BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Martha M. Escutia, Chair
2003-2004 Regular Session
AB 182 A
Assembly Member Harman B
As Amended June 4, 2003
Hearing Date: June 10, 2003 1
Code of Civil Procedure; Welfare and Institutions Code 8
MTY:cjt 2
SUBJECT
Exemptions from Enforcement of Money Judgments
DESCRIPTION
This bill would increase the personal property exemption
amounts by approximately 20%, to reflect changes in the
cost of living since the amounts were last adjusted in
1994. In addition, this bill would create a mechanism for
triennial automatic adjustments in the personal property
exemption amounts tied to the increase in the All Urban
Consumer Price Index.
BACKGROUND
Existing law provides that certain dollar amounts of
various types of personal property are exempt from judgment
enforcement and therefore cannot be seized or sold to
satisfy a court judgment against an individual. These
exemptions are designed to ensure that the debtor maintains
the ability to support him or her and dependent family
members, and also to facilitate the debtor's financial
recovery after court judgment.
This bill is sponsored by the California Law Revision
Commission, which is charged by law with reviewing the
exemption amounts every ten years and to recommend changes
to the Legislature.
CHANGES TO EXISTING LAW
(more)
AB 182 (Harman)
Page 2
1. Existing law provides for exemptions from enforcement
of a money judgment for certain dollar amounts in motor
vehicles, residential improvement materials, jewelry,
heirlooms, and works of art, tools and implements used in
the exercise of the debtor's trade, business or
profession, public benefit accounts, inmate trust funds,
and unmatured life insurance. [Code of Civil Procedure
Secs. 704.010, 704.030, 704.060, 704.080, 704.090,
704.100.]
This bill would increase the dollar amounts of the
exemptions listed above by approximately 20% (for a
listing of increases by dollar amount see Comment 3).
2. Existing law provides that various state bankruptcy
exemptions shall be adjusted in accordance with periodic
adjustments of federal exemption amounts. [Code of Civil
Procedure Sec. 703.140.]
This bill would provide that the Judicial Council shall
triennially adjust the dollar amounts for bankruptcy and
money judgment exemptions based on the change in the
annual California Consumer Price Index for All Urban
Consumers. This exemption for inmate trust funds would
not be automatically adjusted.
3. Existing law provides that a county may recover
general assistance funds expended on an individual when
that individual acquires property in excess of that
needed to support him or herself and any dependents.
[Welfare and Institutions Code Sec. 17403 as interpreted
by the courts, see Reyes v. Board of Supervisors (1988)
196 Cal. App. 3d 1263.]
Existing law provides that certain amounts of personal
property are exempt from an action by the county to
recover general assistance payments. [Welfare and
Institutions Code Sec. 17409.]
This bill would double the exemption amounts described
above (for a listing of increases by dollar amount see
Comment 4).
COMMENT
1. Need for the bill
AB 182 (Harman)
Page 3
This bill is sponsored by the California Law Revision
Commission (CLRC), which is charged with reviewing
various exemption amounts every ten years and making
recommendations to the Legislature. CLRC writes that:
Exemptions are necessary to protect an amount of
property sufficient to support the judgment debtor
and dependent family and to facilitate the
debtor's financial rehabilitation. To fulfill
this purpose, exemption amounts need to be
adjusted periodically to reflect changes in the
cost of living . . . .
Legislation comprehensively adjusting personal
property exemption amounts was last enacted, on
Commission recommendation in 1994 . . . . Since
that time, the average cost of living in
California has increased by approximately 21%,
making revision of exempt amounts appropriate to
account for inflation . . . .
The Commission's existing duty to review exemption
statutes every ten years should be supplemented
with an automatic triennial cost-of-living
adjustment. This will bring the enforcement of
judgments personal property exemptions in line
with the automatic COLA applicable to the
bankruptcy-only exemptions . . . .
Automatic COLA provisions relieve the Legislature
of the burden of considering routine adjustments
needed to preserve important protections in the
face of inflation . . . The Commission recommends
using the California All Urban Consumer Price
Index as the best single measure of cost-of-living
changes affecting Californians . . . .
Responsibility for determining the appropriate
COLA factor should be placed on the Judicial
Council. This is appropriate because the Judicial
Council is responsible for rules of practice and
procedure under the Enforcement of Judgments Law .
. . This responsibility would also be analogous to
the role of the Judicial Conference of the United
AB 182 (Harman)
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States in determining and publishing the COLA
factor under the Bankruptcy Code.
2. Bill would replace periodic legislative action with
automatic cost-of-living increases every three years
In addition to recommending increases in exemption
amounts, the CLRC proposes that the money judgment
exemption amounts, except for the exemption for inmate
trust accounts, be automatically adjusted by Judicial
Council rule every three years, based on the change in
the California Consumer Price Index for All Urban
Consumers.
CLRC points out that bankruptcy exemption amounts are
already automatically adjusted in accordance with
cost-of-living adjustments in federal bankruptcy law.
There is no reason, CLRC argues, why money judgment
exemptions should not be similarly adjusted. CLRC adds
that automatic adjustments would relieve the Legislature
of the need to periodically legislate changes.
CLRC also suggests that both the money judgment and
bankruptcy exemptions be automatically adjusted according
to the California Consumer Price Index for All Urban
Consumers. As a result, the index used to automatically
adjust the bankruptcy exemptions would be changed from a
national index to a state index.
3. Bill would increase exemption amounts by approximately
21% to reflect changes in cost of living since last
legislative adjustment
The Legislature last adjusted the money judgment
exemption amounts in 1995 [SB 832 of 1995 (Kopp), Ch.
196, Statutes of 1995]. Since that time, the California
Consumer Price Index for All Urban Consumers has risen
approximately 21%. This bill would increase the
exemption amounts by this amount, resulting in the
following increases:
----------------------------------------------------------
| Exemption | Amount Under | Proposed New |
| | Existing Law | Amount |
|---------------------+------------------+-----------------|
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| Motor vehicle | $1,900 | $2,300 |
|---------------------+------------------+-----------------|
| Home improvement | $2,000 | $2,425 |
| materials | | |
|---------------------+------------------+-----------------|
| Jewelry, heirlooms, | $5,000 | $6,075 |
| and works of art | | |
|---------------------+------------------+-----------------|
| Tools used in a | $5,000-$10,000 | $6,075-$12,150 |
| trade or business | | |
|---------------------+------------------+-----------------|
| Commercial motor | $4,000 | $4,850 |
| vehicle | | |
|---------------------+------------------+-----------------|
| Public benefit | $1,000-$3000 | $1,225-$3,650 |
| account | | |
|---------------------+------------------+-----------------|
|Inmate trust account | $1,000 |$1,225 |
----------------------------------------------------------
4. Bill would increase exemptions available to recipients
of public assistance who are being sued by counties
seeking reimbursement of public assistance expenditures
Existing law provides for a right of action by counties
against recipients of public assistance for money
expended on that assistance when the recipient acquires
property [Welfare and Institutions Code Sec. 17409].
This provision has been interpreted by the courts to
allow counties to recover public assistance given to an
individual beyond the amount necessary for the individual
to support herself or himself and dependents (see Reyes
v. Board of Supervisors (1988) 196 Cal. App. 3d 1263).
Existing law further provides that certain amounts of
property are exempt from such a claim. This bill would
double these exemption amounts as follows:
----------------------------------------------------------
| Exemption | Amount Under | Proposed New |
| | Existing Law | Amount |
|---------------------+------------------+-----------------|
| Cash | $50 | $100 |
|---------------------+------------------+-----------------|
|Personal effects and | $500 | $1,000 |
| household furniture | | |
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|---------------------+------------------+-----------------|
| Trust funds for | $500 | $1,000 |
| funeral expenses | | |
|---------------------+------------------+-----------------|
| Insurance policies | $500 |$1,000 |
| | | |
----------------------------------------------------------
CLRC explains that the existing exemption amounts have not
been changed since 1959, and that doubling the amounts is
actually considerably less than the increase in the cost of
living since that time. However, any recipient of public
assistance who is subject to a money judgment under Welfare
and Institutions Code Sec. 17409 would probably also be
entitled to the generally applicable money judgment
exemptions that have been regularly increased to reflect
the cost of living. As a result, there is probably less
rationale for an increase in the situation-specific
exemptions in the Welfare and Institutions Code that fully
reflects changes in the cost of living.
Support: Business Law Section, State Bar of California;
Insolvency Law
Committee, State Bar of California; Kenneth Klee,
Professor of Law,
University of California, Los Angeles
Opposition: None Known
HISTORY
Source: California Law Revision Commission
Related Pending Legislation: SB 804 (Machado) would
increase the homestead exemption from
money judgments. The bill has passed
the Senate and is awaiting a hearing
in the Assembly Judiciary Committee.
AB 101 (La Suer) would make changes
in the same chapter of the Code of
Civil Procedure as this bill. The
bill has been placed on the Assembly
Inactive File.
AB 182 (Harman)
Page 7
Prior Legislation: SB 832 of 1995 (Kopp), Ch. 196 of 1995
Prior Vote: Assembly Judiciary Cmte. (14-0); Assembly
Floor (71-2)
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