Bill Text: CA SB890 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Debt buyers.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Engrossed - Dead) 2012-07-02 - Set, first hearing. Failed passage in committee. Reconsideration granted. [SB890 Detail]

Download: California-2011-SB890-Amended.html

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BILL NUMBER: SB 890	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 24, 2011

INTRODUCED BY   Senator Leno

                        FEBRUARY 18, 2011

   An act  to add Title 1.6C.5 (commencing with Section 1788.50)
to Part 4 of Division 3 of the Civil Code, and to amend Sections
700.010, 706.103, 706.104, 706.108, and 706.122 of, and to add
Sections 581.5 to, the Code of Civil Procedure,   relating to
debt  collection   buyers  .


	LEGISLATIVE COUNSEL'S DIGEST


   SB 890, as amended, Leno. Debt  collection.  
buyers.  
    Existing 
    (1)     Existing  state and federal
law regulate the practice of debt collection. Existing state law
prohibits a debt collector from engaging in specified conduct,
including the use of threats or causing a telephone to ring
repeatedly to annoy the person called. Existing law prohibits a debt
collector from obtaining an affirmation from a debtor of a consumer
debt that has been discharged in bankruptcy, without clearly and
conspicuously disclosing to the debtor, in writing, the fact that the
debtor is not legally obligated to make such affirmation.
   This bill would  state the intent of the Legislature to
enact legislation to require a debt collector when suing to provide
documentation that evidences that the debt collector is attempting to
collect from the right person, for the right amount, on a debt that
the he or she can lawfully recover   enact the Fair Debt
Buyers Practices Act, which would regulate the activities of 
 a person who has   bought consumer debt and the
circumstances in which   the person   may bring
suit. The bill would prohibit a debt buyer, as defined, from making
any written statement in an attempt to collect a consumer debt,
including bringing suit, unless the debt buyer has valid
documentation that the debt buyer is the sole owner of the specific
debt at issue and reasonable verification of the amount of the debt
allegedly owed. The bill would require the debt buyer to make this
documentation   available to the debtor, without charge,
upon request, within 5 days.   The bill would require a debt
buyer who receives a payment on a debt to provide an original
receipt containing specified information.   The bill would
prohibit a debt buyer from initiating a suit to collect a debt if the
statute of limitations on the cause of action has expired. The bill
would prescribe penalties for a violation of the act and would
provide that its provisions may not be waived. The bill would
prohibit an entry of judgment in favor of a plaintiff debt buyer
unless properly authenticated business records relating to the debt
and ownership of it, among other things, are properly in evidence
  ,   and would require a court to enter a judgment
against the plaintiff debt buyer if this information is not provided
or   if he or she fails to appear or is not prepared on the
date scheduled for trial  . 
   (2) Existing law establishes a process for the enforcement of
money judgments and requires a levying officer to provide certain
documents and information to a judgment debtor and to a designated
employer in connection with wage garnishment. Existing law permits a
process server also to serve an earnings withholding order on an
employer and requires that the process server also serve certain
documents at this time. Existing law requires an employer who is
served with an earnings withholding order to provide certain
documents to an employee who is a judgment debtor.  
   This bill would require, in the circumstances described above,
that a copy of the form that the judgment debtor may use to make a
claim of exemption and a copy of the form used to provide a financial
statement also be provided. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Title 1.6C.5 (commencing with Section
1788.50) is added to Part 4 of Division 3 of the   Civil
Code   , to read:  

      TITLE 1.6C.5.  Fair Debt Buyers Practices Act


   1788.50.  (a) As used in this title, "debt buyer" means a person
who, in the ordinary course of business, regularly engages in
purchasing delinquent, charged-off consumer loans, or consumer credit
accounts, or other delinquent consumer debt. "Debt buyer" includes a
person acting on behalf of a debt buyer.
   (b) Terms defined in Title 1.6C (commencing with Section 1788)
shall apply to this title.
   1788.51.  The requirements and remedies of this title are
cumulative to those in Title 1.6C (commencing with Section 1788) as
well as any other law.
   1788.52.  A debt buyer shall not make any written statement in an
attempt to collect a consumer debt, including bringing suit or
initiating another type of proceeding, unless the debt buyer has in
his or her possession valid documentation that the debt buyer is the
sole owner of the specific debt or account at issue and reasonable
verification of the amount of the debt allegedly owed by the debtor.
Reasonable verification shall include documentation of the name of
the original creditor, the name and address of the debtor as it
appeared on the original creditor's records, the original creditor's
account number associated with the debt, a copy of the contract or
other document evidencing the debtor's agreement to the debt, and an
itemized accounting of the amount claimed to be owed, including all
fees and charges. Upon a request from the debtor to whom the debt
purportedly applies, the debt buyer shall make this information
available, without charge, to the debtor within five business days.
   1788.54.  A debt buyer who receives payment on a debt shall
provide an original receipt or an exact copy of the receipt to the
individual from whom payment is received within 10 days of payment. A
receipt provided in this regard shall:
   (a) Show the amount and date paid, the name of the entity paid,
the current account number, the name of the original creditor, and
the account number issued by the original creditor. If the debt buyer
is in possession of the names of any prior purchasers of the debt
and the account numbers issued by those purchasers, this information
shall also be included.
   (b) State clearly and conspicuously if the payment is accepted as
payment in full or as a full and final compromise of the debt. If any
part of the debt will be owing after the payment is made, the
receipt shall state clearly and  conspicuously the balance due after
payment is credited.
   1788.56.  A debt buyer shall not bring suit, initiate another
proceeding, or take any other action to collect a consumer debt if
the applicable statute of limitations on the cause of action has
expired.
   1788.58.  In an action brought by a debt buyer on a consumer debt:

   (a) The plaintiff shall disclose clearly and conspicuously on the
face of the complaint that he or she is a debt buyer.
   (b) All of the following shall be attached to the complaint:
   (1) A copy of the contract or other writing evidencing the
original debt and agreement of the debtor to be responsible for that
debt, and establishing that each defendant debtor is, in fact,
responsible for the original account.
   (2) A copy of the writing establishing that the debt buyer is the
sole current owner of the debt. If the debt has been sold more than
once, admissible written evidence shall be provided to establish an
unbroken chain of ownership interests. Each writing shall contain the
original account number of the debt sold or purchased, which shall
be redacted for security purposes to show only the last four digits,
and shall clearly show the debtor's correct name associated with the
original account number.
   (3) A statement of calculation of liability that separately states
the amount of the original debt, each fee and charge added to the
debt, and each payment credited to the debt after the earliest of
charge off or the delinquency closest in time to the sale of the
debt.
   1788.60.  (a) In an action initiated by a debt buyer prior to the
entry of a judgment, including a default judgment, against a debtor,
the plaintiff shall clearly and conspicuously disclose to the court
that he or she is a debt buyer and shall provide admissible evidence
to establish the amount and nature of the debt and the identity of
the debtor, including all of the information described in subdivision
(b).
   (b) For the purpose of this section, the only evidence sufficient
to establish the amount and nature of the debt shall be properly
authenticated business records that satisfy the requirements of
Sections 1271 and 1272 of the Evidence Code. The authenticated
business records shall include the following items:
   (1) A copy of the contract or other writing evidencing the
original debt and agreement of the debtor to be responsible for that
debt.
   (2) The original account number.
   (3) The name of the original creditor.
   (4) The original charge-off balance.
   (5) An itemization of charges and fees claimed to be owed.
   (6) An itemization of post charge-off additions, if applicable.
   (7) The date of last payment.
   (8) The amount of interest claimed and the basis for the interest
charged.
   (c) If a plaintiff who is a debt buyer seeks a default judgment
and has not complied with the requirements of this section, the court
shall not enter a default judgment for the plaintiff and shall
instead dismiss the action with prejudice.
   1788.62.  (a) Except as otherwise provided by this section, a debt
buyer who violates any provision of this title with respect to any
person is liable to the person in an amount equal to the sum of the
following:
   (1) Any actual damage sustained by the person.
   (2) The amount established pursuant to either subparagraph (A) or
(B):
   (A) The case of any action by an individual, such additional
damages as the court may allow, but not less than five hundred
dollars ($500) per violation and not more than five thousand dollars
($5,000) per violation.
   (B) In the case of a class action, the amount for each named
plaintiff as could be recovered under subparagraph (A), and an amount
as the court may determine for each other class member, not
exceeding the amount per person that could be recovered under
subparagraph (A).
   (3) In the case of any successful action to enforce the foregoing
liability, the costs of the action, together with a reasonable
attorney's fee as determined by the court.
   (b) In determining the amount of liability under paragraph (2) of
subdivision (a), the court shall consider, among other relevant
factors, the following:
   (1) In any individual action under subparagraph (A) of paragraph
(2) of subdivision (a), the frequency and persistence of
noncompliance by the debt buyer, and the nature of the noncompliance.

   (2) In any class action under subparagraph (A) of paragraph (2) of
subdivision (a), the frequency and persistence of noncompliance by
the debt buyer, the nature of the noncompliance, the resources of the
debt buyer, and the number of persons adversely affected.
   (c) A debt buyer shall not be held liable in any action brought
under this title if the debt buyer shows by a preponderance of
evidence that the violation was not intentional and resulted from a
bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.
   (d) An action to enforce any liability created by this title may
be brought within two years from the date of discovery of the
violation occurs.
   1788.64.  Any waiver of the provisions of this title is contrary
to public policy, and is void and unenforceable. 
   SEC. 2.    Section 581.5 is added to the  
Code of Civil Procedure   , to read:  
   581.5.  In a case involving consumer debt, as defined in Section
1788.2 of the Civil Code, and as regulated under Title 1.6C.5
(commencing with Section 1788.50) of Part 4 of Division 3 of the
Civil Code, if the defendant debtor appears for trial on the
scheduled trial date, and the plaintiff debt buyer either fails to
appear or is not prepared to proceed to trial, and the court does not
find a good cause for continuance, judgment shall be entered for the
debtor. Notwithstanding any other law, in this instance, the court
may award the defendant debtor's costs of preparing for trial,
including, but not limited to, lost wages and transportation
expenses. 
   SEC. 3.    Section 700.010 of the   Code of
Civil Procedure   is amended to read: 
   700.010.  (a) At the time of levy pursuant to this article or
promptly thereafter, the levying officer shall serve a copy of the
following on the judgment debtor:
   (1) The writ of execution.
   (2) A notice of levy.
   (3) If the judgment debtor is a natural person, a copy of the form
listing exemptions prepared by the Judicial Council pursuant to
subdivision (c) of Section 681.030  and  , 
the list of exemption amounts published pursuant to subdivision
 (d)   (e)  of Section 703.150  , a
copy of the form that the judgment debtor may use to make a claim of
exemption pursuant to Section 703.520, and a copy of the form the
judgment debtor may use to provide a financial statement pursuant to
Section 703.530  .
   (4) Any affidavit of identity, as defined in Section 680.135, for
names of the debtor listed on the writ of execution.
   (b) Service under this section shall be made personally or by
mail.
   SEC. 4.    Section 706.103 of the   Code of
Civil Procedure   is amended to read: 
   706.103.  (a) The levying officer shall serve upon the designated
employer all of the following:
   (1) The original and one copy of the earnings withholding order.
   (2) The form for the employer's return.
   (3) The notice to employee of earnings withholding order. 
   (4) A copy of the form that the judgment debtor may use to make a
claim of exemption.  
   (5) A copy of the form the judgment debtor may use to provide a
financial statement. 
   (b) At the time the levying officer makes service pursuant to
subdivision (a), the levying officer shall provide the employer with
a copy of the employer's instructions referred to in Section 706.127.
The Judicial Council may adopt rules prescribing the circumstances
when compliance with this subdivision is not required.
   (c) No earnings withholding order shall be served upon the
employer after the time specified in subdivision (b) of Section
699.530.
   SEC. 5.    Section 706.104 of the   Code of
Civil Procedure   is amended to read: 
   706.104.  Any employer who is served with an earnings withholding
order shall:
   (a) Deliver to the judgment debtor a copy of the earnings
withholding order  and   ,  the notice to
employee of earnings withholding  , a copy of the form that the
judgment debtor may use to make a claim of exemption, and a copy of
the form the judgment debtor may use to provide a financial statement
 within 10 days from the date of service. If the judgment
debtor is no longer employed by the employer and the employer does
not owe the employee any earnings, the employer is not required to
make such delivery. The employer is not subject to any civil
liability for failure to comply with this subdivision. Nothing in
this subdivision limits the power of a court to hold the employer in
contempt of court for failure to comply with this subdivision.
   (b) Complete the employer's return on the form provided by the
levying officer and mail it by first-class mail, postage prepaid, to
the levying officer within 15 days from the date of service. If the
earnings withholding order is ineffective, the employer shall state
in the employer's return that the order will not be complied with for
this reason and shall return the order to the levying officer with
the employer's return.
   SEC. 6.    Section 706.108 of the   Code of
Civil Procedure   is amended to read: 
   706.108.  (a) If a writ of execution has been issued to the county
where the judgment debtor's employer is to be served and the time
specified in subdivision (b) of Section 699.530 for levy on property
under the writ has not expired, a judgment creditor may deliver an
application for issuance of an earnings withholding order to a
registered process server who may then issue an earnings withholding
order.
   (b) If the registered process server has issued the earnings
withholding order, the registered process server, before serving the
earnings withholding order, shall deposit with the levying officer a
copy of the writ of execution, the application for issuance of an
earnings withholding order, and a copy of the earnings withholding
order, and shall pay the fee provided by Section 26750 of the
Government Code.
   (c) A registered process server may serve an earnings withholding
order on an employer whether the earnings withholding order was
issued by a levying officer or by a registered process server, but no
earnings withholding order may be served after the time specified in
subdivision (b) of Section 699.530. In performing this function, the
registered process server shall serve upon the designated employer
all of the following:
   (1) The original and one copy of the earnings withholding order.
   (2) The form for the employer's return.
   (3) The notice to the employee of the earnings withholding order.

   (4) A copy of the form that the judgment debtor may use to make a
claim of exemption.  
   (5) A copy of the form the judgment debtor may use to provide a
financial statement.  
   (4) 
    (6)  A copy of the employer's instructions referred to
in Section 706.127, except as otherwise prescribed in rules adopted
by the Judicial Council.
   (d) Within five court days after service under this section, all
of the following shall be filed with the levying officer:
   (1) The writ of execution, if it is not already in the hands of
the levying officer.
   (2) Proof of service on the employer of the papers listed in
subdivision (c).
   (3) Instructions in writing, as required by the provisions of
Section 687.010.
   (e) If the fee provided by Section 26750 of the Government Code
has been paid, the levying officer shall perform all other duties
required by this chapter as if the levying officer had served the
earnings withholding order. If the registered process server does not
comply with subdivisions (b), where applicable, and (d), the service
of the earnings withholding order is ineffective and the levying
officer is not required to perform any duties under the order and may
terminate the order and may release any withheld earnings to the
judgment debtor.
   (f) The fee for services of a registered process server under this
section shall be allowed as a recoverable cost pursuant to Section
1033.5.
   SEC. 7.    Section 706.122 of the   Code of
Civil Procedure   is amended to read: 
   706.122.  The "notice to employee of earnings withholding order"
shall contain a statement that informs the employee in simple terms
of the nature of a wage garnishment, the right to an exemption, the
procedure for claiming an exemption, and any other information the
Judicial Council determines would be useful to the employee and
appropriate for inclusion in the notice, including all of the
following:
   (a) The named employer has been ordered to withhold from the
earnings of the judgment debtor the amounts required to be withheld
under Section 706.050, or such other amounts as are specified in the
earnings withholding order, and to pay these amounts over to the
levying officer for transmittal to the person specified in the order
in payment of the judgment described in the order.
   (b) The manner of computing the amounts required to be withheld
pursuant to Section 706.050.
   (c) The judgment debtor may be able to keep more or all of the
judgment debtor's earnings if the judgment debtor proves that the
additional earnings are necessary for the support of the judgment
debtor or the judgment debtor's family supported in whole or in part
by the judgment debtor.
   (d) If the judgment debtor wishes a court hearing to prove that
amounts should not be withheld from the judgment debtor's earnings
because they are necessary for the support of the judgment debtor or
the judgment debtor's family supported in whole or in part by the
judgment debtor, the judgment debtor shall file with the levying
officer an original and one copy of the "judgment debtor's claim of
exemption" and an original and one copy of the "judgment debtor's
financial statement."  The notice shall also advise the
judgment debtor that the claim of exemption form and the financial
statement form may be obtained without charge at the office of the
levying officer. 
   SEC. 8.    The provisions of this act are severable.
If any provision of this section or its application is held invalid,
that invalidity shall not affect other provisions or applications
that can be given effect without the invalid provision or
application.  
  SECTION 1.    It is the intent of the Legislature
to enact legislation that requires a debt collector to provide
documentation that supports the debt collector's right to the debt
when the debt collector is suing to collect that debt. The
legislation shall require that documentation to evidence that the
debt collector is attempting to collect from the right person, for
the right amount, on a debt that the he or she can lawfully recover.