Consumer debt: charged-off debts.

Senator Hurtado's consumer debt legislation places new restrictions on the sale and collection of charged-off consumer debts in California, establishing time limits for debt transfers and requiring creditor notifications to consumers. The bill prohibits creditors from selling or assigning charged-off consumer debts more than one year after the charge-off date and mandates that creditors notify consumers when their debt is sold or assigned to debt buyers.

The legislation modifies legal timelines for debt collection actions, creating distinct deadlines for creditors and debt buyers. Actions to recover charged-off consumer debts must be initiated within two years of providing notice of default to the consumer or within 90 days of the charge-off date, whichever comes first. Debt buyers face an additional restriction - they cannot pursue collection actions more than one year after the debt's charge-off date.

These provisions add to existing California law governing debt buyers and charged-off consumer debts. The bill maintains the current four-year statute of limitations for actions on written contracts while carving out specific exceptions for charged-off consumer debts. Once the applicable time period expires, no party may initiate legal proceedings or arbitration to collect the debt unless an extension applies under existing law.