Amended in Assembly July 16, 2015

Amended in Assembly July 8, 2015

Senate BillNo. 641


Introduced by Senator Wieckowski

February 27, 2015


An act to add Section 1788.61 to the Civil Code, relating to debt buying.

LEGISLATIVE COUNSEL’S DIGEST

SB 641, as amended, Wieckowski. Debt buying: default judgment.

(1) Existing law, the Fair Debt Buying Practices Act, regulates the practice of buying charged-off consumer debt, as defined, sold or resold on or after January 1, 2014, for collection purposes and prescribes the circumstances pursuant to which the debt buyer may bring suit. The act prohibits a court from entering a default or other judgment in an action initiated by a debt buyer against a debtor unless business records, authenticated through a sworn declaration, are submitted by the debt buyer to the court to establish the facts required to be alleged, as specified.

This bill would permit abegin delete debtorend deletebegin insert personend insert to serve and file a notice of motion and motion to set aside a default or default judgment and for leave to defend an action relating to debt, if service of a summons did not result in actual notice to thebegin delete debtorend deletebegin insert personend insert in time to defend an action brought by a debt buyer and a default or default judgment has been entered against thebegin delete debtorend deletebegin insert personend insert in the action. The bill would requirebegin delete a debtorend deletebegin insert the personend insert to make this service and filing within 6 years after entry of the default judgment or 180 days of the first actual notice of the action, whichever isbegin delete earlier.end deletebegin insert earlier, except in cases of identity theft or mistaken identity, in which case the service and filing is to be made within 180 days of the first actual notice of the action.end insert The bill would prescribe requirements for the filing, which would include an affidavit submitted to the court under oathbegin delete andend deletebegin insert showingend insert that thebegin delete party’send deletebegin insert person’send insert lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would permit a court to set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action. The bill would apply to a judgment entered on and after Januarybegin delete 1. 2010.end deletebegin insert 1, 2010, except as specified.end insert

(2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 1788.61 is added to the Civil Code, to
2read:

3

1788.61.  

(a) begin insert(1)end insertbegin insertend insertNotwithstanding Section 473.5 of the Code
4of Civil Procedure, if service of a summons has not resulted in
5actual notice to abegin delete debtorend deletebegin insert personend insert in time to defend an action brought
6by a debt buyer and a default or default judgment has been entered
7against thebegin delete debtorend deletebegin insert personend insert in the action, thebegin delete debtorend deletebegin insert personend insert may
8serve and file a notice of motion and motion to set aside the default
9or default judgment and for leave to defend the action.begin delete Theend delete

10begin insert(2)end insertbegin insertend insertbegin insertExcept as provided in paragraph (3), theend insert notice of motion
11shall be served and filed withinbegin delete the earlier of:end delete

12begin delete(1)end deletebegin deleteend deletebegin deleteSixend deletebegin insert a reasonable time, but in no event exceeding the earlier
13of:end insert

begin insert end insert
14begin insert(A)end insertbegin insertend insertbegin insertSixend insert years after entry of the default or default judgment
15against thebegin delete debtor.end deletebegin insert person.end insert

begin delete

16(2) Within 180

end delete

17begin insert(B)end insertbegin insertend insertbegin insertOne hundred eightyend insert days of the first actual notice of the
18action.

begin insert

19(3) Notwithstanding paragraph (2), in the case of identity theft
20or mistaken identity, the notice of motion shall be served and filed
P3    1within a reasonable time, but in no event exceeding 180 days of
2the first actual notice of the action.

end insert

3(b) A notice of motion to set aside a default or default judgment
4and for leave to defend the action shall designate as the time for
5making the motion a date prescribed by Section 1005 of the Code
6of Civil Procedure, and it shall be accompanied by an affidavit
7showing under oath that thebegin delete party’send deletebegin insert person’send insert lack of actual notice
8in time to defend the action was not caused by his or her avoidance
9of service or inexcusable neglect. Thebegin delete partyend deletebegin insert personend insert shall serve and
10file with the notice a copy of the answer, motion, or other pleading
11proposed to be filed in the action.begin insert In contesting the motion to set
12aside the judgment or default judgment, a debt buyer may
13introduce, and the court may consider, evidence relating to the
14document retention policies of the process server who appears on
15the proof of service of the summons and complaint.end insert

16(c) Upon a finding by the court that the motion was made within
17the period permitted by subdivision (a) and thatbegin delete debtor’send deletebegin insert the
18person’send insert
lack of actual notice in time to defend the action was not
19caused by his or her avoidance of service or inexcusable neglect,
20the court may set aside the default or default judgment on whatever
21terms as may be just and allow the party to defend the action.begin insert If
22the validity of the judgment is not challenged, the court may select
23an appropriate remedy other than setting aside the default or
24default judgment.end insert

25(d) This section shall apply to a default or default judgment
26entered on or after January 1,begin delete 2010.end deletebegin insert 2010, except in the case of
27identity theft or mistaken identity, in which case this section shall
28apply regardless of the date of the default or default judgment.end insert

begin insert

29(e) This section shall not limit the equitable authority of the
30court or other available remedies under law.

end insert
31

SEC. 2.  

No reimbursement is required by this act pursuant to
32Section 6 of Article XIII B of the California Constitution because
33the only costs that may be incurred by a local agency or school
34district will be incurred because this act creates a new crime or
35infraction, eliminates a crime or infraction, or changes the penalty
36for a crime or infraction, within the meaning of Section 17556 of
37the Government Code, or changes the definition of a crime within
P4    1the meaning of Section 6 of Article XIII B of the California
2Constitution.



O

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