California Private Student Loan Collections

California has a number of formal acts in law. Section 3, Part 4, Title 1.6C.15 of the Civil Code provides the Private Student Loan Recovery Reform Act, found in Sections 1788.200 through 1788.211. Title 1.6C.15 was added in 2021 by Chapter 559. Section 1788.20 names the law.

Section 1788.201 provides definitions for the following terms: “borrower”; “student borrower”; “consumer report”; “consumer reporting agency”; “co-signer”; “creditor”; “debtor” “exempt entity”; “original creditor”; “private education lender”; “loan for private education”; “action to recover private education credits”; and, “private education loan collector”.

Section 1788.202 prohibits a private education lender or private education loan collector from making a written representation to a debtor for the purpose of collecting a private education loan unless the private education lender or private education loan collector does have specified information including 18 items.

Section 1788.203 requires that all settlement agreements between a private education lender or private education loan collector and a debtor be documented in open court or otherwise reduced to writing. The private education lender or private education loan collector must ensure that a copy of the written agreement is given to the debtor.

Section 1788.204 prohibits a collector of private education loans from suing or initiating arbitration or other legal proceedings to collect a private education loan if the statute of limitations applicable to the private education lender or private education loan collector claim has expired.

Section 1788.205 provides that in an action brought by a private education lender or private education loan collector to collect a private education loan, the claim must allege specified information.

Section 1788.206 provides that in an action brought by a private education lender or private education loan collector, no default or other judgment may be entered against a defendant unless documents are submitted by the plaintiff to the court to establish the facts to be alleged. The documents must be properly authenticated and each in a form that would qualify as a commercial document.

Section 1788.207 provides that if service of a summons has not resulted in effective notice to a person in time to defend against an action brought by a private education lender or student loan collector private education and a default or default judgment has been entered against the person in the action, the person may serve and file a notice of motion and a motion to set aside the default or default judgment and leave to contest action using the specified procedures.

Section 1788.208 permits a person to bring an action against a creditor, private education lender, or private education loan collector for a violation of any provision of this title to recover or obtain damages -interest, an order to set aside any default judgment, restitution, etc. There are additional rules for class actions. The legal action must be brought within one year of the discovery by the plaintiff of the last infringement.

A private education lender or private education loan collector has no civil liability for damages under this section if the private education lender or private education loan collector demonstrates by a preponderance of evidence that the breach was unintentional and the result of an honest mistake, and occurred notwithstanding the maintenance of procedures reasonably adopted to avoid error.

Section 1788.209 provides that any waiver of the provisions of this title is contrary to public order, and is void and unenforceable. Article 1788.210 provides for a severability clause. Article 1788.211 specifies that this title came into force on July 1, 2022.


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