SB 706 California Senate · 2025-2026 Regular Session

Consumer debt: charged-off debts.

Summary

Existing law places various requirements on, and prohibits certain actions by, debt buyers with respect to charged-off consumer debts. This bill would prohibit a charged-off consumer debt from being sold or assigned more than one year after the debt was charged off. The bill would require a charge-off creditor to notify the consumer when the creditor sells or assigned a charged-off consumer debt to a debt buyer. Existing law prescribes various time periods for the commencement of actions other than for the recovery of real property, including within 4 years for an action upon any contract, obligation, or liability founded upon an instrument in writing, as specified. This bill would prohibit an action from being brought to recover a charged-off consumer debt on or after the date that is the earliest of specified dates. The bill would prohibit a debt buyer from bringing an action to recover a charged-off consumer debt after one year from the date the debt was charged off.

Bill status failed 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 21, 2025 Last action Feb 2, 2026

Maddy AI version diff · 2 comparisons

What changed between versions

03/24/25 - Amended Senate → SB706 · 1 edit

MINOR

No substantive policy changes were made between these two versions of SB 706. The differences are entirely formatting and presentation: the first version is a plain-text legislative document with line numbers and page headers, while the second is an HTML web-page rendering of the same bill text from the California legislature website, complete with navigation menus and search interfaces.

TECHNICAL

The bill text was reformatted from a plain-text legislative document (with line numbers, page breaks, and header/footer markings) into an HTML web-page layout including site navigation, search tools, version tracking links, and share options. All substantive provisions remain identical.

02/21/25 - Introduced → 03/24/25 - Amended Senate · 6 edits · Mar 24, 2025

MODERATE

SB 706 was substantially expanded in the Senate from a narrow avian health intent statement into a bill that also imposes new restrictions on the sale and collection of charged-off consumer debts. The amended bill adds a one-year limit on selling charged-off debts, requires creditors to notify consumers when their debt is sold, and creates a short statute of limitations for collecting such debts (as early as 90 days after charge-off). This matters because it significantly limits the time window in which debt buyers can pursue consumers for old debts.

Scope change

The bill expanded from a single-purpose avian health intent statement to a dual-purpose bill that also creates new statutory limitations on the sale and collection of charged-off consumer debts, adding provisions to both the Civil Code and Code of Civil Procedure.

SCOPE

The bill's subject matter expanded from solely avian health to also include consumer debt protections, adding new provisions to the Civil Code and Code of Civil Procedure.

REQUIREMENT

New Civil Code Section 1788.57 prohibits a charged-off consumer debt from being sold or assigned more than one year after it was charged off.

New Civil Code Section 1788.57 requires a charge-off creditor to notify the consumer when the creditor sells or assigns a charged-off consumer debt to a debt buyer.

TIMELINE

Code of Civil Procedure Section 337 was amended to add an exception for Section 337.3 and a new subdivision (d) clarifying that once the limitations period runs, no suit or arbitration may be initiated to collect the debt, and the period can only be extended under Section 360.

New Code of Civil Procedure Section 337.3 prohibits any action to recover a charged-off consumer debt on or after the earliest of: two years after notice of default/delinquency, or 90 days after the debt was charged off.

ELIGIBILITY

New Code of Civil Procedure Section 337.3 imposes a stricter one-year limit specifically on debt buyers, who cannot bring an action to recover a charged-off consumer debt more than one year from the date the debt was charged off.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Apr 23, 2025

Upper · Passed

April 30 hearing postponed by committee.

upper

Apr 22, 2025

Committee

April 22 set for first hearing. Failed passage in committee. (Ayes 1. Noes 2. Page 837.) Reconsideration granted.

upper

Apr 2, 2025

Committee

Re-referred to Coms. on JUD. and B. & F.I.

upper

Mar 24, 2025

Upper · Passed

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

upper

Mar 12, 2025

Committee

Referred to Com. on RLS.

upper

Feb 21, 2025

Introduced

Introduced. To Com. on RLS. for assignment. To print.

upper

1 primary · 0 co-sponsors