California could be looking at two new laws that impact debt collection practices coming by the end of 2021.
Before wrapping up for the year, the state legislature sent two different bills to the governor’s desk. Each of them could significantly impact how collectors can go about their business here in California.
Whether you are someone in the debt collection industry or just a consumer that wants to understand their rights better, let’s take a few minutes to break down the details of each bill from a debt collection perspective.
Fair Debt Collection Practices Act
The first bill likely to come across the governor’s desk over the next few weeks will expand the scope of the Fair Debt Collection Practices Act of 2013.
One of the key details included in this new law is that a collection agency will now be required to provide a statement of balance for an account and justification for any interest or fees within 30 days anytime a consumer requests that information.
Debt collectors will also have to provide a statement on when the last payment was made and when a debt became delinquent. They will also be forbidden from sending written statements to consumers unless they have a written contract or some other evidence that a debt is actually owed.
Each of these new requirements will make it harder for third-party debt collection agencies that purchase old debt in bulk lots.
Private Student Loan Collection Reform Act
Another bill likely to be signed into California law this year is the Private Student Loan Collection Reform Act, which is designed to offer additional protection to consumers regarding their outstanding or delinquent student loan debt.
This law specifies that anyone conducting any type of collection activity must have adequate documentation in place before beginning those collection activities. It also requires that all settlements on student loan debt be conducted, and thus recorded, in open court proceedings.
Requiring those settlements to occur publicly should create a level playing field for anyone trying to negotiate a settlement as they will be able to see a precedent for collectors and consumers in similar situations.
Expected Impact on California Residents
The end goal for each of these new laws is to reduce the number of abusive collection practices happening here in California. This will be especially true for any third-party debt collection operations, particularly those notorious for purchasing old debt in bulk lots.
If you are a licensed and reputable debt collector that plays by the rules, these new regulations shouldn’t be much of an issue at all for your operation.
And if you are a consumer that has some issues with collections, you can feel more comfortable about settling those debts on your terms instead of being forced into a compromising position.
If you are a company looking for someone to assist you in your debt collection practices, Direct Recovery can help you get started in no time at all. Contact us today to schedule a consultation: http://www.directrecovery.com/contact-us/
