How California Law Protects Consumers From Debt Collection Lawsuits

Yes, California is expensive, but it offers better financial protection for consumers than most other states do. California’s state minimum wage is one of the highest in the country; as of 2024, only Washington state and Washington, D.C. have higher minimum wages. In some cities in California, the minimum wage is even higher. 

The paid leave policies in California are also friendlier to workers than labor laws in most other places in the United States. Despite this, Californians are struggling with debt every bit as much as their counterparts in other states. Federal laws that went into effect about 10 years ago have endeavored to protect consumers from the tyranny of business-to-consumer lawsuits, and while the Fair Debt Collection Practices Act led to a decrease in business-to-consumer debt collection lawsuits, the number of such lawsuits climbed again before the COVID-19 pandemic. 

While other states let business consumer lawsuits, sometimes with dreaded debtors’ examinations, continue unabated, California has enacted statewide practices to address some of the loopholes in the federal legislation that left consumers vulnerable. If a creditor sues you about an old debt, you should not ignore the lawsuit. You stand a much greater chance of winning your case if you contact an Oakland debt collections defense lawyer.

Default Judgments in Favor of Creditors are Still the Norm

When businesses sue consumers over debts that they know the consumers cannot pay, the consumers often ignore the lawsuits, assuming that there is nothing they can do to stop the creditors from taking the money. When the debtor does not respond to the lawsuit, the creditor can get a default judgment, which enables the creditor to seek a garnishment of the debtor’s paycheck.

Yes, this is a dismal state of affairs that enables big companies to exploit cash-strapped consumers. California offers two layers of protection that not every state offers, though. First, creditors are required to be transparent about the origins of the debt. This means that the court usually does not allow lawsuits from unscrupulous collection agencies that bought your debt from who knows where to move forward. Second, the courts encourage consumers to file a response to the lawsuit, in which case there is a greater than 50 percent chance that the court will not order them to pay the debt. The county courts have detailed instructions on their websites, as well as phone hotlines, to help consumers respond to lawsuits even if they cannot afford to hire a lawyer.

Wage Garnishment in California: What is Legal?

The maximum amount that the court can garnish per paycheck is 75 percent of your take home pay. To protect more than 25 percent of your wages, you must file an exemption, showing how much more money, beyond the 25 percent of your pay, you need to cover necessities.

Contact the Law Office of Melanie Tavare About Debt Collection Defense

A debt relief lawyer can help you if a creditor has filed a lawsuit against you. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a free case evaluation.