Debt Settlement Company Litigation

In Washington state, RCW 18.28 dictates what a debt settlement company can charge and what services that they must perform.  Failing to follow these guidelines can lead to any contract you sign being voided and the possibility of statutory damages.  A very quick checklist includes:

  • No more than a $25.00 set up fee or file close fee
  • Fees cannot exceed 15% of the total scheduled debt
  • The company cannot lend you money to settle with or demand a promissory note
  • Contract not including all required disclosures to include 3 day cancellation notice
  • Offer you legal advice

If you believe that the debt settlement company you have hired may have violated the contract, Washington Law, or simply not doing their job, we can review and see if you have a case.  We charge a flat $250.00 for this review.  Our review covers any information you provide to us (this means you need to download or get the docs from the company to give to us to review) to include:

  1. Analysis of Fees
  2. Review of contract to include required provisions
  3. Review of duties required and compliance
  4. Review of work done on your file

We also offer bankruptcy, settlement and debt defense litigation services that may result in a better savings or reduction.  Most volume debt settlement companies offer around 25-50% reduction, we can usually do better.


What does litigation look like?

After the initial review, if we find violations, we are able to offer several options.  One is a demand for disgorgement based on the violations- this is typically the fastest and easiest.  Two is we can file suit and seek damages as well as disgorgement- we usually start with a settlement of the suit approach but can go to trial if necessary.  Litigation to trial would usually take one to two years, depending on the court and opposition.  We offer flat rate, hourly, and contingent options depending upon the facts and violations.


Required Contract Terms:

Every contract between a debt adjuster and a debtor shall:
(1) List every debt to be handled with the creditor’s name and disclose the approximate total of all known debts;
(2) Provide in precise terms payments reasonably within the ability of the debtor to pay;
(3) Disclose in precise terms the rate and amount of all of the debt adjuster’s charges and fees;
(4) Disclose the approximate number and amount of installments required to pay the debts in full;
(5) Disclose the name and address of the debt adjuster and of the debtor;
(6) Provide that the debt adjuster shall notify the debtor, in writing, within five days of notification to the debt adjuster by a creditor that the creditor refuses to accept payment pursuant to the contract between the debt adjuster and the debtor;
(7) Contain the following notice in ten point boldface type or larger directly above the space reserved in the contract for the signature of the buyer: NOTICE TO DEBTOR:
(a) Do not sign this contract before you read it or if any spaces intended for the agreed terms are left blank.
(b) You are entitled to a copy of this contract at the time you sign it.
(c) You may cancel this contract within three days of signing by sending notice of cancellation by certified mail return receipt requested to the debt adjuster at his or her address shown on the contract, which notice shall be posted not later than midnight of the third day (excluding Sundays and holidays) following your signing of the contract; and
(8) Contain such other and further provisions or disclosures as are necessary for the protection of the debtor and the proper conduct of business by the debt adjuster.
Required duties of the debt settlement company:
Every debt adjuster shall perform the following functions:
(1) Make a permanent record of all payments by debtors, or on the debtors’ behalf, and of all disbursements to creditors of such debtors, and shall keep and maintain in this state all such records, and all payments not distributed to creditors. No person shall intentionally make any false entry in any such record, or intentionally mutilate, destroy or otherwise dispose of any such record. Such records shall at all times be open for inspection by the attorney general or the attorney general’s authorized agent, and shall be preserved as original records or by microfilm or other methods of duplication for at least six years after making the final entry therein.
(2) Deliver a completed copy of the contract between the debt adjuster and a debtor to the debtor immediately after the debtor executes the contract, and sign the debtor’s copy of such contract.
(3) Unless paid by check or money order, deliver a receipt to a debtor for each payment within five days after receipt of such payment.
(4) Distribute to the creditors of the debtor at least once each forty days after receipt of payment during the term of the contract at least eighty-five percent of each payment received from the debtor.
(5) At least once every month render an accounting to the debtor which shall indicate the total amount received from or on behalf of the debtor, the total amount paid to each creditor, the total amount which any creditor has agreed to accept as payment in full on any debt owed the creditor by the debtor, the amount of charges deducted, and any amount held in trust. The debt adjuster shall in addition render such an account to a debtor within ten days after written demand.
(6) Notify the debtor, in writing, within five days of notification to the debt adjuster by a creditor that the creditor refuses to accept payment pursuant to the contract between the debt adjuster and the debtor.

Statutory Links

RCW 18.28 Generally

RCW 18.28.010 Definitions

RCW 18.28.080 Fees a debt settlement company can charge

RCW 18.28.090 Excess charges can void contract, require disgorgement

RCW 18.28.100 Contract requirements

RCW 18.28.110 Required duties of the debt settlement company

RCW 18.28.120 Prohibited acts

RCW 18.28.185 Violations of this act violate the consumer protection act RCW 19.86


Companies we represent you against includes but not limited to:

Accredited Debt Relief


Clear One Advantage

Excel Debt Relief

Free Debt Relief

National Debt Relief

Pacific Debt Inc.