BILL ANALYSIS
AB 182
Page 1
ASSEMBLY THIRD READING
AB 182 (Harman)
As Introduced January 27, 2003
Majority vote
JUDICIARY 14-0
-----------------------------------------------------------------
|Ayes:|Corbett, Harman, Bates, | | |
| |Dutra, Hancock, Jackson, | | |
| |Laird, Longville, Lieber, | | |
| |Pacheco, Spitzer, | | |
| |Steinberg, Vargas, Nunez | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Creates a mechanism for automatic adjustment for
inflation of the amounts of personal property exempt from
enforcement in bankruptcy proceedings or proceedings to enforce
a money judgment. Specifically, this bill :
1)Requires Judicial Council (JC) to include, in the form it
prepares listing the federal and state exemptions from
enforcement of a money judgment against a natural person, a
list of the amounts of exemptions that have been adjusted
together with a statement of the date of the next scheduled
adjustment.
2)Deletes the provision for adjustment of bankruptcy exemptions
under California law in accordance with the periodic
adjustments of similar exemptions provided under federal
bankruptcy law.
3)Provides that, beginning on April 1, 2004, and every three
years thereafter, the dollar amounts of personal property
exemptions applicable in bankruptcy matters shall be adjusted
as determined by JC rule, based on the change in the annual
California Consumer Price Index (CPI) for All Urban Consumers
(AUCs).
4)Provides that, beginning on April 1, 2007, and every three
years thereafter, the dollar amounts of personal property
exempt from enforcement of money judgments shall be adjusted
as determined by JC rule, based on the change in the annual
California CPI for AUCs.
AB 182
Page 2
5)Adjusts for inflation the amounts of personal property exempt
from enforcement of money judgments, based on the change in
the annual California CPI for AUCs since the last adjustment.
EXISTING LAW :
1)Requires JC to prepare a form containing a list of each of the
federal and California exemptions from enforcement of a money
judgment against a natural person.
2)Sets forth amounts of property exemptions that may be elected
by a debtor in a bankruptcy case under Title 11 of the United
States Code. The amounts are the same as the exemption
amounts set in federal law, and are required to be adjusted in
accordance with the periodic adjustments of similar exemptions
provided under federal bankruptcy law.
3)Sets forth the dollar amounts of various kinds of personal
property that are exempt from enforcement of a money judgment.
FISCAL EFFECT : None
COMMENTS : This bill is sponsored by the California Law Revision
Commission (CLRC) to update the dollar amounts of personal
property exemptions in cases to enforce money judgments, and to
create an automatic mechanism to update the exemption amounts in
bankruptcy cases and cases to enforce money judgments for
inflation.
In bankruptcy law, dollar amounts of various types of property
are set aside as exempt from inclusion in the bankruptcy estate
against which creditors may collect. This is necessary to
protect property necessary for the basic support of the debtor
and his or her dependent family. Thus, for example, a bankrupt
debtor may claim an exemption of up to $17, 425 in value in
property that the debtor uses as a residence, in addition to
other exemptions in specified dollar amounts for a motor
vehicle, household goods, and additional items. Similarly,
dollar amounts of various types of property exempt from
enforcement of a money judgment are set in state law.
Federal bankruptcy law sets dollar amounts of property exempt
AB 182
Page 3
from the bankruptcy estate and provides for the periodic
automatic adjustment of these amounts for inflation. Federal
law also allows states to opt out and set their own amounts for
exemptions in bankruptcy. California has opted out of the
federal exemptions, but its state exemptions for bankruptcy
mirror the federal exemptions and provide for adjustment in
accordance with any adjustments made in federal law.
Unlike federal law, under California law regarding exemptions
from enforcement of a money judgment, there is no automatic
adjustment of exemption amounts for inflation. Instead, the law
provides for a review of these amounts every 10 years by CLRC.
Legislative action is required to implement any recommendations
that CLRC would make. Under this bill, adjustments for
inflation would become automatic every three years, as they are
under federal law, saving the legislative time and other
resources that would otherwise have to be devoted to this
straightforward and generally noncontroversial matter. The
mechanism for adjustment under this bill uses the California CPI
for AUCs as the basis for the percentage adjustment, rounded to
the nearest $25. This bill makes the first needed adjustments
to the exemption amounts with regard to enforcement of money
judgments, as these amounts have not been adjusted since 1995.
The first automatic adjustment of the bankruptcy exemptions
would take place on April 1, 2007.
This bill does not create automatic adjustment of the homestead
exemption from enforcement of money judgments. CLRC states:
"The homestead exemption receives frequent legislative
attention, because of the obvious importance of the home, the
high level of the exemption, and the role played by interest
groups that can effectively sponsor legislation."
Analysis Prepared by : Kathy Sher / JUD. / (916) 319-2334
FN: 0000194