The California Commissioner of the Department of Financial Protection and Innovation (DFPI) recently posted a checklist of state debt collection license application requirements on the Nationwide Multistate Licensing System website ( NMLS).

The license application will be available on NMLS from September 1, 2021 until December 31, 2021.

The Debt Collection Licensing Act, which comes into force on January 1, 2022, requires anyone doing debt collection activity in California to be licensed by the DFPI.

Applicants can continue to operate as a California debt collector while applications are pending. If you apply after December 31, 2021, you’ll need to wait for a license to be issued before you can operate in California, according to the DFPI.

The DFPI also reports that licensees interested in continuing their operations in California from January 1, 2022 should start gathering the documents needed to apply to ensure they are ready when applications become available. Failure to meet the deadline and continued unlicensed operation may result in enforcement action.

The following persons are required to obtain a license to carry on a debt collection business in California in accordance with the DCLA.

• Anyone who, in the normal course of business, regularly, for his own account or for the account of others, engages in debt collection.
• Anyone who composes and sells, or offers to compose and sell, forms, letters and other collection media used or intended to be used in debt collection.
• Anyone who carries out the activity of a debt buyer. A debt buyer is any person or entity that regularly engages in the business of purchasing consumer debts written off for collection purposes, whether it is to collect the debt itself, to initiate a third party for collection or to hire a lawyer for a collection dispute. .

Activities authorized under the license:

• Active purchase of debt
• Debt collection in the first part
• Debt collection by third parties
• Management of first mortgages (only for collections of first mortgages held / owned by the company)
• Third-party first mortgage service (only for first mortgage collections that the company does not / own)
• Third Party Subordinated Mortgage Service (only for collections of subordinated mortgages that the company does not own / own)
• Judgment recovery

Other debt prerequisites for license applications include a surety bond. Debt collectors must submit with the license application and maintain a bond of a minimum amount of $ 25,000 payable to the Commissioner of the California Department of Financial Protection and Innovation and issued by an insurer licensed to do business in California.

Meanwhile, the DFPI continues to solicit comments on the recently enacted California Consumer Financial Protection Act (CCFPL) and DCLA, particularly on complaints and small business protection to help inform implementation by the California Department of Consumer Financial Protection Act, ACA International reported previously.

Visit the DFPI Debt Collector’s webpage and FAQ for more information.