An act relating to food and agriculture. to add Section 1788.57 to the Civil Code, and to amend Section 337 of, and to add Section 337.3 to, the Code of Civil Procedure, relating to consumer debt.
Summary
SB 706 would make several changes to California law governing charged-off consumer debt. First, it would prohibit a charged-off consumer debt from being sold or assigned more than one year after charge-off, and it would require the original charge-off creditor to notify the consumer when the debt is sold or assigned to a debt buyer. Second, it would create new limits on when lawsuits may be filed to collect charged-off consumer debt, providing that an action generally may not be brought after the earliest of two years after a notice of default or delinquency, or 90 days after charge-off. For debt buyers specifically, the bill would impose a stricter one-year post-charge-off deadline to sue.
Impact
The bill would amend the Civil Code and Code of Civil Procedure by adding Section 1788.57 and Section 337.3 and by modifying Section 337. It would shorten the practical collection window for charged-off consumer debts, restrict the secondary market for those debts after one year, and add a consumer notice requirement when debts are transferred. These changes would affect original creditors, debt buyers, and consumers with charged-off accounts, and would likely reduce the ability to pursue older debts through litigation or assignment.
Sentiment
The available voting history suggests the bill faced significant resistance in committee. One recorded committee action failed passage, though reconsideration was granted, and a later vote to do pass but re-refer to the Banking and Financial Institutions Committee did not advance cleanly. There is no transcript material showing detailed debate, but the vote pattern indicates the measure was controversial rather than broadly supported at that stage.
Contention
The main points of contention appear to be the bill’s tighter limits on debt collection and debt sales, especially the one-year cap on assignment and the shortened lawsuit deadlines. Those provisions would be of concern to creditors and debt buyers, who may argue they reduce recovery options and disrupt existing debt-collection practices. Consumer advocates would likely support the bill’s protections, including notice to consumers and earlier cutoff dates for collection actions, because they reduce the risk of stale debt litigation and improve transparency.
An act to amend Sections 2301 and 2302 of, and to add Section 2303 to, the Fish and Game Code, to add and repeal Section 515 of the Food and Agricultural Code, to amend Sections 675, 676, and 676.