AB 1427 revises California’s consumer credit reporting statute to add a new exclusion: consumer credit reports must not include the sale of a property that was located in a Governor‑declared emergency area and rendered uninhabitable by the disaster. The bill sits alongside existing time‑limit exclusions (bankruptcy, suits and judgments, collections, tax liens, arrests, and other adverse items) and restates prohibitions on including medical information without consent.
Beyond the disaster‑sale exclusion, the bill requires credit reporting agencies to identify the chapter in bankruptcy filings when that information is available, to indicate when an open‑end account has been closed by the consumer, and to start the seven‑year reporting clock for certain collection items after a defined 180‑day delinquency window. These changes shift verification and record‑keeping duties onto furnishers and reporting agencies, with implications for lenders, insurers, disaster‑affected homeowners, and compliance teams.
At a Glance
What It Does
The bill requires consumer credit reporting agencies to omit from reports certain adverse items and imposes new formatting and timing rules: identify bankruptcy chapters when possible, mark consumer‑closed open‑end accounts, and compute the seven‑year reporting period for collections from a 180‑day delinquency trigger. It adds an exclusion for property sales tied to Governor‑declared emergency areas where the property was rendered uninhabitable.
Who It Affects
Consumer credit reporting agencies and firms that furnish credit data (mortgage servicers, debt collectors, tax authorities, landlords, and courts) face new verification and reporting duties. Disaster‑impacted homeowners, consumers with medical debt, and anyone with older adverse records are likely to see direct benefits.
Why It Matters
The bill creates a targeted consumer protection for disaster‑related housing loss and tightens procedural rules that change when adverse items age off reports and how they appear. Compliance teams will need new processes to identify emergency areas and to accept furnishers’ notifications, while creditors and underwriters may see gaps in the data they use for risk decisions.
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What This Bill Actually Does
AB 1427 amends California’s list of information that consumer credit reporting agencies (CRAs) must not include in consumer credit reports. The bill keeps the established age‑out rules for bankruptcies, suits and judgments, paid tax liens, collection accounts, criminal records, and other adverse information, but it tacks on a new, situational exclusion for the sale of properties tied to declared emergencies.
Under the new language, if a property sits within an area where the Governor declared a state of emergency for a wildfire (language in the bill also references "natural disaster") on or after January 7, 2025, and the property was rendered uninhabitable or damaged beyond repair, the sale of that property may not be reported on a consumer credit report.
Operationally, the bill clarifies timing for the seven‑year reporting limit on collections and similar adverse items: that clock starts after a 180‑day period beginning on the delinquency that led to collection activity or charge‑offs. If multiple collection actions occur, the seven‑year period runs from the date of the first such action.
This creates a uniform start date CRAs must calculate from furnishers’ delinquency records rather than from later collection steps.AB 1427 also requires that when a CRA receives bankruptcy information arising under Title 11 of the U.S. Code, it should include the chapter (for example, Chapter 7 or Chapter 13) in the consumer’s file if that detail is ascertainable from the source. The bill mandates that CRAs mark an open‑end credit account as closed if the furnisher notifies them the consumer closed it (excluding demand deposit accounts).
It continues to prohibit including medical information in consumer credit files or furnishing medical information for employment, insurance, or credit purposes without a consumer’s consent, and it preserves the reporting of overdue child or spousal support only where verified through specified governmental channels.Taken together, the changes reallocate verification responsibilities: furnishers must supply clearer, chapter‑level bankruptcy data and timely notices about account closures and the onset of collection activity; CRAs must adjust record‑keeping, apply the new start date for aging, and implement a mechanism to exclude disaster‑related property sales when the statutory conditions are met. Practically, that will require matching property locations to state emergency area maps and resolving ambiguous language in the bill about whether the trigger is limited to wildfires or extends to other natural disasters.
The Five Things You Need to Know
The bill bars reporting the sale of a property when two conditions are met: the property is in an area covered by a Governor’s state of emergency declaration (referencing wildfires/natural disasters) on or after January 7, 2025, and the property was rendered uninhabitable or damaged beyond repair.
Medical debt is explicitly excluded from consumer credit reports; CRAs may not include medical information in files or furnish it for employment, insurance, or credit purposes without the consumer’s consent.
For collection accounts and similar adverse items, the seven‑year reporting period begins after a 180‑day period from the delinquency that preceded collection, and if multiple collection actions occur the clock starts on the first action.
When a CRA receives bankruptcy information under Title 11, it must include the chapter of bankruptcy (e.g.
Chapter 7, Chapter 13) in the report if that detail is available from the information source.
If a furnisher notifies a CRA that a consumer closed an open‑end credit account (excluding checking and other demand deposit accounts), the CRA must indicate on subsequent reports that the account was closed by the consumer.
Section-by-Section Breakdown
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List of items CRAs must not report
Subdivision (a) enumerates categories of information that consumer credit reporting agencies must exclude from consumer reports once they exceed statutory age limits or otherwise meet exclusion criteria. It restates familiar age‑outs for bankruptcies, suits and judgments, paid tax liens, collection accounts, and criminal records, and it excludes medical debt outright. Practically, this is the controlling list CRAs will use to decide whether a data element is permissible to furnish; any compliance program should map incoming furnisher data to these categories to determine reportability.
Unlawful detainer reporting — prevailing lessor standard
The bill narrows unlawful detainer reporting to instances where the lessor qualifies as the prevailing party. That requires either a final judgment in the lessor’s favor (including default, summary judgment, or trial) or a written settlement that expressly allows reporting. Settlements that do not state reporting permission cannot be used as a basis for reporting. This raises a practical requirement for furnishers and CRAs to retain and review court judgments or settlement language rather than relying on mere case closure.
New exclusion: sale of property in declared disaster areas
Paragraph (8) creates the new categorical exclusion for the sale of property when two conditions coexist: (A) the property lay within an area covered by a Governor’s state of emergency declaration (the text references wildfire and also inserts 'natural disaster') on or after January 7, 2025; and (B) the property was damaged beyond repair or rendered uninhabitable as a result of that event. The provision is fact‑specific and triggers an obligation on CRAs to identify eligible sales and omit them from reports, which will require cross‑referencing property locations with state emergency declarations and applying damage or habitability determinations supplied by furnishers or public records.
When the seven‑year clock starts for collections and similar actions
Subdivision (b) spells out that the seven‑year period applicable to accounts placed for collection or charged off begins after the 180‑day delinquency that immediately preceded the collection action or charge‑off. If multiple actions occur, the clock begins on the first action. This creates a single, furnishers‑driven trigger date CRAs must capture from account histories rather than calculating from later events.
Bankruptcy chapter identification, account closure flags, and medical data ban
Subdivision (c) requires CRAs to include the chapter of a bankruptcy case when that information is ascertainable from the furnisher. Subdivision (e) mandates that CRAs mark an open‑end account as closed if the furnisher notifies them the consumer closed it (excluding demand deposit accounts). Subdivision (f) prohibits including medical information in consumer files or furnishing medical information for employment, insurance, or credit without consumer consent. These provisions are operational: furnishers must pass structured metadata (chapter codes, closure flags) and CRAs must store and display these elements correctly.
Child and spousal support reporting
Subdivision (g) authorizes CRAs to include failures to pay overdue child or spousal support only where the information was provided under the former Section 4752 or has been verified by another governmental agency. That limits reporting to entries that have government verification, removing ad hoc or unverifiable furnishers from reporting such sensitive information.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Disaster‑affected homeowners and buyers in declared emergency areas — they avoid having sales of destroyed or uninhabitable properties appear as adverse items on credit reports, which can reduce barriers to rebuilding, refinancing, or obtaining new housing credit.
- Consumers with medical debt — the explicit ban on reporting medical information reduces the presence of medical debt on credit files and the related negative impacts on borrowing costs and eligibility.
- Consumers with older adverse records — tighter timing rules and the clarified seven‑year start date will accelerate removal of certain collection entries, improving credit profiles for some borrowers.
Who Bears the Cost
- Consumer credit reporting agencies — they must implement new exclusion logic, add bankruptcy‑chapter fields, flag consumer‑closed accounts, and match property locations with state emergency maps; these are development, data‑integration, and operational costs.
- Furnishers (mortgage servicers, debt collectors, tax offices, landlords, courts) — furnishers must supply more granular data (bankruptcy chapter, closure notices, verification of habitability/damage) and retain proof to support reporting decisions, increasing compliance burdens and recordkeeping costs.
- Lenders and insurers — the exclusion of certain sale information and medical data may remove risk signals the industry currently uses for underwriting, forcing changes to underwriting models or additional verification steps.
- State and local verification agencies — courts and state emergency offices may see increased requests for certification or records to substantiate claims about judgments, settlements, or property damage, without additional funding included in the bill.
Key Issues
The Core Tension
The central dilemma is between consumer relief and data completeness: the bill protects disaster‑impacted consumers and those with medical debt by removing adverse items, but in doing so it removes data points lenders and insurers use to assess risk—creating a trade‑off between giving immediate relief and preserving the information integrity that supports efficient credit markets.
The bill’s disaster‑sale exclusion is narrowly framed but operationally messy. It ties the exclusion to Governor‑declared emergency areas and to properties 'rendered uninhabitable' or 'damaged beyond repair,' which invites disputes over who determines habitability and what documentation suffices.
CRAs will need authoritative, machine‑readable maps of declared areas and consistent evidentiary standards from furnishers; absent those, inconsistent application could produce both under‑ and over‑exclusion. The bill’s text also contains overlapping references to 'wildfire' and 'natural disaster,' creating ambiguity about whether the exclusion is limited to wildfires declared on or after January 7, 2025, or meant to cover other disasters as well.
Another implementation challenge is verification: the statute requires furnishers to notify CRAs about account closures and provides a 180‑day trigger for aging collection accounts, but it does not set documentation standards or timelines for furnishers to provide supporting records. That raises disputes between creditors and consumers about the correct start date for the seven‑year clock.
The bill also omits explicit enforcement mechanisms or penalties specific to the new provisions; enforcement will rely on existing remedies under the state credit reporting statute and private rights of action, which could produce litigation testing the bill’s ambiguous terms. Finally, the exclusion of certain data (medical debt and disaster‑sale entries) will interact with private credit scoring and underwriting practices outside CRA control, potentially shifting rather than eliminating friction in credit decisions.
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