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Governor Gavin Newsom signed the California Fair Debt Settlement Practices Act (AB 1405) (Cal. Civ. Code § 1788.300 and following) into law on October 4, 2021. Effective January 1, 2022, this law sets certain requirements and prohibitions for debt settlement companies and related payment processing services, such as:
Debt Settlement. Debt settlement allows you to settle your debt for less than you owe. It’s usually in a lump-sum payment. Just like that, you’re out of debt! Sounds good, right? It’s not quite too good to be true, because it’s a legitimate option, but it has drawbacks.
California Governor Gavin Newsom signed into law the California Fair Debt Settlement Practices Act (the Act), California Civil Code Section 1788.300 - 1788.307, which provides requirements and prohibitions related to debt settlement services and related payment processing services. The law takes effect on January 1, 2022.
A California debt settlement means paying less than the total amount owed for a debt. A reduction in the outstanding balance of the debt creating a smaller and more manageable debt amount. It is done through payment by lump sum or payment through a very short term installment plan.
California Debt Settlement Laws. The California Fair Debt Settlement Practices Act (Cal. Civ. Code § 1788.300, and following (2024)), effective January 1, 2022, provides protections to consumers who hire someone to provide debt settlement services by: requiring certain disclosures.
Payday loans. Cash advance loans. Auto loans after repossession. Private student loans. The reason that secured debt cannot be settled is that the creditor can seize your assets instead. As an example, if you default on your mortgage, the lender will foreclose on your home and sell it at auction.
California’s new debt settlement laws, notably the FDSPA, signify a pivotal stride towards shielding consumers from predatory practices, ensuring fairness, transparency, and informed decision...