California Law on Defaulting on Credit Card Debt

Tough economic conditions or personal hardship sometimes lead to credit card default. If you cannot pay your credit card bills in California, you still have rights under the state's debt laws. You cannot be harassed, threatened or treated unfairly by lenders or collection agencies attempting to collect a debt.

Statute of Limitations

The state of California has a statute of limitations on credit card debts to prevent creditors and collection agencies from pursuing debtors indefinitely. For debts in writing, the statute of limitations in California is four years. For oral debt agreements, creditors cannot pursue the debt after two years. If you contact the lender to negotiate repayment, the statute of limitations starts over. If a civil court in California rules against you for an owed debt, the statue of limitations for collection is ten years.

Creditor Harassment

Lenders in California cannot harass you to collect on credit card accounts in default. Lenders are only legally allowed to call you between eight in the morning and nine at night. If you are called, lenders cannot pretend to be someone else or scare you for any reason. For example, a debt collector cannot call and claim to be a lawyer attempting to sue you. If you are harassed, contact the California Department of Consumer Affairs to report it.

Collections Notification

If the original lender of your defaulted credit card debt sells its claim to a collection agency, the original lender must contact you to warn of the impending transfer. This warning is to offer you one last chance to negotiate repayment before your debt is turned over to a collection agency. Collection agencies may add a collection fee to your original debt and increase efforts to collect on your California debt. Collection agencies are still subject to harassment laws.

Payment Plans

You have the option under the California Federal Debt Collection Practices Act (FDCPA) to negotiate a partial-payment plan with your debt lender. Partial payments prevent possible legal action and the involvement of collection agencies. For example, if your credit card debt payment is $150 per month, you can ask the credit card company in writing if you can pay $100 per month to prevent further negative consequences. Keep track of your written correspondence; save emails and send certified postal mail when necessary.