Bill > AB1166

This bill expands the existing Fair Debt Settlement Practices Act to include protections for commercial loan recipients, specifically defining a "commercial debtor" as someone who owes commercial debt of $500,000 or less and is not a large for-profit business. The bill introduces new definitions and requirements for debt settlement providers working with both consumer and commercial debtors, including mandatory disclosures about potential risks, settlement processes, and fee structures. Key provisions require debt settlement providers to provide detailed, transparent contracts that outline the specific debts being addressed, estimated settlement timelines, and potential consequences of debt settlement. The bill also establishes strict rules about when and how debt settlement providers can charge fees, mandates monthly accounting statements, and allows consumers or commercial debtors to terminate contracts without penalty. Additionally, the bill creates legal recourse for individuals, allowing them to sue debt settlement providers for violations and potentially recover damages between $1,000 and $5,000 per violation, plus actual damages and attorney's fees. The overall aim is to protect both consumer and commercial debtors from unfair, deceptive, or abusive debt settlement practices by increasing transparency and accountability in the debt settlement industry.

Budget and Finance, Business and Industry, Justice

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260AB1166