Fair Debt Buying Practices Act | McCarthy Law PLC
August 12, 2013

Fair Debt Buying Practices Act

From the desk of San Francisco Lead Attorney Alison Cordova:

On July 1st, the California General Assembly unanimously passed the Fair Debt Buying Practices Act or California S.B. 233. In late May, this same bill passed the state Senate on a 36-0 unanimous vote, and Governor Jerry Brown is expected to sign the bill into legislation. The legislation would affect consumer debt sold or resold on or after January 1, 2014.

The bill increases regulation of debt buyers. For instance, before a debt buyer can make any written statement to the consumer in an attempt to collect on the debt, the debt buyer must possess proof of ownership of the debt, the account balance at charge-off, the date of default or last payment, the name and address of both the original creditor and the debtor, and a complete chain of title on the account if bought and sold multiple times. The bill would also prohibit an entry of judgment in favor of a plaintiff debt buyer unless business records authenticated through a sworn declaration and relating to the debt and ownership of it was submitted by the debt buyer to the court.

If the statute of limitation has passed on the debt, meaning that the consumer cannot be sued to recover on the debt, the debt buyer must communicate the following in writing to the consumer: “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, we may continue to report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”

Statutory damages are also provided for under the bill. The court is given discretion as to the amount, ranging anywhere from $100 to $1,000.

Read the full text of Fair Debt Buying Practices Act or California S.B. 233 here: www.leginfo.ca.gov/pub/13-14/bill/sen/sb_0201-0250/sb_233_bill_20130702_enrolled.pdf

If you are being contacted or sued by a debt-buyer, consult a qualified debt settlement attorney who can advise you of your rights under current and future laws. The attorney can also negotiate a settlement with the debt-buyer, reducing your debt to a fraction of what is claimed due and relieving you of liability.

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