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Provisions of California's Fair Debt Buying Practices Act

At the beginning of this month, the California General Assembly passed what is called the Fair Debt Buying Practices Act.  The new bill has a number of requirements that so-called debt buyers must meet before these businesses can begin contacting borrowers.  If enacted into law, the bill would require specific disclosure language that would need to be used when collecting debts, and it would require proof that they are the sole owner of the debt by showing account balances from the time when the debt was purchased.

As in many types of legislation of this type, this proposed legislation would require transparency on the part of the company purchasing the debt.  Communications with the debtor must be conducted in a certain manner, and these debtors must also have the ability to request particular information concerning where the debt originated, when it was purchased by any other party, etc.

As the proposed bill passed unanimously through the assembly, it shouldn't surprise anyone if the Fair Debt Buying Practices Act becomes law. It is currently going to the Governor for his signature and, if signed, would become effective on January 1st.

This legislation obviously was not designed to make it easier for creditors to collect upon a debt. The requirements will likely make it more burdensome for those engaging in buying the debts of others, and it could also result in more lawsuits being filed against these entities. In particular, it will require disclosures about debts that the creditors can no longer sue about because of the age of the debt.

On the other hand, when creditors are entirely in compliance with specific acts it will make it more difficult for borrowers to attempt to get out of paying what is owed. The attorneys that help out creditors in these sorts of matters could be a useful resource in order to ensure that the legislation is complied with, and can also help prepare new types of strategies in order to help collect on these debts.

Source:, "California Passes Fair Debt Buying Practices Act," by Patrick Lunsford, July 3, 2013