The federal government passed the Fair Debt Collection Practices Act and the Fair Credit Reporting Act in 1978 to account for rising problems with unfair or improper practices by debt collectors. The number of Americans in debt has since risen, bringing state governments across the country to create additional laws to enhance, increase or replace the federal standards. These laws work to regulate all debt related processes and protect debtors from debt harassment.
Washington includes extensive sections in their law code on Collection Agencies and Unfair Business Practices - Consumer Protection for debt collection law, in addition to their Consumer Loan Act, which outlines the regulations for businesses that grant loans. The legal interest rate for loans in Washington is 12%. This is also the rate of judgment penalties. Anything above is generally considered usury.
Each state imposes limits to the time charges can be brought against an individual or business for any given proposed violation. These are not consistent for all laws or in all states. Regarding debt laws, they apply to a contract's place of origin, rather than the residency of any party involved. In addition, these limits apply beginning after the first missed payment, instead of the last paid one. The limits for various types of contracts in Washington are:
Washington uses the same 25%, or 30 times the current federal minimum wage limit on wage garnishments. In contrast to federal law, the greater of the two is the allowed limit, rather than the lesser. However, in the case of violations of any Collection Agency laws by debt collectors, penalties of up to $25,000 may be assessed, whereas federal laws warrant only $1,000 per violation.
Debt Harassment is controlled by multiple portions of Washington law code. These laws are very similar to those in the federal code provided by the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. However, they incur penalties equal to all other collection practice violations, at no more than $25,000.
There are federal and state level regulations for the repayment of debts through contracts that control such things as garnishment and interest rate limitations. These are the same laws that are applicable to debt negotiation and settlement. This is because a debt settlement or renegotiation essentially creates a new contract to replace an existing one. Debt collectors are often fairly flexible with these negotiations because it can allow the debtor to successfully repay their debt. To accomplish this process can be made with the help of legal aid and direct contact with the loaning party, or with a debt settlement company. Though debt settlement companies can appear the easier route, they can sometimes cost debtors much more than their original debt in the end. A new contract can include lump sum payments, fewer or reduced payments, and even deferred payments, that result in a few major benefits such as:
Debt settlement lawyers specialize in assessing financial situations, contract negotiations and all pertinent laws. The possibility for major benefits from debt settlement makes the use of such lawyers very important for those looking to effectively reduce or remove their debt. In addition to their skills in contract negotiations, these lawyers act as mediators between a debtor and the loaning party before and after negotiations take place. With this legal representation enacted, debt collectors cannot legally make direct communication attempts with debtors. Such contact could be considered debt harassment. These lawyers can also manage such circumstances or any previous actions by collectors that may have been debt harassment.