbidding debt buyers from going to court to get default judgments without providing evidence to the court.
  • Requiring evidence of the original debt in any legal action.
  • Requiring disclosures in the complaint, including who purchased the debt.
  • Creating violations under the Consumer Protections Act.

The policy has wide reaching support and received input from the Statewide Poverty Action Network, Columbia Legal Services, Washington State Association for Justice and Washington Collectors Association. The bill was passed by both the House and Senate unanimously.