Law for Debt Collection

In California, collection agencies must adhere to both state and federal collection laws when attempting to obtain a debt from a party. From state to state, there are laws regarding the process that a collection agency must follow when attempting to retrieve an outstanding balance. These laws are very restrictive and strict. However, just as with any other federal law, no matter what the subjective laws of a state are, those federal statutes maintain superiority and must be observed by (i.e.: the Supremacy Clause) all states.

Before a California commercial collections agency begins to worry about observing any federal laws, they must meet the linear guidelines established in the California Debt Collection Statute of Limitations. According to this time-line, upon purchasing a debt, California collection agencies must first contact a debtor in writing within four years and then must contact the debtor orally (i.e.: via phone) within two years.

If a California Commercial collection agency meets this linear table, then they must adhere to two basic collection laws, one state and one federal. Essentially, this regulates the process and effectively blankets the collection procedure a California commercial collections agency must undergo.

The state law, which serves as a guideline for any California commercial collections agency, is known as the California Fair Debt Collection Practices Act - Civ. Code Sect. 1788-1788.3. According to the California Department of Consumer Affairs, this law establishes a guideline for California collection agencies to follow regarding harassment, call restrictions, debt notification, partial payments, payment deadlines, and debtor responses. Quite simply, the law serves to protect any indebted parties from overbearing harassment and/or payments employed by collection agencies.

Also worth mentioning is another California law that a California commercial collections agency must observe when collecting a debt. This is the California Consumer Credit Reporting Agencies Act. This law is applicable to California collection agencies because it sets forth those guidelines a collection agency must adhere to when the case calls for them to report an individual’s credit.

The federal law that serves as a general guideline of operation procedures for California collection agencies is the Fair Debt Collection Practices Act. This act, much like the California Fair Debt Collection Practices Act, protects the indebted party by ensuring a collection agency does not cross the line of inappropriate collection techniques. The guidelines it sets forth includes limitations and regulations on how a collector can discuss a debt, who the collection agency can disclose information to, and those written documents necessary for obtaining an outstanding debt.