The best business debt settlement companies in Washington state cap their fees at 15%, will hand off your case to a Washington state lawyer if a funder sues you or obtains a confession of judgment, and price offers around what a funder can get under Washington's community property and county-based homestead exemption laws.
What rules apply to business debt settlement companies in Washington state?
Any for-profit business debt settlement company should follow Washington's Debt Adjusting Act, RCW Chapter 18.28. The Act applies to anyone engaged in "managing, counseling, settling, adjusting, prorating, or liquidating indebtedness of a debtor." It excludes attorneys and non-profits dealing "exclusively with commercial debts," so we must assume that for-profit companies settling commercial debts must follow the Act, although we have not found a Washington court applying it to a merchant cash advance program.
A company that isn't a law firm cannot charge you more than 15% of the total debts listed in your contract (RCW 18.28.080), and the cap includes any initial $25 charge. The contract has to list each debt and creditor, the total fees and any installments, and tell you in ten-point bold type that you have three days to cancel (RCW 18.28.100). The Washington Supreme Court applied the fee caps to settlement programs and their payment processors in Carlsen v. Global Client Solutions, 171 Wash.2d 486 (2011). See our article on how much business debt settlement costs for how fees are calculated.
It also cannot prepare court documents, exemption affidavits, releases of garnishment, stipulations or compromise agreements, provide legal advice, or accept a power of attorney from you (RCW 18.28.130), and it cannot take a confession of judgment from you (RCW 18.28.120). Before you retain a company, ask:
- Is your company a law firm? If not, do you follow RCW Chapter 18.28?
- If a funder sues me or gets a judgment here, which Washington licensed lawyer will represent me?
- Will my contract list what I owe each funder, your total fee and my three-day right to cancel?
- Will you ask me to sign a power of attorney or a confession of judgment?
Can a funder go after my spouse's property if only I signed the guaranty?
Probably, as to community property. Washington courts presume that any debt a spouse incurs during the marriage is a community debt (Pacific Gamble Robinson Co. v. Lapp, 95 Wash.2d 341 (1980)). The presumption covers a guaranty one spouse signs, and rebutting it takes clear and convincing evidence that neither spouse intended or expected any material economic benefit to the community when the guaranty was signed (Bank of Washington v. Hilltop Shakemill, 26 Wash. App. 943 (1980)). All property either spouse acquires during the marriage, including earnings, is community property (RCW 26.16.030).
Based on these cases (our inference, since no ruling addresses MCAs), if you guaranteed your own business, rebutting the presumption will be very difficult because your family probably depends on the business, so a funder may reach joint bank accounts and your non-signing spouse's paycheck. A guaranty for a different business, such as your adult child's, may be different: in Nichols Hills Bank v. McCool, 104 Wash.2d 78 (1985), a husband's guaranty for his son was a gift of the community's credit that needed his wife's permission, and without it the bank could not reach the family home or even his half of the community property. A funder also cannot go after your spouse's separate property (what your spouse owned before the marriage or inherited) for your separate debts (RCW 26.16.200). Ask a Washington lawyer whether the funder named your spouse or the marital community in its lawsuit.
How much of your home does Washington's homestead exemption protect?
RCW 6.13.030 grants a homestead exemption of the greater of $125,000 or your county's median single-family sale price for the prior calendar year, according to the Washington Center for Real Estate Research, and it is automatic once the house is your principal residence. Using the 2025 county medians, the 2026 exemptions are:
| County | Homestead exemption (2025 median sale price) |
|---|
| King | $940,000 |
| Snohomish | $755,000 |
| Pierce | $560,000 |
| Clark | $555,000 |
| Spokane | $420,698 |
| Yakima | $354,990 |
| Ferry | $199,500 |
The exemption varies 4.7 times across counties under the same statute, and it can drop, as San Juan County's did, from $900,000 to $797,500. As an illustration, a Spokane County owner with $600,000 in equity (an $800,000 home with a $200,000 mortgage) has about $179,000 in equity that is not exempt, but a Yakima County owner with $350,000 in equity has none exposed. A guaranty pledging the house doesn't defeat the exemption unless both spouses signed the mortgage or other security agreement (RCW 6.13.080). See our guide for merchants in Seattle for King County.
Does Washington's usury law help with a merchant cash advance?
RCW 19.52.080 prevents most merchants from using Washington's usury law: corporations, partnerships and other entities cannot plead usury, and neither can any person in a transaction that is primarily for business purposes. So even if an MCA were treated as a loan, Washington law gives you no usury defense. See our discussion of how to use New York law to argue that an MCA is usurious.
How does a confession of judgment work in Washington?
Washington still allows judgment on a signed confession without the funder ever filing a lawsuit (RCW 4.60.050). The confession must be in writing, under oath, before a notary public, naming a specified sum and concisely stating facts showing it is justly due (RCW 4.60.040 and RCW 4.60.060). A judge, not merely a court clerk, has to find the COJ sufficient (RCW 4.60.070). One joint obligor's confession reaches only joint property and the signer's own (RCW 4.60.030). Have your lawyer compare your COJ to these statutes.
If your funder sues in New York and files that judgment here, RCW 6.36.035 prevents execution for ten days in Superior Court or 14 days in District Court after the funder files proof of mailing. That gives you a little time to settle.
Frequently Asked Questions
Does Washington have a commercial financing disclosure law?
Washington is not one of the ten states that Venable LLP lists as having a commercial financing disclosure law as of March 2026.
How much stays in my bank account if a funder garnishes it?
RCW 6.15.010 grants an automatic bank account exemption of $500 for a person (not a business) for a general debt (business guaranty debt probably qualifies as a general debt) and $2,000 for a consumer debt.
How much of my paycheck can be garnished on a business guaranty?
RCW 6.27.150 exempts from garnishment for a non-consumer debt (business debt) the greater of 35 times the federal minimum hourly wage or 75% of your disposable earnings.