California Debt Collection Laws

The federal government has enacted protections for consumers who find themselves in serious debt and unable to make payments as required. Those accounts are often sent to debt collection agencies that generally operate on a commission. If such agencies attempt to harass, deceive, or abuse consumers, the federal Fair Debt Collection Practices Act and Fair Credit Reporting Act allow victims to file complaints and pursue legal claims of their own in some cases. Some states also extend these federal statutes further, providing even greater protection to consumers. The best solution, whenever possible, to avoid such difficult circumstances is to seek help before debts are referred to collectors. An attorney can often either provide those services or refer consumers to experts who can.

Debt Collection in California

California is one of the states that have enacted supplemental debt protection statutes expanding upon federal protections and providing avenues for borrowers to file written complaints with the Attorney General’s Public Inquiry Unit or the Federal Trade Commission.

California Statute of Limitations

  • Lawsuits concerning the non-payment of written contracts, promissory notes, and open accounts must be filed within the California 4-year statute of limitations
  • Those addressing non-payment of oral agreements must be filed within a 2-year statute of limitations
  • Even though a California statute of limitations expires, creditors and collection agencies may continue to pursue payment by other legal forms of contact, even though lawsuits are no longer valid

Collections Practices and Rules for California

California law mirrors federal debt protection statutes in most areas. However, California law protects consumers from the harassment and abuses of not only collection agents and agencies, but from original creditors as well.

Legal Collections Actions

  • Creditors and debt collection agencies may pursue debt collection processes through phone calls, letters, faxes, and personal visits
  • They may also file lawsuits to collect unpaid loan balances within the appropriate statute of limitations
  • They may file any positive or negative payment reports with the proper credit bureaus

Illegal Collections Actions

  • Repetitive and disruptive calls to consumers, often during inconvenient or unreasonable times, such as before 8 a.m. and after 9 p.m., without consent
  • Pretending to be a law enforcement or government official or presenting documents that appear to be from those sources to intimidate and force payment from borrowers
  • Failing to comply with consumer requests to cease contact unless it provides information about impending actions
  • Divulging or threatening to divulge debt information in any public manner to anyone other than the debtor without permission
  • Failing to comply with a consumer’s request to cease contact through their workplace because of their employer’s prohibition to do so
  • Harassing a consumer through intimidation, profanity, violence, threats of violence, or abuse

Laws for Debt Harassment in California

Both California state laws and federal laws prohibit any form of harassment in relation to debt collection or debt settlement.

California Debt Negotiation and Settlement Rules

Debt negotiation and debt settlement companies can, in some cases, help delinquent debtors reduce their total debt obligation and pay off that amount in one lump sum for just a fraction of the previous amount. However, these services may also be offered by unscrupulous con artists who are only out to take a beleaguered consumer’s money.

It is important to realize that such enterprises can constitute fraud, which is against the law. Anyone who encounters them should seek the help of an attorney to examine any contracts they may propose. Moreover, in fact, they may find that their attorney can provide the same services in a more secure relationship. Never enter into an agreement with someone who tries to hide any aspect of their business or block a consumer’s contact with their creditors. It generally ends in more debt and more lasting consequences.

Help from a California Debt Collection Attorney

There are many aspects of a financial crisis that a borrower should consider, such as the tax implications, their future credit possibilities, and even future job possibilities. These vital issues can change a person’s life, so it can be well worth the expense and time to consult a debt settlement attorney to be sure a consumer’s rights are being honored and all the implications of their financial arrangements work toward their best interests.

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