I understand a collection agency can charge 12% interest for a judgement or bad check cases in Washington State. But, can they charge 12% interest regardless of whether it's in the original contract or in the absence of a judgement. Another words, for just handling the collections are they able to collect interest.

THat would be the interest rate on the un-paid balance due after they obtain a judgment, not before.

They must obtain a judgment first, you must defend the court action or they will by default obtain a judgment against you.

The must also have in their possession the original contract or note.