Each state has its own set of laws that companies must follow when collecting debts from residents living in that state. California has consumer protection laws that prevent creditors from participating in unethical or abusive collection activity, but it also grants creditors considerable debt recovery options when a debtor refuses to meet his financial obligations.
Creditor Conduct
The Fair Debt Collection Practices Act (FDCPA) is a set of federal laws governing the debt collection industry. The law prohibits such behavior as using foul language when speaking with debtors, communicating with debtors at any time and place the individual claims is inconvenient and informing the individual's friends, family members and employer about the delinquent account. The FDCPA only regulates the behavior of third-party collectors such as a collection agency hired by the original creditor. California, in an effort to protect consumers from potentially abusive collection activity, extended the FDCPA to cover not only third-party collectors but the original creditor as well.
Statute of Limitations
California allows creditors to sue consumers for unpaid debts. State law, however, dictates the amount of time a creditor has to take legal action. All creditors have four years in which to file suit against a California resident unless the original debt was secured using an oral repayment agreement. California only permits creditors two years to file lawsuits for debts incurred under an oral contract.
Community Property Law
Because California is a community property state, creditors have a wider range of options when collecting debts. Community property law dictates that what belongs to one spouse also legally belongs to the other. This applies not only to property but to debt as well. If the debtor incurred the debt during her marriage, a creditor can hold her spouse just as responsible for paying off the debt as the debtor. While not all community property states permit creditors to pursue a debtor's spouse for repayment, California permits the practice even if the debtor's spouse had no part in incurring the debt or was not aware the account existed.
Judgment Enforcement
If a creditor sues a California resident and wins the case, state laws give the creditor several ways in which to collect the debt. The creditor can use the judgment the court provides after a lawsuit to seize the individual's personal property or real estate via a lien, garnish the individual's wages or seize his bank accounts via a bank levy. Court judgments in California are valid for 10 years.
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