California Collection Laws
- California allows wage garnishment and bank account levies.
- The California statute of limitations on credit card debt is four years.
- Consult with an attorney to learn more about your rights and liabilities.
Learn California's Laws for Wage garnishment, Levy, Lien, Foreclosure, Payday Loans & More
If you owe debt and reside in California, it’s important to understand your rights and liabilities. It is even more important if a creditor threatens to file a lawsuit against you.
A lender, collection agent or law firm that owns a collection account is a creditor. California law gives creditors several means of collecting delinquent debt from you.
Before a creditor may use these legal tools in California, the creditor must go to court to receive a judgment against you. See the Bills.com article Served Summons and Complaint to learn more about this process, and how to fight a lawsuit.
A court will hold a hearing after a creditor files a lawsuit. A hearing may result in a judgment awarded to the creditor. A judgment is a court’s declaration the creditor has the legal right to demand:
The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which tool a judgment-creditor may use depends on the circumstances and California law. We discuss each of these remedies below. In California, the following cited laws are found under the Code of Civil Procedure unless specified.
California Wage Garnishment Rules
The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.
Know Your Rights - Wage Garnishment
In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.
California allows wage garnishment (CCP § 706.010-706.011). In general, California follows the federal rules for the amount of a garnishment, which allows up to 25% of a worker’s wages to be garnished. For exemptions, CCP § 706.05 and § 703.010-703.150 define earnings and what is considered exempt. Municipal and state employees may be garnished. See the Bills.com resource California Wage Garnishment additional discussion on wage garnishment.
See the Dept. of Labor’s Employment Law Guide - Wage Garnishment and the Dept. of the Treasury’s Answers About Garnishments.
Generally, 401(K) or other retirement funds are exempt from garnishment. It is advisable to have those funds deposited into a separate bank account if you are concerned about garnishment on those benefits.
California Financial Account Levy
A levy means that the creditor has the right to take whatever money in a debtor’s account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied. In some states levy is called attachment or account garnishment. The names may vary but the concept is the same.
In California, a levy or attachment, is allowed under § 699.510-699.560. Levy is allowed if the plaintiff possesses a legal instrument known a writ commanding the levying officer to seize and sell as much of a debtor’s property as is necessary to satisfy a creditor’s claim. See § 700.010-700.200 for specifics.
If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.
A lien is an encumbrance — a claim — on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinance the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay the judgment.
California allows a lien for a money judgment. Under § 697.510-697.670, mechanics and contractors (and similar laborers and professionals) have the right to place a lien on real property (697.310 through 697.410) or personal property (697.510 through 697.670). This also includes creditors for unsecured debt (credit cards, auto loans, et cetera), see Civil Procedure Code § 697.010-697.060. Exemptions are covered under § 704.010-704.210. A lienholder on a residence may not foreclose. However, if a lienholder of personal property may demand the sheriff seize the property and auction it to satisfy the lien.
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
California Writ of Replevin
Replevin means an action for recovering goods wrongfully taken or detained. Four California statutes cover replevin. One concerns the recovery of public records from a private party. A second concerns recovery of property before the commencement of civil litigation (Civil Procedure § 512.010). A third concerns a post-judgment writ of possession (§ 712.010), and the fourth concerns the repossession of a manufactured home, a mobile home or real property (Sections 1166a, and 712.010 et. seq.). The fourth is usually applied when a landlord seeks to eject a tenant from a property.
California Statutes of Limitations
Each state has is own statute of limitations. Under California law, the statute of limitations is governed by § 335-349.4. The statute of limitations on an open account (i.e., credit card) is 4 years, written contracts 4 years, real property actions 5 years, foreign judgments are valid for 10 years, and domestic judgments are valid for 10 years (and can be renewed at 10 years). See the Bills.com article California Statute of Limitations to learn more details.
Know Your Rights - Collection Agents
Collection agents violate the FDCPA if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.
For information on California foreclosures, see Bills.com article Is My HELOC a Recourse or Non-Recourse Loan in California? for a discussion of the differences between recourse and non-recourse loans. See also Mortgage Debt and Community Property to learn how California’s community property laws affect foreclosure.
California foreclosure laws are found in Civil Code § 2920-2944.7. To learn more about the rules surrounding foreclosure in this state, including deficiency balances see CP § 580d and § 2938(e)(3).
California Payday Loan Collection
See the Bills.com resource California Payday Loans to learn how California Civil Code § 1789.30-1789.38, and specifically § 1789.33, protects consumers of payday loans. Defaulting on a payday loan is not a crime in California, and collection agents suggesting the contrary are misinformed.
|More About California Debt|
|Is My Home Loan a Recourse or Non-Recourse Loan in California?|
|California Service of Process|
|Delinquent California Tax|
|California Mortgage Foreclosure Process|
|California Short Sale & Deficiency Balance|
California Repossession Rules
The repossession agency must notify the borrower by mail or in person within 48 hours after repossessing a vehicle.
The seller or holder must give 15 days’ notice of intent to sell a repossessed vehicle to all persons liable on the contract (CC §2983.2(a)), except when the vehicle was seized by a public agency, such as a car seized by the police for transporting illegal drugs (CC §2983.3(b)(6)).
The notice of intent to dispose of a repossessed vehicle must advise all persons liable on the contract of their rights to redeem the vehicle, reinstate the contract, request a 10-day extension of the redemption and reinstatement periods, and request a written accounting of the disposition, and must give notice of the borrower’s possible liability for a deficiency judgment. (CC §2983.2(a)(1)-(9)). The seller must provide a full accounting for the disposition of the vehicle to any person liable on the contract on written request or if there is a surplus. (CC §2983.2(b)-(c))
California Collection Agency Law
Collection agents need not be licensed in California. The California Fair Debt Collection Practices Act (CFDCPA) is sometimes referred to as the Rosenthal Fair Debt Collection Practices Act (RFDCPA). The CFDCPA mirrors the FDCPA in most respects, with two exceptions. The first is original creditors are covered by the CFDCPA. By contrast, the FDCPA covers all collection agents and, in some circumstances, original creditors.
The CFDCPA’s second difference concerns how collection agents must use the legal process. California collection agents must:
- Serve you with notice of a lawsuit when it sues you. If it gets a default judgment because it failed to serve you with a lawsuit notice, it may not collect on that judgment.
- Sue you in the county where you either:
- Incurred the debt
- Lived when you incurred the debt, or
- Live now
- Not send you a document that appears to have been issued, authorized, or approved by a government agency or attorney when it wasn’t.
Violation of the CFDCPA may be a criminal misdemeanor. If you have been victimized by a collection agency, file a report of the violation with your local city or county district attorney or prosecutor. Consult with a lawyer to discuss filing a civil lawsuit against the collection agent. Some lawyers take these cases on a contingency basis, which means no out-of-pocket costs to you. These laws are found in California Civil Code § 1788.
Consult with a California attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in California. See also the State of California Dept. of Consumer Affairs document Collecting or Satisfying the Judgment for more information about California’s collection laws.
If you cannot afford a lawyer, contact Law Help CA or another California pro bono program to find no- or low-cost legal service.
Struggling with debt?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in Georgia, 34% have any kind of debt in collections and the median debt in collections is $1854. Medical debt is common and 17% have that in collections. The median medical debt in collections is $855.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.
My boyfriend Raymond passed away in Sept2020. He owes quite a large amount of credit card debt. He has a mobile home in a park that is paid off. Can they put a lien on this mobile home?
My condolences for your loss.
I am not a lawyer, so the information I share should not be considered legal advice. There is a legal proces that needs to take place after a person dies, to account for the assets and debts of the decedent. Probate is a common method, but not all assets need to go through probate. I suggest you read this page that has some good information about probate in California, from the California Courts official website.
Did he leave a will? He may have left that asset to you or to someone. It is true that creditors have a chance to assert their claims against his estate, too. It could be the case that his debts are so large that the mobile home is sold and the proceeds go to his creditors, though it depends on what he owes and the value of his assets.
I recieved a car title loan a year ago on my 2003 lexus and defaulted on it. They never came to repossess the vehicle. Now that it's been I year, i go back in to ask for them to release the title or to come get the dead car out of my yard and they wanted to make a settlement of $2000 and than they'll release the lien. What are my options here? Did they commit a breach of contract? Cause according to their terms and agreement, it stated that they will repo the car after 30 days in default. Before I forget to mention, my copy of the document titled "write off recovery". What should i do? What can I do if i dont want to pay it?
I am not an attorney, so information I share is not to be considered legal advice.
You don't have a lot of leverage. It depends on the language in the contract, but I am guessing that what you shared is that they can repo the car after thirty days in default, not that they are legally obligated tto do
You could not reach out to them again and see if you fall back into the cracks long enough that you can assert the statute of limitations on debt as a defense. if four years pass from the date you first missed a payment before you are sued, you can use the SOL as an affirmative defense if you are sued. Before that, they can choose to sue you. They don't need to settle for less than you owe, though they can choose to settle f they wish.
My previous employer went into default on the 7th of may for an administrative remedy. How do i collect ?
Jerrad, I am not a lawyer so any information I share is not to be considered legal advice.
The type of business (corporation or sole propietorship), the assets it has, the facts around the administrative remedy, what other debts your forrmer employer has and how the line forms to make claims by the people, business entities or government agencies that are owed money are all issues that need exploring.
I advise you to speak with an attorney if what you are owed is significant.
Hi. I have a credit card bill I can't pay. I havent paid any of a $7,000 dollar credit card bill and wont be able to. How do i file bankrucpcy? I can't afford a lawyer.
Danny, sorry to read that you're under this kind of stress.
I recommend that you visit the official government website of the California Courts. Here is a link to their page about bankruptcy. It has good information about filing on your own.
My mom got a judgment against her for not paying a credit card debt. She is over 70 years old living in California. She does not work, and only collects Social Security. Her and my father own their home but it is in a living trust. Can they come after anything? Thank you.
Thank you for reaching out. Please, do not take my answer to be legal advice as I am not an attorney. Only attorneys can offer legal advice.
In the state of California, garnishment of social security is not allowed under federal law.
However, a creditor could be awarded to place a lien on their property.
I would recommend speaking with an attorney to get precise answers to your questions.