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SB 706

Consumer debt: charged-off debts.

2025-2026 Regular Session Introduced by Melissa Hurtado

SB 706 regulates California's handling of charged-off consumer debts, restricting collection practices or requiring clearer disclosure of charged-off status to consumers.

April 30 hearing postponed by committee.
#consumerdebt #charged-offdebts
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Bill Summary · SB 706

Legislative bill overview

SB 706 addresses how charged-off consumer debts are handled in California. The bill restricts or regulates the practices surrounding debts that creditors have written off as uncollectible, potentially limiting debt collection activities or requiring specific disclosures about charged-off status.

Why is this important

Charged-off debts affect millions of California consumers and often remain on credit reports for years, impacting creditworthiness even after the creditor has stopped active collection efforts. The distinction between a charged-off debt and an actively collectable debt significantly influences consumers' financial options and credit standing, making this distinction legally relevant.

Potential points of contention

  • Creditor impact: Lenders and debt collection agencies argue that restrictions on charged-off debt collection could reduce recovery rates and increase lending costs, potentially making credit more expensive for all consumers
  • Debt buyer practices: The bill likely affects third-party debt purchasers who buy charged-off debts at discounts; restrictions could disrupt this secondary market and alter collection strategies
  • Consumer protection vs. enforceability: Balancing legitimate creditor interests against protecting vulnerable consumers from aggressive collection on aged debts where statute of limitations may apply

Compiled from official sources — confirm details with the bill’s official record.

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