Changes to California law protect consumers who owe time-barred debts

Wednesday, October 31, 2018

A recent change to California law significantly limits the ability of debt collectors to collect a time-barred debt from a California consumer.

Effective Jan. 1, 2019, amendments to the Rosenthal Fair Debt Collection Practices Act will require all debt collectors—not only “debt buyers,” as was the case before this change—to notify California debtors if they are attempting to collect a debt that is past the statute of limitations. The notice, which states that the debtor will not be sued for the debt and whether or not the debt will [continue to] be reported as unpaid to the credit reporting agencies, must be included in the first written communication from the collector.

The new law also prohibits debt collectors from initiating legal proceedings (a lawsuit or arbitration, for example) to collect certain debts after the four-year limitations period has run. (Previously, the expiration of the statute of limitations didn’t prohibit a collector from suing; consumers had to raise the time-barred status as a defense to the suit in order to avoid a judgment against them.)

Learn more about debtors’ rights in Consumer Action’s debt collection publications.