SB 1022 - Debt Collection
Operative on July 1, 2004.

Existing law prohibits certain actions by debt collectors in connection with the collection of consumer debts. If you have any doubt as what those acts are, please contact our office for copies of previous articles relating to collection of past due assessments and the Federal and State Fair Debt Collection Practices Act.

Beginning July 1, 2004, 3rd-party debt collectors (e.g. management companies and law firms) are required to provide notice to debtors, with the first written notice sent to a California address of the debtor in connection with the collection of a debt, that sets forth the debtor's rights, as specified, under the federal Fair Debt Collection Practices Act. For most associations, this notice will be placed on the pre-lien letter (a.k.a. the Notice of Intent to Lien letter).

The type-size used in the disclosure shall be in at least the same type-size as that used to inform the debtor of his or her specific debt, but is not required to be larger than 12-point type. The notice to debtors should include the following description of debtor rights:

"The state Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt Collection Practices Act require that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or http://www.ftc.gov."

The notice shall be included "with" the first written notice initially addressed to a California address of a debtor in connection with collecting the debt by the third-party debt collector. The use of the word "with", instead of "in" suggests that the notice may be a separate attachment, rather included in the letter itself. However, if it is used as a separate attachment, we would recommend that a footer be included on the first page indicating that it is attached so that there is no dispute later as to whether or not it was included.

Also, if a language other than English is principally used by the third-party debt collector (the manager or the law firm) in the initial oral contact with the debtor, a notice shall be provided to the debtor in that language within five working days. This ultimately gives debt collectors less incentive to be helpful and speak in a language other than English. Thus, debt collectors may want to consider an English-only policy when speaking to debtors.

The exact language specified above must be used. However, the statute does stated that the notice required may be changed only as necessary to reflect changes under the federal Fair Debt Collection Practices Act that would otherwise make the disclosure inaccurate. Of course, the language is not exactly reassuring because it requires everyone to sit and wait for changes to the federal statute (which is ridiculously long) and then to wait for the lawyer to analyze whether that change makes this notice inaccurate. To say that debt collection has become ridiculously micro managed is a gross understatement.

A debt collector who fails to provide the notice would be liable for actual damages and a civil penalty under specified provisions of existing law.