Debt collection is an integral part of most businesses simply because it is next to impossible to completely escape it. No matter how thoroughly you conduct background checks on them or how carefully you evaluate their financial status, you will come across clients and customers that will either lag behind in payments or will take on loans that they are unable to payback on. Whichever way it happens, the resulting measure is the same: debt collections.

If you are a resident of California, or have business there, it is important to be aware of the laws governing debt collection in the state of California as well as some important facts.

Debt Collection Laws in California

Two sets of regulations for debt collection ensure that the process is conducted without any illegal, abusive or damaging means by both parties, i.e the creditors and the indebted. They are:

• The Federal Fair Debt Collection Practices Act (FDCPA) is a federal law that serves to act upon all major states in the USA.

• The California Fair Debt Collection Practices Act (CFDCPA) which is specific to the state of California and provides more protection than the federal law.

Facts About the FDCPA

• It only applies to a collection company that is collecting debt on a third party’s behalf. For example, it does not apply on the store to which you owe money, but if the store hires a collection agency, it applies on the agency.
• It does not provide any particular means for the debt to be erased.
• It serves to offer protection from harassment, abuse, deception and any other illegal or damaging means used for debt collection.
• It provides a window for the indebted to decide where, when and how he/she wants to be contacted or approached by collectors.

Facts About the CFDCPA

• It applies not just on a third party collection agency but also on original creditors, people who are tasked with collecting debt as a part of regular business, companies that create the tools for debt collection, etc.
• It does not, however, apply on foreclosure and occasional debt collectors.
• It has a statute of limitations that outlines a time period of 4 years for debt collection for all kinds of consumer debts except those based on an oral agreement, for which the statute of limitations is 2 years.
• It serves to offer protection from harassment, abuse, deception and any other illegal or damaging means used by creditors and/or collection agencies for debt collection.
• You can sue creditors/agencies for violating the CFDCPA in court, and if you are successful in the lawsuit, you can win the actual indebted amount plus attorney fees and perhaps a small additional amount for damages as well.

Once you are armed with this basic information regarding debt collection laws and facts in California, you can both ensure that your company makes no mistake in pursuing a debt as well as ensure that you are not wronged in any manner by creditors.
Nexum Group has done the research and not only collects but educates companies on how to do it the correct way.