California Law for Nonpayment on a Credit Card

When credit card debt goes unpaid, it can have dire repercussions for the user. The company may sue to get the funds back or hire a collection agency to harass the user about payments. In California, strict laws govern the handling of credit card debt, in order to ensure fair practices on both sides. The intent is to provide the card company with reasonable means of securing payments, while ensuring that the cardholder doesn't suffer excessive harassment in the process.

Collection Agencies

Once debts go unpaid, a collection agency often steps in to induce the money from the credit cardholder. In California, the federal Fair Debt Collection Practices Act governs how and where collection agencies may act in this regard. For example, they may only contact the cardholder by phone between the hours of 8 a.m. and 9 p.m. local time; they must stop communicating after receiving written notice; they cannot communicate with a third party about the debt; and they cannot contact the cardholder at his job if his employer tells them that such a practice is unacceptable. Such stipulations prevent the collection agency from using actively abusive and/or deceptive practices when securing a debt.

Statute of Limitations

California places a statute of limitations of four years on any credit card debt. That means that the credit card companies have four years from the card holder's last payment to instigate a lawsuit. After that, they can still continue to pursue the debt, but they must do so without the aid of the public courts.

Nonpayment After Death

California is a community property state, which means that married couples jointly share any assets and debts acquired during the course of the marriage. If one partner dies, the surviving partner must pay off any debt accrued by the deceased. If a single person dies with credit card debt, the credit card company must obtain payments through the estate and cannot pursue the matter further if there are insufficient funds to fully repay the debt.

Cancellation

In order to cancel the card for nonpayment in California, the credit card company must give 30 days' written notice to serve as a fair warning. The exception comes when the cardholder has not made a payment within 90 days or violates any aspect of the agreement first signed when the credit card was issued. The card issuer may also cancel the card when it possesses "evidence or reasonable belief" that the cardholder has no intention of paying or is unable to pay the debt.