Debt collectors licensed in the state of California have new requirements that will go into effect starting January 1st, 2019. California Governor Jerry Brown signed Assembly Bill No. 1526 into law on September 5th, 2018, which will amend the Rosenthal Fair Debt Collection Practices Act. This Act regulates debt collection practices among the debt collectors in the state. The new California Debt Collection law will affect how collections agencies attempt to collect time-barred debts.
What Are Time-Barred Debts?
Time-barred debt is money that has been owed so long that it has passed the statute of limitations. Time-barred debt is usually no longer legally collectible due to the amount of time that has passed. States have different laws with respect to how much time must pass before a debt becomes time-barred. Some states limit the amount of time that has lapsed as short as three years and as long as ten.
California Statue of Limitations on Debt
In California, a creditor has four years to file an action based on a written debt. The new bill prohibits any debt collector from attempting to collect a debt via written communication if the debt is considered a time-barred debt without informing the consumer that they can no longer be sued for the debt in question. Depending on the age of the debt, however, California debt collectors may still be able to report the debt to the credit reporting agencies.
California Bankruptcy Can Discharge Old Debt
If you are experiencing an undue burden as a result of unsecured debt, filing for bankruptcy protection using Chapter 7 or Chapter 13 debt can discharge, or wipe out, your obligation to pay the debt. Contact a bankruptcy lawyer in Sacramento if you live in the Eastern District of California, to find out if you have enough debt or a low enough income to file for bankruptcy. Bankruptcy can also be used to stop collection activities and avoid lawsuits from creditors.