SB 1131 California Senate · 2025-2026 Regular Session

Debt collection.

Summary

The Debt Collection Licensing Act generally regulates the business of debt collection and prohibits a person from engaging in the business of debt collection in this state without first obtaining a license pursuant to the act. The act prescribes the duties and powers of the Commissioner of Financial Protection and Innovation, which include conducting prescribed examinations as often as the commissioner deems necessary and appropriate, and authorizing the commissioner to conduct those examinations electronically, as specified. The act also establishes the Debt Collection Advisory Committee to advise the commissioner on matters relating to debt collection or the debt collection business, as specified. This bill would require the commissioner to conduct examinations remotely unless an onsite examination is considered necessary for the protection of the public, as specified. The bill would also rename the Debt Collection Advisory Committee as the Debt Collection Advisory Board, require the commissioner to request the advice of the board before the initial publication or adoption of fee schedules or a proposed regulation, except as specified, and exempt the board from the Bagley-Keene Open Meeting Act. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect.

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 17, 2026 Last action May 14, 2026

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What changed between versions

02/17/26 - Introduced → 03/23/26 - Amended Senate · 11 edits · Mar 23, 2026

MAJOR

SB 1131 was completely transformed from a minor nonsubstantive fix to a credit union examination provision into a comprehensive overhaul of California's debt collection licensing regime. The amended bill renames the act, restructures licensing to a single license per business entity, adds new exemptions, increases fees substantially, shifts examinations to a remote-first model, and creates preemption against local licensing requirements. This represents a major expansion in scope from a technical credit union amendment to sweeping regulatory reform of the debt collection industry.

SCOPE

The bill's entire subject matter changed from a nonsubstantive amendment to Section 14250 (credit union examinations) to amendments across 13 sections of the Financial Code governing debt collection licensing, including Sections 100000 through 100025.

New Section 100000.7 preempts local government by prohibiting any county, city, or political subdivision from requiring a debt collector to be licensed or registered as a debt collector.

DEFINITION

The act is renamed from the 'Debt Collection Licensing Act' to the 'Debt Collector Licensing Act.'

REQUIREMENT

Licensing structure changed from a license for the principal place of business (with no separate licenses for branch offices) to a single license covering the licensee's entire business, explicitly not requiring separate licenses for branch offices, facilities, affiliates, or subsidiaries.

Annual report requirements changed: removed the requirement to report total or face dollar amounts of various kinds of accounts, and added specific reporting on number of California debtor accounts purchased or collected, total dollar amount purchased, face value in portfolio, total collected and outstanding uncollected debt, and net proceeds generated.

ELIGIBILITY

New exemptions added: trustees performing nonjudicial foreclosure acts, persons described in Section 1692a(6)(F) of Title 15 US Code (certain creditors collecting their own debts), and persons or entities licensed under the State Bar Act. Also added exemption for collection of covered commercial debt or covered commercial credit.

FISCAL

Application fee increased from $350 to $1,000. Annual fee restructured from a pro rata share formula (minimum $250) to a three-tier system: $1,000, $4,000, or $7,000 based on the number of California debtor accounts in active collection, with thresholds determined annually by the commissioner.

Fiscal committee designation changed from 'no' to 'yes,' indicating the amended bill now has a fiscal impact requiring fiscal committee review.

ENFORCEMENT

Examinations now default to remote (via video technology and electronic submission of records) unless an onsite examination is deemed necessary for public protection. Specific triggers for onsite exams include court-adjudicated FDCPA or fair debt buying violations, out-of-state license suspension/revocation, or concerns identified during a remote exam. The commissioner may also reduce exam frequency if a qualifying third-party audit is available.

The commissioner's power to suspend a license for a Fair Debt Collection Practices Act violation is limited when the same violation has been adjudicated by a court and all damages, penalties, or fees have been paid. A licensee may dispute an ancillary relief order if the same injured person already obtained a final judgment on the merits in court for the same violation.

TECHNICAL

The Debt Collection Advisory Committee is renamed the Debt Collection Advisory Board. The commissioner must now request the board's advice before initial publication or adoption of fee schedules or proposed regulations (except during emergency rulemaking). The board is exempted from the Bagley-Keene Open Meeting Act, with legislative findings justifying the exemption.

03/23/26 - Amended Senate → 04/08/26 - Amended Senate · 9 edits · Apr 8, 2026

MAJOR

The April 8 amendment to SB 1131 removes the credit union law amendment from the bill, increases the application fee from $350 to $1,000, eliminates the requirement to submit a sample debt collection letter with applications, moves the annual fee payment deadline from January 1 to December 31, raises the late payment penalty from 1 percent to 5 percent per month, and removes the minimum and maximum caps on annual fees. These changes tighten the financial framework of the Debt Collector Licensing Act while streamlining application requirements.

SCOPE

Removed the nonsubstantive amendment to the California Credit Union Law (Section 14250) from the bill, narrowing its scope to debt collection only. The bill title changed from 'relating to financial institutions' to 'relating to debt collection.'

FISCAL

Application fee increased from $350 to $1,000.

Late payment penalty on annual fees increased from 1 percent to 5 percent per month or part of a month.

Removed the minimum ($250) and maximum (aggregate reasonable costs) caps on annual fees, replacing them with a provision that annual fees are independent of investigation and examination fees.

Fiscal note changed from 'Fiscal committee: no' to 'Fiscal committee: yes,' indicating the bill now has a fiscal impact requiring committee review.

REQUIREMENT

Removed the requirement that applicants submit a sample of the initial validation letter (under federal FDCPA Section 1692g) they will use in correspondence with California consumers.

TIMELINE

Annual fee payment deadline moved from January 1 to December 31 of each year.

DEFINITION

Removed the definition of 'Collection agency' from Section 100002, which had defined it as a business entity through which a debt collector or association of debt collectors engages in debt collection.

TECHNICAL

Fixed a double negative in the preemption provision (Section 100000.7), changing 'No county...shall not require' to 'A county...shall not require.'

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 14, 2026

Upper · Passed

May 14 hearing: Held in committee and under submission.

upper

Apr 15, 2026

Upper · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0. Page 3898.) (April 15). Re-referred to Com. on APPR.

upper

Apr 8, 2026

Upper · Passed

From committee with author's amendments. Read second time and amended. Re-referred to Com. on B. & F.I.

upper

Apr 8, 2026

Committee

Re-referred to Com. on B. & F.I.

upper

Mar 23, 2026

Upper · Passed

From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS.

upper

Feb 26, 2026

Committee

Referred to Com. on RLS.

upper

Feb 17, 2026

Introduced

Introduced. Read first time. To Com. on RLS. for assignment. To print.

upper

1 primary · 0 co-sponsors