Consumer debt: charged-off debts.

Plain English Breakdown

The official source material includes additional content about avian health that is not relevant to the main purpose of the bill regarding charged-off debts and was removed from the explanation.

Rules for Charged-Off Debts

This law sets rules about selling charged-off debts and limits when debt buyers can take legal action to recover these debts.

What This Bill Does

• It stops creditors from selling or giving away a charged-off debt more than one year after the debt was marked as unpaid.
• It requires creditors to tell consumers if they sell their charged-off debt to another company within one year of charging off the debt.
• It says that no legal action can be taken to recover a charged-off debt on or after certain dates, depending on when the debt was charged off.
• It stops debt buyers from taking legal action against someone for a charged-off debt more than one year after the debt was marked as unpaid.

Who It Names or Affects

• Creditors who have debts that are not being paid by consumers.
• Debt buyers who purchase unpaid consumer debts.
• Consumers with charged-off debts.

Terms To Know

Charged-off debt

A debt that a creditor has decided is unlikely to be repaid and no longer counts as an asset on their books.

Debt buyer

A company that buys debts from creditors for less than the full amount owed, then tries to collect the full amount from consumers.

Limits and Unknowns

• The bill does not specify what happens if a creditor sells a charged-off debt after one year.
• It is unclear how this law will affect existing debts that were sold before it was passed.

Official Summary Text

SB 706, as amended, Hurtado.
Avian health.
Consumer debt: charged-off debts.
Existing law places various requirements on, and prohibits certain actions by, debt buyers with respect to charged-off consumer debts.
This bill would prohibit a charged-off consumer debt from being sold or assigned more than one year after the debt was charged off. The bill would require a charge-off creditor to notify the consumer when the creditor sells or assigned a charged-off consumer debt to a debt buyer.
Existing law prescribes various time periods for the commencement of actions other than for the recovery of real property, including within 4 years for an action upon any contract, obligation, or liability founded upon an instrument in writing, as specified.
This bill
would prohibit an action from being brought to recover a charged-off consumer debt on or after the date that is the earliest of specified dates. The bill would prohibit a debt buyer from bringing an action to recover a charged-off consumer debt after one year from the date the debt was charged off.
Existing law requires the Secretary of Food and Agriculture to contract with the Regents of the University of California for its School of Veterinary Medicine to establish and operate the California Animal Health and Food Safety Laboratory. Existing law requires the laboratory system to be headed by a director appointed by the Dean of the School of Veterinary Medicine, as specified, and to test, examine, and make diagnoses of infectious, nutritional, toxic, metabolic, and other diseases of domestic animals.
This bill would state the intent of the Legislature to enact subsequent legislation to enhance support for the Tulare Laboratory of the California Animal Health and Food Safety Laboratory System and the Avian Health Program administered by the Department of Food and Agriculture to ensure robust disease surveillance, early detection, and timely
responses to avian health threats, thereby protecting California’s poultry industry, public health, and agricultural economy.

Current Bill Text

Download Bill PDF