Creditor and debtor law includes the rights and obligations of (1) creditors who extend credit and make loans to consumers and businesses and (2) consumers and businesses who seek credit and loans for their personal and business finances. Creditor/debtor law consists primarily of state and federal statutes.
In California, creditor and debtor law is governed by a combination of state statutes and federal laws that outline the rights and obligations of both parties. Creditors, such as banks and lending institutions, are regulated in their practices of extending credit and making loans to ensure fair treatment of consumers and businesses. This includes adherence to the California Fair Debt Collection Practices Act, which restricts the methods creditors can use to collect debts. Debtors, on the other hand, are protected under laws such as the Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt Collection Practices Act, which provide guidelines on how debt can be collected and offer protections against abusive collection practices. Additionally, the state's Rees-Levering Motor Vehicle Sales and Finance Act regulates the sale and financing of motor vehicles. Bankruptcy proceedings, which can provide relief for overburdened debtors, are primarily governed by federal law under the U.S. Bankruptcy Code, but California law offers exemptions that debtors can choose instead of federal exemptions when filing for bankruptcy.