§ 1798.97.2. — 1798.97.2. (Added by Stats. 2022, Ch. 989, Sec. 2.)

California § 1798.97.2.

• Jurisdiction: California
• Code CIV: Civil Code - CIV
• Div. 3.: DIVISION 3. OBLIGATIONS
• Title: 1.81.35.
• Part 4.: TITLE 1.81.35. Coerced Debt

Text

(a)
A person shall not cause another person to incur a coerced debt. A person who causes another person to incur a coerced debt in violation of this subdivision shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimant’s attorney’s fees and costs.
(b)
Upon receipt of both of the following, a claimant shall cease collection activities until completion of the review provided in subdivision (d):
(1)
Adequate documentation.
(2)
The debtor’s sworn written certification that a particular debt, or portion thereof, being collected
is coerced debt.
(c)
If a debtor notifies a claimant orally that a particular debt, or portion thereof, being collected is coerced debt, the claimant shall notify the debtor, orally or in writing, that the debtor’s notification must be in writing. If a debtor notifies a claimant in writing that a particular debt, or portion thereof, being collected is coerced debt, but omits information required by subdivision (b), and if the claimant does not cease collection activities, the claimant shall provide written notice to the debtor of the additional information that is required.
(d)
(1)
Within 10 business days of receiving the complete statement and information described in subdivision (b), the claimant shall, if the claimant furnished adverse information about the debtor to a consumer credit reporting agency, notify the consumer credit reporting agency that the
account is disputed.
(2)
The claimant shall initiate a review considering all of the information provided by the debtor and other information available to the claimant in its file.
(3)
Within 10 business days of completing the review, the claimant shall notify the debtor in writing of the claimant’s determination and the good faith basis for that determination.
(4)
The claimant shall not recommence collection activities until the debtor has been notified in writing of the good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(e)
No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the particular debt, or portion thereof,
shall arise if the claimant decides after the review described in subdivision (d) to cease or recommence collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or claimant.
(f)
(1)
At least 30 days before filing an action pursuant to paragraph (2) of subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt, a debtor shall submit notice of the debtor’s intent to file an action against the claimant and documents that comply with subdivision (b) in writing to the claimant.
(2)
The written notice described in paragraph (1) shall be sent by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(3)
The written
notice described in paragraph (1) shall be sent to an address made available to the debtor by the claimant for receipt of the notice, or, if an address has not been identified by the claimant, to the claimant’s principal place of business as identified by the Secretary of State. If an address is unavailable through the Secretary of State’s website, the debtor may use the correspondence address of the claimant, or in the case of a debt collector, the address on file with the Department of Financial Protection and Innovation for licensing purposes.
(4)
(A)
The debtor shall not commence an action described in subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt if the claimant informs the debtor that it has ceased all efforts to collect on the particular debt, or portion thereof, identified in the written notice pursuant to paragraph (1) and the debtor receives
written notice of this cessation before the expiration of the 30-day period.
(B)
The debtor may commence an action described in subdivision (a) of Section 1798.97.3 or other action against a claimant in connection with an allegedly coerced debt if either of the following conditions is satisfied:
(i)
The 30-day period described in paragraph (1) expires and the collection activities have not ceased or the debtor has not received written notice that collection activities have ceased.
(ii)
The debtor receives written notice pursuant to paragraph (4) of subdivision (d) of the claimant’s good faith determination that the information does not establish that the particular debt, or portion thereof, is coerced debt.
(5)
For purposes of this subdivision, the
30-day period shall begin to run when the claimant receives the written notice.
(g)
A claimant that ceases collection activities under this section and does not recommence those collection activities shall do both of the following:
(1)
If the claimant has furnished adverse information to a consumer credit reporting agency regarding the debtor and a particular debt, or portion thereof, notify the agency to delete that information no later than 10 business days after making its determination.
(2)
If the claimant is a debt collector, notify the creditor no later than 10 business days after making its determination that collection activities have been terminated based upon the debtor’s assertion that a particular debt, or portion thereof, being collected is coerced debt.
(h)
A claimant that has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code may provide those documents to the debtor.

Legislative History

Added by Stats. 2022, Ch. 989, Sec. 2. (SB 975) Effective January 1, 2023.