BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 929
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 929 (Wieckowski)
          As Amended August 23, 2012
          Majority vote 
           
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          |ASSEMBLY:  |54-21|(May 19, 2011)  |SENATE: |24-14|(August 28,    |
          |           |     |                |        |     |2012)          |
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           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
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            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
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          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 


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