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If you're navigating medical debt in Washington State, here's what you need to know: the state has some of the strictest regulations in the U.S. to protect consumers from aggressive collection practices. Key highlights include:
These laws ensure fair treatment for consumers while imposing strict compliance requirements on collectors, debt buyers, and healthcare providers. The focus is on transparency, limiting penalties, and preventing undue financial harm.
Washington State has established a set of rules designed to protect consumers from aggressive medical debt collection practices. These regulations not only restrict how collectors pursue payments but also impose limits on financial penalties. Violations of these laws can even render the debt void.
Starting July 27, 2025, healthcare providers, facilities, and collection agencies in Washington will be prohibited from reporting medical debt to consumer credit reporting agencies. This ban applies universally - covering all medical debt, regardless of its amount, age, or payment status. Similarly, credit bureaus will not be allowed to include medical debt in consumer credit reports.
If these rules are violated, the debt becomes void, and collectors lose the right to pursue it. Violators may also face fines or lawsuits, as such actions are classified as unfair or deceptive under the Washington Consumer Protection Act (RCW 19.86). Any contract involving medical debt entered into after July 27, 2025, must include terms acknowledging this prohibition; otherwise, the contract itself could be invalidated. Debt buyers and collection agencies must implement strict measures to ensure no medical debt is mistakenly reported to credit bureaus.
Seth Frotman from the Consumer Financial Protection Bureau sums up the rationale behind these protections, stating:
"The purpose of the credit reporting system is to assess credit risk, not to coerce people to pay debts they may not owe."
In addition to these credit reporting restrictions, Washington law also addresses interest rates on medical debt.
Washington limits prejudgment interest on medical debt to 9% annually. This cap applies to all medical debt, including accounts where interest was already accruing as of July 28, 2019. Consumers can request an itemized statement that includes the medical creditor’s name, service dates, and a description of the services provided. Until this information is supplied, collection efforts must stop.
For hospital-related debts, collectors are required to notify consumers about potential eligibility for charity care. They must also pause collection efforts during any application or appeal process tied to charity care.
Besides capping interest rates, Washington law also protects consumers by restricting wage garnishment for medical debt.
Washington law ensures that 100% of a consumer’s earnings are exempt from wage garnishment for medical debt. Collection agencies cannot garnish wages to satisfy medical debt judgments. To make this clear, collection notices are required to include the statement: "A garnishment against wages or other earnings may not be issued for medical debt".
This stands in contrast to garnishment rules for other types of debt. For instance, up to 20% of disposable earnings can be garnished for consumer debt, and up to 15% for private student loans. Bank accounts, however, are subject to specific exemption amounts, which consumers can claim using an "Exemption Claim" form.
Washington enforces a detailed framework for medical debt collection, focusing on contact limits, disclosure requirements, and banned practices to protect debtors.
Debt collectors in Washington must adhere to strict rules about how often and when they can contact individuals. For example, they cannot contact a debtor or their spouse more than three times within a single week. If reaching out to someone at their workplace, this is limited to once per week.
Timing restrictions are also in place. Collectors can only communicate between 7:30 a.m. and 9:00 p.m. in the debtor's local time zone. Additionally, calls or texts to a cell phone are capped at two per day. Importantly, collectors are prohibited from blocking their number on caller ID.
| Contact Method | Frequency/Timing Limit |
|---|---|
| Total Weekly Contacts | Max 3 times per week (including spouse) |
| Workplace Contacts | Max 1 time per week |
| Daily Cell/Text | Max 2 times per day |
| Time of Day | Only between 7:30 a.m. and 9:00 p.m. |
| Caller ID | Must not be intentionally blocked |
These rules ensure that communication remains reasonable and respectful.
Collectors are also required to provide detailed written disclosures to inform debtors of their rights. The first written notice must include key information, such as the right to request the original account number, the date of the last payment, and an itemized statement of the debt. If a debtor requests this information - whether orally or in writing - all collection efforts must pause until the requested details are provided at no cost.
The itemized statement must include:
For hospital-related debts, collectors must also inform debtors about potential eligibility for charity care and include the hospital's contact information. Additionally, every communication must clearly state that the collector is attempting to collect a debt and that any information obtained will be used for that purpose.
Washington law strictly prohibits aggressive or deceptive collection tactics. Collectors cannot use offensive language, threaten violence, or imply criminal prosecution. They are also barred from impersonating government officials or using misleading symbols like badges, uniforms, or fake legal documents that mimic official forms.
Other forbidden practices include:
The Washington State Legislature has emphasized the importance of proper legal notice, stating:
"The legislature intends to require that debt collection complaints be filed prior to service of the summons and complaint on defendants to ensure that defendants understand that it is an existing court case."
These regulations create a framework that balances the rights of debtors with lawful collection practices, setting clear boundaries for collectors to follow.
Debt buyers and sellers in Washington State must adapt their practices to comply with strict legal standards. These strategies focus on ensuring that documentation and contract terms align with state laws governing portfolio trading and debt collection, particularly in light of the consumer protections and legal requirements discussed earlier.
Collection agreements must now include specific language to remain enforceable. For example, under SB 5480, contracts involving medical debt created after the law's effective date must include a clause prohibiting the reporting of such debt to consumer credit reporting agencies. Without this provision, the medical debt could become void and unenforceable. Debt buyers should audit their purchase agreements to confirm that sellers have incorporated this required language.
Additionally, agreements must reflect the 120-day waiting period mandated by law before medical debt can be sold or assigned. To protect against premature transfers, buyers should include indemnity provisions in their contracts. Other key terms include capping prejudgment interest at 9% per year and requiring sellers to provide a complete chain of ownership from the original creditor to meet court documentation standards.
Technology can play a critical role in implementing and managing these updates effectively.
Digital tools can streamline compliance by centralizing documentation and tracking regulatory deadlines. Platforms like Debexpert offer portfolio analytics that help debt buyers evaluate medical debt portfolios while ensuring secure file sharing through end-to-end encryption. These systems also facilitate the exchange of necessary compliance documentation - such as initial billing dates, chain-of-title records, and itemized service statements - before transactions are finalized.
Automation is another key advantage. For instance, automated systems can flag portfolios missing essential data, such as the date of the initial billing statement, which is crucial for verifying compliance with the 120-day waiting period. Additionally, technology can prevent prohibited actions, like reporting medical debt to credit bureaus, by disabling automated workflows that could otherwise trigger such reporting. This is especially important since reporting medical debt to credit agencies would render it void and unenforceable.
While technology aids compliance, thorough record-keeping practices remain essential.
Proper documentation of pre-service notices is critical for minimizing legal risks. Before filing a legal complaint, buyers must include specific documents, such as the original contract signed by the debtor and proof of an unbroken chain of ownership, to support their claims. Legal complaints must also feature a disclosure in at least 10-point font identifying the entity as a debt buyer and providing the date the obligation was purchased.
Accurate records of debtor interactions, including communication logs and timestamps, are equally important. These records demonstrate compliance with contact limits and verification procedures, as all collection efforts must pause until requested information is supplied at no cost. For hospital debts, buyers must also maintain documentation showing whether charity care applications are pending, since collection efforts are prohibited during the application or appeal process. These record-keeping practices work hand-in-hand with the strict contact and disclosure rules outlined earlier.
Washington State Medical Debt Collection Laws: Before vs After 2025 Changes
Washington State is set to transform medical debt collection practices with its 2025-2026 laws. These updates introduce stricter rules to protect consumers while raising compliance requirements for collectors.
SB 5480 introduces a major shift by making medical debt void and unenforceable if reported to a consumer credit reporting agency. Previously, collectors had to wait 180 days before reporting medical debt; now, the practice is banned entirely. Consumer reporting agencies are also prohibited from including medical debt in consumer reports.
Contracts for medical debt created after the law's effective date must explicitly reflect this credit reporting ban. If these terms are missing, the contract is rendered void and unenforceable. Jennifer Evancic, a compliance expert, explained:
"Medical debt will be considered void and unenforceable if it is reported to a consumer credit reporting agency or bureau. This provision essentially removes the leverage of credit damage from medical debt collection efforts."
SB 5720 adds new hurdles for default judgments. Collectors must now include detailed itemizations of the debt, the date of the last payment, and the date of default in their complaints. For debt buyers, proof of ownership is required, including a documented chain of ownership with specific dates and entities involved after charge-off. Complaints must also feature a mandatory "Consumer Notice", warning about potential consequences like wage garnishment or property liens.
Hospitals now have increased responsibilities as well. They must provide discharged patients with a written list of all physician groups and professional partners that may bill separately, along with contact details for billing support.
The table below highlights how these changes alter collection practices:
| Feature | Pre-2025 | Post-2025 |
|---|---|---|
| Credit Reporting | Allowed after a 180-day waiting period | Prohibited; reporting invalidates the debt |
| Default Judgments | Basic proof of debt and licensing required | Detailed itemization, ownership chain, and "Consumer Notice" needed |
| Itemization Requests | Not always disclosed in the first notice | Right to a free itemized statement must be disclosed upfront |
| Interest Rates | Capped at 9% per annum | Remains capped at 9% per annum |
| Hospital Notices | Charity care notice required | Must also list potential third-party billers |
| Contract Validity | Standard contract law applied | Void if specific consumer protection terms are missing |
These laws introduce a new compliance framework that fundamentally changes how medical debt is managed.
Washington's policies are expected to set the tone for national reforms. Experts believe the state's strict "void if reported" rule could inspire similar measures in other states aiming to reduce the financial burden of medical debt. This aligns with federal efforts, such as the Consumer Financial Protection Bureau's regulation finalized on January 7, 2025, which bans the inclusion of medical bills in credit reports used by lenders nationwide.
The removal of credit reporting as a collection tool pushes the industry toward alternative strategies, emphasizing thorough documentation. These higher standards complement the compliance measures already in place. Moving forward, stricter enforcement of the Consumer Protection Act is likely, as violations of these medical debt laws are now classified as unfair or deceptive trade practices.
The evolving landscape demands that industry professionals stay alert to regulatory updates. Debt buyers and sellers will need to invest in systems that ensure compliance with these stricter rules. Transparency, stronger consumer protections, and rigorous documentation requirements are becoming the new norm in medical debt collection.
Washington State's medical debt collection laws have introduced sweeping changes that significantly impact how debt buyers, sellers, and collection agencies operate. The 2025–2026 legislative updates emphasize consumer protection and compliance, creating some of the most stringent safeguards in the country. For businesses, staying compliant is now essential to maintain enforceable debt portfolios.
One of the biggest changes is the absolute ban on credit reporting for medical debt. According to RCW 70.54.475, “A medical debt is void and unenforceable if a person, health care provider, health care facility, or licensed collection agency violates this section by furnishing information regarding the medical debt to a consumer credit reporting agency”. This eliminates a common leverage tool in collections and demands immediate updates to automated reporting systems.
Other critical provisions include:
Additionally, operating without proper licensing from the Washington State Department of Licensing can lead to fines of up to $500, imprisonment for up to one year, or both. Violations are also considered "unfair or deceptive acts" under the Consumer Protection Act, leaving businesses vulnerable to lawsuits.
To meet these new standards, companies must adopt precise, technology-driven compliance measures. For example, software should block credit bureau reporting for medical debts, automatically enforce contact limits, and integrate with hospital systems to halt collection efforts when charity care applications are filed.
Adapting to these changes is vital to protect your operations and ensure compliance. Regularly audit your workflows to confirm adherence to the new laws. Verify that all parties in the collection chain are properly licensed and bonded. Double-check interest calculations to ensure no medical debt exceeds the 9% cap. Update initial notices to include all required disclosures about debtor rights, and immediately disable any automated credit reporting for medical debts to avoid legal issues.
If a collector reports your medical debt, you have the right to take action. You can request a detailed breakdown of the debt, dispute any errors, and file complaints if your rights are violated. Washington law specifically bans unfair practices and offers protections to consumers. On a federal level, laws like the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA) provide additional safeguards. These laws let you challenge inaccuracies with credit bureaus and push for corrections or even removal if the debt was reported improperly.
A collector cannot directly take money from your paycheck or bank account for medical debt unless they secure a court judgment and adhere to the legal garnishment process. In Washington State, garnishments typically require a court judgment, and specific types of income and property may be safeguarded under state laws.
Under Washington State law, you have the right to request a free, detailed bill from a medical debt collector. This request can be made either in writing or verbally. Once you've asked for it, the collector is required to stop all collection activities until they provide the itemized statement at no charge.
The itemized bill will include key details such as the name of the medical creditor, the dates of service, a description of the services provided, the original amount owed, any adjustments made, payments received, and information about eligibility for charity care.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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