In May, Washington state enacted two notable laws affecting garnishment and medical debt reporting. While the legislation was signed earlier this year, the effective dates are approaching, and the details are now drawing attention from those involved in debt collection and financial services.Â
Garnishment Exemptions Set to Increase in 2025Â
On May 20, Governor Bob Ferguson signed Senate Bill 5651, marking a shift in how personal bank accounts are protected from garnishment in Washington. The law will take effect on July 1, 2025, and is designed to provide broader financial protections for consumers.Â
Highlights of the bill include:Â
Higher Exemption Amounts:Â
- The automatic exemption from bank garnishment for consumer debt will increase from $1,000 to $2,000.Â
- For non-consumer debts, the exemption will be $500.Â
- These changes do not apply to garnishments related to bankruptcy cases.Â
Consistent Treatment Across Debt Types:Â
- Prior distinctions among private student loans, consumer debt, and other debts have been removed. All debt types will now follow the same exemption standards.Â
Ongoing Adjustments:Â
- Beginning April 1, 2027, the Department of Revenue will adjust exemption amounts every three years based on changes in the Consumer Price Index.Â
Extended Legal Protections:Â
- The automatic exemption protections will now extend beyond July 2025, eliminating a previously scheduled expiration.Â
- Alimony and spousal support payments are now explicitly exempt from garnishment actions.Â
Support for the bill included testimony from members of the Northwest Collectors Association, a regional organization representing Washington, Oregon, and Idaho. Contributors included Mindy Chumbley, president of Solverity, and Gwen Turner, COO of Fairway Collections.Â
Updated Definition of Medical Debt Under New LawÂ
Washington also enacted changes regarding the handling of medical debt in credit reporting. Senate Bill 5480, approved during the recent legislative session, establishes a revised definition of medical debt and aims to reduce its impact on consumers’ financial standing.Â
The updated definition now classifies medical debt as:Â
“A debt owed by a consumer to a person whose primary business is providing medical services, products, or devices, or to such person’s agent or assignee, for the provision of such medical services, products, or devices.”Â
The legislation is intended to remove barriers associated with medical debt and could influence how other states shape similar consumer protection laws.Â
Looking AheadÂ
As the implementation dates draw nearer, organizations involved in Washington’s financial, legal, or collection sectors are beginning to review the implications of these new laws. Understanding the changes may help in evaluating internal systems or preparing for any necessary adjustments to align with the updated regulations.Â
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Author:Â Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
