Current lengthy process to get exemption from levies leaves many low-income Californians cut off from their accounts and unable to pay bills
Sacramento – Low-income Californians would no longer see their entire bank accounts frozen and turned over to a debt collector under a bill by Senator Bob Wieckowski (D-Fremont). SB 298 was approved by the Senate Judiciary Committee this afternoon. It would automatically exempt from collection $4,800 in a person’s account.
The committee heard from Grace Alcantar, a substitute teacher, who lost her final $6,000 when a bank levied her account to collect on credit card debt brought about by her efforts to pay off student loans. After her efforts to work out a more manageable payment schedule failed, her account was levied. She eventually received an exemption, but it took her months to get her money back.
“Wiping out someone’s bank account puts low-income workers at serious risk of homelessness, hunger, illness, and unemployment,” said Wieckowski, a member of the Judiciary Committee. “SB 298 is needed because the current process to get a claim of exemption is too burdensome and time consuming for consumers. Legal assistance is so inaccessible, that few consumers can actually utilize the exemptions. By putting in a floor of $4,800, this bill allows creditors to collect on a debt without pushing the consumer into further poverty or bankruptcy, which benefits no one.”
Wieckowski said $4,800 represents two months of work at a $15 an hour rate.
If SB 298 is enacted, California would join 16 other states that provide protection from bank levies. Wisconsin, Tennessee and Mississippi protect $5,000 or more.
“The current system puts the creditors’ ability to be repaid above all other considerations,” said Jith Meganathan of the California Low Income Consumer Coalition and the Western Center on Law and Poverty. “The results for thousands of low-income Californians are evictions, hunger, inability to purchase medicine and job loss. This bill will help strike a better balance between the creditors’ rights and society’s interest in ensuring that low-income individuals are able to maintain some stability in their lives.”
Senator Wieckowski represents the 10th Senate District, which includes southern Alameda County and northeast Santa Clara County.
