BILL ANALYSIS Ó AB 929 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 929 (Wieckowski) As Amended August 23, 2012 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |54-21|(May 19, 2011) |SENATE: |24-14|(August 28, | | | | | | |2012) | ----------------------------------------------------------------- Original Committee Reference: JUD. SUMMARY : Increases the amounts of property exemptions for motor vehicles, jewelry, and tools of the trade that a bankruptcy debtor may elect to exempt such property from enforcement of a money judgment. Specifically, this bill : 1)Increases the amounts of the following property exemptions under CCP Section 703.140: a) The exemption for the debtor's interest in a motor vehicle or vehicles is set at an amount not to exceed $4,800 for one or more vehicles (an increase from $2,775 for a single vehicle); b) The exemption for the debtor's aggregate interest in jewelry, held primarily for personal, family, or household use of the debtor, is set at an amount not to exceed $1,425 (an increase from $1,150); and, c) The exemption for the debtor's aggregate interest in any implements, professional books, or tools of the trade of the debtor or the trade of a dependent of the debtor, is set at an amount not to exceed $7,175 (an increase from $1,750). d) The exemption for the debtor's aggregate interest in real property or personal property used by a debtor or his dependent as a residence, or in a cooperative that owns property that the debtor or dependent uses as a residence, is set at an amount not to exceed $24,060 (an increase from $17,425). 2)Increases the income eligibility threshold for a judgment debtor or spouse aged 55 years or older to claim the $175,000 AB 929 Page 2 homestead exemption. The Senate amendments significantly narrow the bill to restore the amounts of the homestead exemptions to current levels, and revise the dollar amounts of certain exemptions to reflect federal exemption base amounts adjusted upward for inflation according to recent California Consumer Price Index data. AS PASSED BY THE ASSEMBLY , this bill was substantially similar to the version approved by the Senate. FISCAL EFFECT : According to the Senate Appropriations Committee, the California homestead exemption amounts were last adjusted in 2009, when the above exemptions were raised from $50,000, $75,000, and $150,000, respectively. Under current law, the Judicial Council, on April 1, 2013, and at each three-year interval thereafter, is required to submit to the Legislature the amount by which the dollar amounts of the above homestead exemptions may be increased based on the change in the annual California Consumer Price Index (CPI) for All Urban Consumers and post the updated rates on their Web site. The Judicial Council has indicated there would be minor and absorbable costs to adjust the homestead exemption limits as required by this bill and post them on the Web site. The fiscal effect associated with the increase in the exemption limits for motor vehicles, jewelry, and tools/equipment as a result of these narrowing amendments is unknown at this time. COMMENTS : According to the author, an increase in the amount of certain exemptions under CCP Section 703.140 is warranted to assist bankruptcy debtors in California, especially in light of the current mortgage crisis and poor economy. This bill would increase the amounts of exemption for the bankruptcy debtor's aggregate interest in real property used as a residence, motor vehicle(s), and so-called "tools of the trade." With respect to the latter, the author contends that debtors who need tools for their job are at increased risk of not being able to continue working if the total value of their tools exceeds the current exemption amount of $1,750 which is often the case. Therefore, the author contends "permitting debtors to keep more assets such as tools of the trade and a work-related automobile will enable debtors to recover from financial insolvency more quickly and successfully." AB 929 Page 3 This bill also makes a small increase to income eligibility criteria that potentially allow a judgment debtor or his spouse age 55 years or older to claim the $175,000 homestead exemption. Specifically, the bill allows an unmarried person age 55 or older to have an annual income of up to $25,000 (rather than $15,000) and still claim the $175,000 homestead exemption. For married persons age 55 or older, the bill increases the annual income threshold to $35,000 (rather than $20,000). Recent amendments to the bill significantly narrow the bill to restore the amounts of the homestead exemptions to current levels, and makes a corresponding change to relieve the Judicial Council from adjusting those amounts for inflation in 2016, because such adjustment would no longer be appropriate at that time. Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334 FN: 0005703