Laws Protecting Californians From Debt Collectors
Upsolve is a nonprofit tool that helps you file bankruptcy for free. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card. Explore our free tool
Debt collection laws come from federal and state governments. California has chosen to put extra laws into place to protect California residents. The Rosenthal Act is one such law. There is also a federal law, the Fair Debt Collection Practices Act, that protects consumers across the United States. Keep reading to learn more about California debt collection laws and how they protect you.
Written by the Upsolve Team. Legally reviewed by Attorney Andrea Wimmer
Updated April 12, 2022
California is the nation’s leader in consumer-protection debt collection laws. Everyone is a consumer, but everyone is not equally protected by debt collection laws across the country. Debt collection laws come from federal and state governments. California has chosen to put extra laws into place to protect California residents. The Rosenthal Act is one such law. There is also a federal law, the Fair Debt Collection Practices Act, that protects consumers across the United States. Keep reading to learn more about California debt collection laws and how they protect you.
The Federal Fair Debt Collection Practices Act (FDCPA)
Consumers in the state of California and every other state benefit significantly from the federal Fair Debt Collection Practices Act (FDCPA). This law helps protect consumers from abusive and harassing debt collectors and increases transparency in debt collection. It does not apply to child support collection. The FDCPA has been around since 1977. It was passed to address documented widespread fraud, abuse, and unfair debt collection practices.
Parts of the law are often changed and updated. There are also temporary rules, such as those which address the COVID-19 pandemic and eviction debt collection rules that prohibit fraudulent, abusive, and unfair eviction debt collection notices.
Who’s covered under the law?
The protections under the FDCPA (U.S.C. 15) are meant to apply to personal, household, and family debt. Personal debt is known as consumer debt. The FDCPA does not regulate corporate debt, agricultural debt, or business debt. If you’re a sole proprietor and have debts related to your business, the FDCPA isn’t there to protect you. But if you used your credit card to pay your bills and buy food, the FDCPA is there for you.
The FDCPA rules apply to collection agencies and debt buyers, but they usually don’t apply to original creditors. If a debt collector is not the original creditor, they are referred to as a third-party debt collector. There is an exception to this rule. If an original creditor pretends to be a different debt collector by using a different name, then the FDCPA will apply.
What’s not allowed?
Under the FDCPA U.S.C. 15, debt collectors are prohibited from doing many things. For instance, debt collectors cannot:
Contact you before 8:00 a.m.
Contact you after 9:00 p.m.
Contact you at an unusual place and time known to be inconvenient for you
Contact you at work after they’ve been told to not contact you at work
Contact you if you’re represented by an attorney
Contact friends and coworkers about your debt
Debt collectors are also prohibited from engaging in abusive practices. For instance, they cannot:
Swear, curse, or use profane language
Collectors of debt are also not allowed to harass you. The legal definition of harassment for debt collection is going to be updated on Nov. 30, 2021. A new rule will limit contact from debt collectors. If a debt collector can't reach you, they can only contact you once per day. If a debt collector talks to you, they can only contact you once per week. This means if a debt collector calls you and talks to you, then calls you every day after that for the next week, the collector will be violating federal law. If a debt collector calls you five times in one day and you don’t answer the phone, the debt collector is violating the law.
Debt collectors will also be required to let you opt out of texts and emails. You’ll also have the right to set your preferred communication method with debt collectors. You can use your preferred communication method to notify collectors to cease communication.
Debt collectors must also always identify themselves as debt collectors when they call. They can’t lie to you about the amount you owe, the timeframes of time-barred debt, and the legal consequences of not paying the debt. They also can’t pretend to be someone they’re not. If they do, it’s a violation of the law and the violation can be reported. A debt collection company also cannot compile a list of debt and then list it for sale to the public.
What must debt collectors do?
Although there are many things that debt collectors cannot do under the FDCPA, there are also many things they are required to do. For instance, under the law, debt collectors are required to send you a letter to validate the debt within five days of first contacting you. The law goes further and requires collectors to have the following information in each debt validation letter:
Statement of how much you owe
The name of the original creditor
Statement that they will provide you with information about the original creditor in writing if you request information on the original creditor in writing
Statement that the debt collector can assume the debt is valid unless you dispute it within 30 days
Statement that they'll verify by mail if you dispute the debt in writing within 30 days
Take a look at some of your debt collection letters. Do they contain these statements? Has it been 30 days since you received the letter?
How can I learn more about my debt?
You can contact a debt collector to learn more about your debt. All you need to do is send them a letter. Writing a letter can be a pain, but the Consumer Financial Protection Bureau (CFPB) makes it easier by providing form letters you can copy and revise with your personal information. You’ll also find a wealth of other consumer protection tools that could help you learn more about your California debt.
Sample letters from the CFPB include:
A validation letter you can use to get more information about your debt
A dispute letter you can use to state you do not owe a debt
A cease-and-desist letter telling the debt collector to stop contacting you and others
A letter telling the debt collector to talk to your lawyer, not you
A letter telling the debt collector your contact preferences
You don’t have to use these letters, but they will make life easier for you. Plus, you won’t have to worry about giving the collectors too much information that they might use against you.
Take time to review your credit report and compare it with the claims made by the collection agency. Has it been over seven years since you’ve had a foreclosure on your home? Is that foreclosure still on your report? Is your student loan debt accurate? Are your student loan payments recorded accurately? Be sure to write letters to dispute any errors.
Upsolve User Experiences2,047+ Members Online
California’s Rosenthal Fair Debt Collection Practices Act (California Civil Code Sections 1788 to 1788.33) provides consumers with even more protection from unethical debt collection practices. The Rosenthal Act expands on the FDCPA’s consumer protections. For instance, the Rosenthal Act requires more types of debt collectors to abide by debt collection laws. As an example, the FDCPA does not apply to original creditors, but the Rosenthal Act does. It also applies to people who make and sell forms and letters for use in debt collection activities. The Rosenthal Act does not apply to occasional debt collectors.
One of the biggest benefits of the Rosenthal Act is that it considers foreclosure a debt collection activity. The FDCPA does not. A recent update to the Rosenthal Act will also require anyone engaged in the act of debt collection in California to be licensed. The licensing requirement under California’s Rosenthal Act will take effect on January 1, 2022, and will help with debt collection oversight.
In other good news, a new Consumer Financial Protection Bureau rule will go into effect on November 30, 2021. This rule prohibits debt collectors from threatening to sue for an old debt that is past the statute of limitations. This is the time period during which a debt collector is allowed to sue. California also has statutes of limitations that limit the amount of time that you can be sued for a debt. Not every state has the same statutes, and the time allowed for a debt collector to sue depends on a state’s particular laws. In California, debt collectors have only four years to sue for a debt that was created with a written contract and only two years to sue for a debt that was created with an oral contract.
Old debts are often referred to as time-barred debts. California statutes don’t allow debt collectors or creditors to sue for time-barred debts, but the collectors can still send you written notices, call you, and report your activity to credit reporting agencies. Collectors must still follow the laws and regulations under the Rosenthal Act and the FDCPA. In some other states, it’s legal to sue for time-barred debts, but an attorney can argue that the statute of limitations has passed. The Pew Charitable Trusts research reported that between 1993 and 2013 debt collection lawsuits more than doubled, and the outcomes for people with legal representation were better than the outcomes for those without a lawyer.
If a debt collector contacts you over a time-barred debt, or if you find your bank account is suddenly garnished from an old debt, it’s a good idea to talk to an attorney about the collection before you respond. Although debt collectors aren’t allowed to mislead you under the Rosenthal Act, they may. It’s also possible you could restart the statute of limitations. If you acknowledge your debt or even make a small payment, you could reset the statute of limitations. Then the four-year or two-year time limit to sue would start all over again. An attorney can help you avoid that scenario. Removing time-barred debt from your credit report could also help improve your credit score.
What To Do if a Debt Collector Violates the FDCPA and/or the Rosenthal Act
The FDCPA originally became law because of the widespread documented abuse of debt collection activities by debt collectors. Laws such as the FDCPA and the Rosenthal Act helped tamper these abuses, but abuse, harassment, and fraud among debt collectors still exist. The Federal Trade Commission gets more reports of debt collector fraud than any other type of fraud.
If a debt collector violates a consumer protection law such as the FDCPA or the Rosenthal Act, the company can be reported to government agencies such as the California Attorney General’s Office, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB) by filing a formal complaint on their website. If you go to the FTC to file a complaint, you’ll be redirected to the CFPB website to complete the complaint process. If you have a dispute or fraud issue with debt from California medical bills, you can file a complaint online for managed care plans and PPO coverage.
Also, California’s Identity Theft Protection Act allows victims of identity theft to bring suit against a creditor. If you’re a victim of identity theft, file a complaint with a government agency listed above, and talk to an attorney for legal advice. Consumers also have the right to file a lawsuit against a debt collector. Don’t be afraid to talk to an attorney if you’re considering this option, even though an attorney’s fee could be high. If the case is decided in your favor, you could be awarded court costs, attorney fees, and money for the damages that the debt collector caused. A damage award may include your physical and mental reaction to stress and lost wages.
Have you documented your calls from debt collectors? Excessive calls to coworkers and family members and calls that violate the FDCPA could be considered an invasion of privacy. If you haven’t documented debt collector calls and actions, start documenting them now. If you can prove that the debt collector willfully and knowingly violated California law, you could get an additional $100-$1,000 on top of the FDCPA award. In California, this award will also apply to original creditors. The federal award does not apply to original creditors.
Your final award will depend on the amount of debt you owe. If your award is more than the debt you owe, you’ll get the extra money. If your award is less than the debt you owe, your debt may be reduced by the amount you were awarded by the court for the FDCPA violation. It will depend on the circumstances of the debt and the facts of your case.
Debt collector harassment and abusive actions will continue unless consumers and the government work together. Consumers can report harmful activities and the government can order harmful collection activities to stop. If you live in California or have California consumer debt, you have the protections of the Rosenthal Act and the federal FDCPA. You can help make sure that debt collectors follow the law.
Use the form letters provided by the CFPB to insist that proper procedures are followed. File complaints with the California Attorney General, FTC, and CFPB. Be sure to consult an attorney if you’re being sued for an old, time-barred debt, and consider talking to an attorney if you’d like to sue a debt collector for violations of the FDCPA. Don’t let the stress of debt collection damage your life. Use the power of federal and state laws to get the protection you deserve. In California, you have extra protection. Be sure to use this to protect yourself (and others) from California debt collectors.