Debt relief in California: collection rules, time limits and your options
Updated November 9, 2026
California at a glance (checked November 2026)
| California | |
|---|---|
| Time limit to sue on credit cards and written contracts | 4 years |
| Does a payment restart the clock? | No, for consumer debts |
| Wage garnishment for consumer debt | Up to 20% of disposable pay, often less |
| State debt collection laws | Rosenthal Act; Debt Collection Licensing Act |
| Who licenses debt collectors | Department of Financial Protection and Innovation (DFPI) |
| Where to complain | DFPI, and the CFPB |
Debt collection rules in California
The Rosenthal Fair Debt Collection Practices Act (Civil Code § 1788 and following) covers both collection agencies and creditors collecting their own debts. It adds to the federal rules: a collector can't threaten violence or arrest, use obscene language, call so often that it's harassment, or falsely claim to be a lawyer, a court or a government agency.
Since 2022, the Debt Collection Licensing Act requires most debt collectors and debt buyers to hold a license from the DFPI. You can look up a collector on the DFPI license search before you pay, and a collector that isn't licensed is a warning sign.
Debt buyers face extra rules: before suing or collecting, they must have documents showing they own the debt and how much is owed, and they must tell you when a debt is too old to sue on.
How long creditors have to sue
California gives creditors 4 years to sue on written contracts, which includes most credit cards and loans, and 2 years for debts based on a spoken agreement.
Since 2019, California law also says that a payment on a debt past the time limit doesn't restart the clock, and that creditors, debt buyers and collectors can't sue on a time-barred consumer debt. A collector can still ask you to pay, but it must tell you the debt is too old to sue on.
If you're sued anyway, file a response by the deadline on the papers and raise the time limit as a defense.
What can be garnished in California
After a court judgment, a creditor can take the lesser of:
- 20% of your disposable earnings (pay after required deductions), or
- 40% of the amount by which your weekly disposable earnings exceed 48 times the state minimum hourly wage (or the local minimum wage, if it's higher).
That means low earners are fully protected and many others lose well under 20%. You can also ask the court for a lower amount if you need the money for your family's basic support.
California's homestead exemption protects between $300,000 and $600,000 of equity in your home, depending on your county's median home price. Retirement accounts, a vehicle up to a set value, and a set amount in your bank account are also protected.
Ways out of debt in California
- Nonprofit credit counseling can set up a debt management plan with lower card interest rates. Look for agencies accredited by the NFCC or FCAA.
- Debt consolidation can lower your rate if your credit is still good. Check it with our debt consolidation calculator.
- Debt settlement companies operating in California must follow state rules on contracts and fees, as well as the federal ban on fees before a debt is settled.
- Bankruptcy: California lets you choose between two sets of exemptions, one better for homeowners and one for renters.
Where to get help or complain
- California DFPI licenses debt collectors and takes complaints.
- Consumer Financial Protection Bureau takes complaints about collectors and lenders nationwide.
- LawHelpCA lists free legal aid offices across the state.
General information about California law, not legal advice. Checked November 2026.