Nothing necessarily new here, except to remind everyone that a new law is going into effect in California on Tuesday that will require debt collectors to provide notification to individuals when attempting to collect a debt where the statute of limitations has expired.
The law, AB 1526, is one of the biggest compliance changes for the ARM industry that will go into effect when the calendar turns to 2019 next week.
When attempting to collect on a time-barred debt in California, collectors are going to have to include the following notification in the first written communication with an individual after the debt has become time-barred, if the debt can still be reported to a credit bureau under the Fair Credit Reporting Act:
“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”
If the debt is time-barred but may not be reported to a credit bureau, collectors will have to send this notice instead:
“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”
The law has applied to debt buyers for a number of years, but come Jan. 1, will now apply to debt collectors as well.
Along with determining when the four-year statute of limitations on a debt begins, the law also says that when the four years is over, “a person shall not bring suit or initiate an arbitration or other legal proceeding to collect the debt.”