California Governor Jerry Brown recently signed Assembly Bill 1526 into law. This law amends California’s debt collection law—the Rosenthal Fair Debt Collection Practices Act—which is the state's version of the Fair Debt Collection Practices Act (FDCPA). Under the amended law, a debt collector has to inform a consumer if a debt has become time-barred, meaning the consumer can’t be sued over the debt.
Since 2014, debt buyers who try to collect from California residents have had to provide one of the following two notices when the statute of limitations for filing a suit to collect a debt had passed:
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, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.
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, and we will not report it to any credit reporting agency. (Civ. Code § 1788.52(d)(2)).
As of January 1, 2019, debt collectors are also required to send this notice if a debt is time-barred. The collector has to include the notice in the first written communication sent to the consumer after the statute of limitations passes.
The Fair Credit Reporting Act provides limits for how long a debt can be reported to credit reporting agencies. If your debt can still be included in your credit history, you’ll get the first notice. But if the debt can is so old that the collector can’t report it to these agencies, you’ll see the second disclosure.
The new law also bans collectors from actually filing a lawsuit or initiating arbitration or any other legal proceeding to collect a time-barred debt.
Effective date: January 1, 2019.