BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 233|
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THIRD READING
Bill No: AB 233
Author: Wieckowski (D)
Amended: 6/10/13 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-1, 6/18/13
AYES: Evans, Corbett, Jackson, Leno, Monning
NOES: Walters
NO VOTE RECORDED: Anderson
ASSEMBLY FLOOR : 50-23, 4/11/13 - See last page for vote
SUBJECT : Wage garnishment: restrictions: student loans
SOURCE : Author
DIGEST : This bill prohibits the use of an earnings
withholding order for purposes of enforcing a judgment for the
collection of debt that the judgment debtor proves is from a
student loan that is not made, insured, or guaranteed through a
federal student loan program. This bill requires a court to
terminate an earnings withholding order issued on or after July
1, 2014, upon proof by the judgment debtor that the earnings
withholding order enforces a judgment for collection of
non-federal program student loan debt. This bill also
establishes procedures for a judgment debtor to request to
terminate or modify an earnings withholding order enforcing a
judgment based on a non-federal program student loan debt.
ANALYSIS :
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Existing law:
1. The Wage Garnishment Law, establishes procedures regarding
the garnishment of a judgment debtor's wages. (Code Civil
Procedures [CCP] Section 706.010 et seq.)
2. Provides that "disposable earnings" means the portion of an
individual's earnings that remains after deducting all
amounts required to be withheld by law. (CCP Section
706.011(a).)
3. Provides that "earnings" means compensation payable by an
employer to an employee for personal services performed by
such employee, whether denominated as wages, salary,
commission, bonus, or otherwise. (CCP Section 706.011(b).)
4. Provides that service of an earnings withholding order
creates a lien upon the earnings of the judgment debtor that
are required to be withheld pursuant to the order and upon
all property of the employer subject to the enforcement of a
money judgment in the amount required to be withheld pursuant
to such order. The lien continues for a period of one year
from the date the earnings of the judgment debtor become
payable unless the amount required to be withheld pursuant to
the order is paid as required by law. (CCP Section 706.029.)
5. Restricts the amount of garnishment of a judgment debtor's
disposable earnings for any workweek to the lesser of 25% of
the individual's disposable earnings for that week or the
amount by which the individual's disposable earnings for that
week exceed 40 times the state minimum hourly wage in effect
at the time the earnings are payable. (CCP Section 706.050.)
6. Exempts from garnishment the portion of the judgment debtor's
wages proven to be necessary for the support of the judgment
debtor or the judgment debtor's family supported in whole or
in part by the judgment debtor. Existing law provides that
this exemption is not available for debt incurred relating to
the payment of attorney's fees under the Family Code, as
specified, for debt incurred for personal services rendered
by an employee or former employee of the judgment debtor, for
debt relating to a child support order, as specified, or for
debt relating to a state tax order. (CCP Section 706.051.)
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This bill:
1. Prohibits the use of an earnings withholding order for
purposes of enforcing a judgment for the collection of debt
that the judgment debtor proves is from a student loan that
is not made, insured, or guaranteed by the United States
Government pursuant to the Federal Family Education Loan
Program or the William D. Ford Federal Direct Loan Program.
2. Requires a court to terminate or modify an earnings
withholding order issued on or after July 1, 2014, if the
earnings withholding order enforces a judgment based on a
non-federal program student loan debt.
3. Authorizes a judgment debtor to request to terminate an
earnings withholding order enforcing a judgment based on a
non-federal program student loan debt.
4. Provides that a judgment creditor is liable to the judgment
debtor for all amounts collected by the judgment creditor
pursuant to an earnings withholding order issued to enforce a
judgment based on a non-federal program student loan debt.
5. Requires a judgment creditor to specify in an application
for issuance of an earnings withholding order whether the
judgment is based in whole or in part on a claim for debt
from a non-federal program student loan.
6. Requires a judgment debtor who requests to terminate an
earnings withholding order enforcing a judgment based upon a
non-federal program student loan to include in the request
specified information.
7. Requires the request to terminate an earnings withholding
order enforcing a judgment for a non-federal program student
loan debt to be made by filing with the levying officer an
original and one copy of the request.
8. Requires the levying officer, upon the filing of a request,
to send to the judgment creditor, at the address stated in
the application for the earnings withholding order, by
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first-class mail, postage prepaid, both of the following:
(a) a copy of the request; and (b) a notice of the request,
which must state that the request has been filed and that the
earnings withholding order will be terminated or modified to
subtract from the amount to be withheld the portion that is
based on a judgment to collect a non-federal program student
loan debt, unless a notice of opposition to the request is
filed with the levying officer by the judgment creditor
within 10 days after the date of the mailing of the notice of
the request.
9. Requires a judgment creditor, who desires to contest a
request to terminate an earnings withholding order enforcing
a judgment for non-federal program student loan debt, to file
with the levying officer a notice of opposition to the
request within 10 days after the date of the mailing of the
notice of the request.
10.Provides that if a notice of opposition to a request is
filed with the levying officer within the 10-day period, the
judgment creditor is entitled to a hearing on the request not
later than 30 days from the date a notice of motion is filed
by the judgment creditor.
11.Requires the judgment creditor to give written notice of the
hearing to the levying officer and serve a notice of the
hearing and a copy of the notice of opposition to the request
on the judgment debtor and, if indicated in the request, on
the attorney for the judgment debtor.
12.Provides that service is deemed made when the notice of the
hearing and a copy of the notice of opposition to the request
are deposited in the mail, postage prepaid, addressed to the
judgment debtor at the address stated in the request and, if
service on the attorney for the judgment debtor was indicated
in the request, to the attorney at the address stated in the
request.
13.Requires the judgment creditor to file proof of the service
with the court.
14.Requires the levying officer to file the request and the
notice of opposition to the request with the court after the
levying officer receives the notice of the hearing and before
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the date set for the hearing.
15.Provides that if the levying officer does not receive a
notice of opposition to the request within the 10-day period
after the date of mailing of the notice of request and a
notice of the hearing not later than 10 days after the filing
of the notice of opposition to the request, the levying
officer must serve on the employer one of the following: (a)
a notice that the earnings withholding order has been
terminated if the entire amount to be withheld under the
order is based on a judgment to collect a non-federal program
student loan debt; or (b) a modified earnings withholding
order that reflects the subtraction from the amount to be
withheld of the portion that is based on a judgment to
collect a non-federal program student loan debt.
16.Requires, if, after hearing, the court orders that the
earnings withholding order be terminated or modified, the
clerk to transmit a certified copy of the order to the
levying officer who must serve on the employer of the
judgment debtor: (a) a notice that the earnings withholding
order has been terminated; or (b) a copy of the modified
earnings withholding order.
17.Authorizes the court to order that the earnings withholding
order be terminated as of a date that precedes the date of
hearing; if the court determines that an amount withheld
pursuant to the earnings withholding order should be paid to
the judgment debtor, the court is required to make an order
directing the person who holds that amount to pay it promptly
to the judgment debtor.
18.Prohibits a judgment creditor, whose earnings withholding
order is terminated or modified, from applying for another
earnings withholding order to enforce the same judgment or
portion thereof that was determined to be based on a
non-federal program student loan.
19.Provides that if an employer has withheld and paid over
amounts pursuant to an earnings withholding order after the
date of termination of the order but prior to the receipt of
notice of its termination, the judgment debtor may recover
those amounts only from the levying officer if the levying
officer still holds those amounts or, if those amounts have
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been paid over to the judgment creditor, from the judgment
creditor.
20.Requires an employer, who has withheld amounts pursuant to
the earnings withholding order after termination of the order
but has not paid over those amounts to the levying officer,
to pay those amounts to the judgment debtor.
21.Authorizes an appeal from any court order regarding the
request to terminate an earnings withholding order enforcing
a judgment based upon a non-federal program student loan,
provides that an appeal by the judgment creditor from an
order modifying or terminating the earnings withholding order
will not stay the order from which the appeal is taken, and,
notwithstanding the appeal, provides that until the order
modifying or terminating the earnings withholding order is
set aside or modified on appeal, the order modifying or
terminating the earnings withholding order are given the same
effect as if the appeal had not been taken.
22.Specifies that the procedures for the request to terminate
an earnings withholding order enforcing a judgment based upon
a non-federal program student loan not apply to a withholding
order for support or a withholding order for taxes.
Background
In California, under the Wage Garnishment Law, a judgment
creditor can seek garnishment of a judgment debtor's wages to
satisfy a court judgment. The Wage Garnishment Law provides for
exemptions from wage garnishment, such as for necessities for
living and child support. However, California consumers facing
large private student loan debt are not shielded from wage
garnishment.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/19/13)
Associated Students of University of California, Davis
California Council on Economic Education
California Labor Federation
Children's Advocacy Institute at the University of San Diego
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School of Law
Latino Democratic Club
Legal Aid Association of California
Veterans Caucus of the California Democratic Party
OPPOSITION : (Verified 6/19/13)
California Association of Collectors, Inc.
California Bankers Association
ARGUMENTS IN SUPPORT : The California Labor Federation argues
that "[s]tudent loan debt is not dischargeable in bankruptcy;
therefore the debtor cannot get rid of the debt and will have to
pay back his loan eventually. By preventing the garnishment of
wages for many student loans, creditors will be more inclined to
work with the debtor and figure out a repayment plan that the
student can manage, benefitting thousands of young underemployed
Americans with oppressive education loans."
ARGUMENTS IN OPPOSITION : The California Association of
Collectors and the California Bankers Association, in
opposition, argue that this bill "inexplicably singles out one
form of debt from wage garnishment, while similar forms of debt
create a larger burden for student loan borrowers." Opponents
note that private student loans only account for 6% of the
market and "include rigorous credit underwriting that
responsibly assesses a borrower's willingness and capacity to
repay the loan, which best prepares borrowers for successful
repayment." Furthermore, opponents argue that this bill "will
effectively render delinquent private student loan debt
uncollectible," and assert that "the availability of [private]
loans will decrease and fewer students will have an opportunity
to go to collect and graduate as a result."
ASSEMBLY FLOOR : 50-23, 4/11/13
AYES: Ammiano, Atkins, Bloom, Blumenfield, Bocanegra, Bonilla,
Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Cooley, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Garcia, Gomez, Gordon, Gray, Hall, Roger Hernández, Holden,
Jones-Sawyer, Levine, Medina, Mitchell, Mullin, Muratsuchi,
Nazarian, Pan, Perea, V. Manuel Pérez, Quirk, Quirk-Silva,
Rendon, Skinner, Stone, Ting, Torres, Weber, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Achadjian, Allen, Bigelow, Chávez, Conway, Dahle,
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Donnelly, Beth Gaines, Gatto, Grove, Hagman, Jones, Linder,
Logue, Maienschein, Mansoor, Melendez, Morrell, Nestande,
Olsen, Wagner, Waldron, Wilk
NO VOTE RECORDED: Alejo, Gorell, Harkey, Lowenthal, Patterson,
Salas, Vacancy
AL:d 6/19/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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