On September 24, 2024, Governor Gavin Newsom signed into law three consumer protection bills aimed at medical debt, commercial debt, and enforcement of money judgments. RMAI actively lobbied and were able to achieve amendments on all three bills. In the case of Senate Bill 1061, we were able to significantly narrow the scope of the term “medical debt” and withdrew our opposition. RMAI continued to oppose Senate Bill 1286 and Assembly Bill 2837 because the amendments did not go far enough to mitigate their negative impacts to the industry.
Here is a summary of the provisions impacting the receivables industry that were enacted into law:
Medical debt relief
California SB 1061 – This bill would prohibit a person from furnishing information regarding a medical debt to a consumer credit reporting agency and would make a medical debt void and unenforceable if information is furnished to a consumer credit reporting agency. The bill also prohibits using any medical debt listed on a credit report as a negative factor when making credit decisions and gives individuals more room to address their medical bills before debt collection and reporting actions can take place. This bill will be effective on January 1, 2025.
Rosenthal Fair Debt Collection Practices Act relating to commercial debts
California SB 1286 – This bill would expand the scope of the Rosenthal Fair Debt Collection Practices Act to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of commercial debts owed by a natural person of $500,000 or less that were entered, renewed, sold, or assigned on or after July 1, 2025. This bill will be effective on January 1, 2025.
Civil actions: Enforcement of money judgments
California AB 2837 – This bill would expand the types of retirement plans exempt from money judgments and exempt such property to the extent necessary to provide specified support for, and satisfy tax obligations of, the judgment debtor. This bill will be effective on January 1, 2025.
RMAI encourages its members that collect on accounts owed by California consumers to share this information with their legal, compliance, and operations employees.
This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.