Being Sued for Debts in Washington

At some point in life, most people have been in a situation where they were financially strapped. It is all too easy to get into debt – whether from credit cards, medical bills, or a car loan. Unfortunately, it can be difficult to dig yourself back out of debt.

In Washington State, debt collectors can file a legal action to recover unpaid debt. If you are being sued for an outstanding debt, then there are certain steps that you can take to protect yourself. Properly responding to a debt collection lawsuit can help get you back on the path to financial stability.

Attorney Richard D. Granvold represents individuals who are struggling with debt. He works with clients to help them achieve the best possible outcome based on their unique situation. To learn more, reach out to our law office to schedule a free consultation with a Federal Way, WA bankruptcy lawyer. Attorney Richard D. Granvold can help anyone in Western Washington as the Bankruptcy Court is in Seattle or Tacoma no matter where you live and court hearings are on the telephone. 

Why Am I Being Sued?

If you owe money to a medical provider, credit card company, student loan company, or any other lender and get behind on your payments, they might file a debt collection lawsuit against you. Generally, you will not be sued if you miss one monthly payment. Your debt has to be delinquent for a specific period of time before financial institutions, collection agencies, or another creditor can file a debt collection lawsuit.

The process begins when the creditor, a collection agency, or a debt buyer files a legal action against you in court.  The complaint will state why you are being sued and the amount owed, which may also include interest, attorney’s fees, and costs.

Some lawsuits can be served without yet being filed with the Court (like Superior Court cases), and others like in District Court must already have been filed in court; either way, you will be served with a copy of the complaint and a summons. This puts you on notice that you are being sued and explains your legal rights. Under Washington law, you have 20 days to respond to debt collection lawsuits, unless the summons says otherwise.

Washington law allows creditors to file a lawsuit against you for unpaid debt. A creditor – such as a hospital – can also hire a debt collection agency to recover the money on their behalf. In Washington State, debt buyers – a person or entity that purchases debt – can also file a lawsuit to collect on these claims.

A debt collector, debt buyer, or other creditor must follow specific rules when they are attempting to collect a debt. The federal Fair Debt Collection Practices Act (FDCPA) and the Washington Collection Agency Act regulate debt collection within the state. Under these laws, debtors have certain rights and protections, such as the ability to request that a debt be verified.

These laws also prohibit unfair and deceptive practices, require debt collectors to be licensed, and limit how debt collectors can communicate with people who are in debt. Despite these laws, Washington is known as being one of the most punishing states in the country for debt collection. If a company wins a judgment against a debtor, they can collect the outstanding debt, attorneys’ fees, 12% interest, and even start wage garnishments.

What Should I Do If I Am Being Sued?

Debt collection lawsuits should not be ignored. If a debt collector obtains a judgment against you, then you may be on the hook for quite a bit more money than what you originally owed. It may also lead to wage garnishment.

There are a number of potential defenses to a debt collection lawsuit. For example, Washington has a strict statute of limitations (time limit) for debt collection.  If a debt falls outside of the statute of limitations, it is considered a time-barred debt – and you can request that the lawsuit be dismissed.

The statutes of limitations for debt collection depends on the type of debt involved:

  • Written contracts: 6  years
  • Oral agreements orr implied contracts: 3 years
  • Auto loans: 4 years
  • State tax debt: 4 years
  • Credit cards: 6 years
  • Open accounts: 6  years
  • Recovery of property and judgments: 10 years (renewable for 10 more years).

If a debt collector or debt buyer attempts to sue you for a time-barred debt, then the case may be dismissed. You will still owe the original amount of money, and the debt collector can use methods other than going to court to attempt to collect the debt.

Other possible defenses to a debt collection lawsuit may include:

  • Mistake (the debt is not yours)
  • The debt was canceled
  • Partial payment of the debt (incorrect debt amount)
  • The debt has been paid in full or excused
  • You co-signed the loan but were not advised of your rights when doing so.

An inability to pay the debt is not a defense to a debt collection action.

Whether a statute of limitations period described above is “tolled” depends on state laws and facts beyond the scope of this reading: tolling is a legal term and law which pauses the time during the prescriptive Statute of Limitations period. Tolling occurs in many ways.

Washington’s debt collection laws are incredibly complicated. Hiring an attorney who understands these laws is generally a good idea. They can help you answer the lawsuit, and advise you of other options to resolve the debt, such as filing for Chapter 7 or Chapter 13 bankruptcy.

If you do not respond to a summons within the 20-day time frame, then the creditor will likely ask the court to enter a default judgment against you. The court may simply award the full amount requested by the creditor or may examine it closely to make sure that the amount is justified. Once the default judgment has been entered, then the creditor can seek a wage garnishment order to satisfy the judgment.

There may be situations where not responding to a debt collection lawsuit may make sense, such as where you definitely owe the debt, the amount requested is fair, and you have no potential defenses to the claim. However, most people aren’t familiar with the laws surrounding debt collection in Washington State – and may not even be aware that they could seek damages if a debt collector breaks certain rules. For this reason, it makes sense to consult with a debt collection attorney if you receive a summons for a legal action based on outstanding debt.

Options for Dealing with Lawsuits

If you have been sued for a debt, then you may not know what to do – or what your options are. There are a number of things that you can do after receiving a summons for this type of lawsuit.

First, you can fight the lawsuit. As noted above, there are many potential defenses to this type of legal action. It may also be possible to file a counterclaim against the debt collector. For example, if the debt collector has harassed you, engaged in unfair practices, or made fraudulent claims, then they may have violated the FDCPA and/or the Collection Agency Act. You may be able to seek damages from them and prevent them from seeking interest and/or attorneys’ fees on your debt.

Second, if you believe that you owe the debt, you should consider hiring an attorney. A lawyer can analyze the case for any possible defenses or counterclaims. They may also be able to help you negotiate a settlement so that you can avoid going to court.

Third, if your debt is so significant that it is unmanageable, you may be able to file for bankruptcy. Depending on your specific situation, bankruptcy may be the best option for you. It may also put an immediate stop to debt collection, foreclosure actions, and wage garnishment.

There are two primary types of bankruptcy for individuals: Chapter 7 or Chapter 13. Chapter 7 bankruptcy discharges most types of debt and can give you a fresh start. A Chapter 13 bankruptcy will allow you to protect some assets while paying off your debt over 3 to 5 years.

Dealing with debt collectors can be incredibly stressful. If you find yourself in a place where your debt is overwhelming and you are facing debt collection lawsuits, then bankruptcy might be the best way to get your life back on track.

What Does It Mean to Be Judgment Proof?

Being judgment proof means that you don’t make much income, have a lot of money in the bank, or have assets that a creditor could seize to pay off your judgment. If you are judgment proof, a creditor can still obtain a judgment against you. However, they probably won’t be able to collect on the judgment. However, they can obtain a court order requiring your appearance before a court to answer questions on your assets which could be a great inconvenience to you and result in having to possibly changing bank accounts, etc. 

If you make below a certain amount of money, then a creditor also cannot garnish your wages. They also cannot attempt to satisfy the debt by going after your Social Security, child support, unemployment, public assistance benefits, or veterans’ benefits. To learn more about how you can stop wage garnishments or collections on a debt judgment, give our law office a call for a free consultation.

Will a Debt Collection Lawsuit Show Up on My Credit Report?

Yes. If a lender, a debt collector, or a debt buyer files a legal action against you for unpaid debt, it will damage your credit score. This information will remain on your credit report for a period of 7 years; the underlying debt can be on a report for 10 years also.

Being in debt can negatively impact your credit in a number of ways. In some cases, the best way to get out of debt and to start to rebuild your credit is by filing for bankruptcy. Contact the Law Office of Richard D. Granvold to learn more about how we can help.

Can I Be Sued for Not Paying My Student Loans?

Yes. The federal government usually does not file lawsuits to collect on student loans because it has other options, such as wage garnishment and withholding tax refunds. However, private lenders may file a debt collection lawsuit if you default on your student loans.

It may be possible to discharge student loans through bankruptcy in some situations. A skilled bankruptcy lawyer can help you examine your options if you are unable to pay off your student loans. Reach out to attorney Richard D. Granvold today to schedule a free consultation about your case.

How We Can Help

It can be incredibly hard to dig your way out of debt. In addition to paying off the amount that you originally owed, you may also be on the hook for interest, penalties, and even attorneys’ fees. Even a relatively small amount of outstanding debt can quickly seem insurmountable.

Fortunately, there are options for resolving your debt. At the Law Office of Richard D. Granvold, we work hard to help our clients get back onto solid financial ground. We’ll explore all of your options with you, and help you make the best decision for yourself and your family. To learn more or to schedule a free consultation with a Federal Way, WA bankruptcy lawyer, call our law firm today at 253-945-6062.