BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 567|
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CONSENT
Bill No: AB 567
Author: Wagner (R)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-0, 6/4/13
AYES: Evans, Anderson, Corbett, Jackson, Leno, Monning
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 75-0, 4/8/13 - See last page for vote
SUBJECT : Enforcement of money judgments: exemptions
SOURCE : California Law Revision Commission
DIGEST : This bill removes an existing requirement directing
the California Law Revision Commission to review the statutory
dollar amounts of personal property exempted from the
enforcement of monetary judgments every ten years, and to
recommend to the Governor and the Legislature any necessary
changes regarding those amounts. It retains the Commission's
existing authorization to continually review and submit
recommendations concerning the enforcement of monetary
judgments.
ANALYSIS :
Existing law:
1.Provides for twenty-one specific exemptions that limit the
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enforceability of a money judgment against a debtor's personal
property, including 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 policies.
2.Makes eleven similar specific exemptions available to debtors
in personal bankruptcy proceedings.
3.Provides for subsistence level exemptions that limit
reimbursement claims from reaching certain personal property
acquired by persons for the support of whom public moneys have
been expended.
4.Requires the California Law Revision Commission to review the
exempt amounts provided in statutes related to the enforcement
of civil judgments and in other statutes every ten years, and
recommend to the Governor and the Legislature any changes in
exempt amounts that appear proper.
5.Requires the Judicial Council of California to adjust the
dollar amounts of exemptions provided in statutes related to
the enforcement of civil judgments and in personal bankruptcy
proceedings every three years based on the change in the
California Consumer Price Index for All Urban Consumers.
This bill deletes the requirement that the California Law
Revision Commission make the decennial recommendations, while
retaining the Commission's general authority to study, review,
and make recommendations regarding the enforcement of monetary
judgments.
Background
Under existing law, certain dollar amounts of various types of
personal property are exempt from civil judgment and cannot be
seized or sold to satisfy a court judgment entered against an
individual. For example, the Code of Civil Procedure currently
exempts, among other things, $7,175 worth of jewelry, heirlooms,
and works of art owned by a debtor, and $2,875 worth of
materials used to repair or maintain a residence, from being
used for the satisfaction of a money judgment. These personal
property exemptions are designed to ensure that a debtor
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maintains the ability to support himself/herself, as well as
dependent family members, after the entry of judgment, and also
to facilitate the debtor's financial recovery.
To account for inflation and other changes in consumer prices,
existing law directs the California Law Revision Commission to
review the statutory dollar amounts of personal property
exempted from the enforcement of monetary judgments every ten
years, and to recommend "any changes in exempt amounts that
appear proper." Existing law also directs the Commission to
study and recommend similar revisions to the value of personal
property subject to either state bankruptcy exemptions or to
county actions for the recovery of general assistance funds.
The Commission's first two decennial reviews (completed in 1994
and 2003) recommended inflation-based adjustments to the
exemption amounts, which the Legislature subsequently enacted
into law. (SB 832, Kopp, Chapter 196, Statutes of 1995; AB 182,
Harman, Chapter 379, Statutes of 2003). The second decennial
review also recommended the creation of a new statutory cost of
living adjustment (COLA) mechanism to automatically increase the
exemption amounts every three years.
The Legislature responded to the second decennial review by
passing AB 182 (Harman, Chapter 379, Statutes of 2003) (codified
in part at Code Civ. Proc. Sec. 703.150). Among other things,
that bill created a statutory mechanism that automatically
increases the value of personal property exempted from monetary
judgments and bankruptcy filings every three years in line with
changes in California's Consumer Price Index. It directs the
Judicial Council of California to "determine the amount of the
adjustment based on the change in the annual California Consumer
Price Index for All Urban Consumers," and to publish the
adjusted figures together with the date of the next scheduled
adjustment.
The California Law Revision Commission, the sponsor of this
bill, states that with the advent of the automatic COLA
mechanism, the existing decennial review provision has become
outdated and unnecessary. In its third decennial review, which
was completed in December 2012, the Commission found that "the
automatic COLA mechanism has been operating as intended," and
"[c]onsequently, the statutory exemption amounts do not require
manual adjustment at this time." The Commission's report went
on to state that "[b]ecause the COLA mechanism is properly
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adjusting the exemption amounts to account for inflation, the
Commission sees no need for further decennial review of the
exemption amounts," and "[t]he Commission therefore recommends
that the decennial review requirement be repealed."
Prior Legislation
ACR 98 (Wagner, Chapter 108, Statutes of 2012) directed the
California Law Revision Commission to examine California law in
twenty-three distinct fields, including the civil law relating
to creditors' remedies.
AB 929 (Wieckowski, Chapter 678, Statutes of 2012) increased the
dollar amount of the exemptions for a debtor's interest in motor
vehicles, jewelry, professional books, and tools of the trade of
the debtor or the debtor's dependent, and also increased the
amount of the homestead exemption for persons 55 years of age or
older who meet specified low-income criteria.
AB 2328 (Olsen, 2012) would have eliminated the California Law
Revision Commission, including its responsibility to produce
decennial reports concerning personal property exempted from the
enforcement of money judgments. This bill failed passage in the
Assembly Judiciary Committee.
AB 1046 (Anderson, Chapter 499, Statutes of 2009) raised the
amounts of a debtor's homestead exemption by $25,000 in each
available category, establishing the current statutory levels of
$75,000, $150,000, and $175,000.
AB 182 (Harman, Chapter 379, Statutes of 2003) raised the dollar
amounts a debtor may claim for exemptions from enforcement of a
money judgment and in bankruptcy actions in line with decennial
recommendations of the California Law Revision Commission. This
bill also directed the Judicial Council of California to
triennially adjust the dollar amounts for bankruptcy and money
judgment exemptions based on changes in the California Consumer
Price Index for All Urban Consumers.
SB 832 (Kopp, Chapter 196, Statutes of 1995) raised the dollar
amounts a debtor may claim for exemptions from enforcement of a
money judgment and in bankruptcy actions in line with decennial
recommendations of the California Law Revision Commission.
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AB 707 (McAlister, Chapter 1364, Statutes of 1982) codified the
Enforcement of Judgments Law, including the statutory dollar
amount of personal property exempted from the enforcement of
monetary judgments.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/5/13)
California Law Revision Commission (source)
ARGUMENTS IN SUPPORT : According to the author:
The Commission recently completed its third decennial
review. It found that the automatic COLA mechanism has
been operating as intended. As the statutory exemption
amounts no longer require manual adjustment to account for
inflation, AB 567 will remove the statutes requiring manual
adjustments be performed.
[This bill] [r]emoves [the] requirement of decennial review
of amounts exempted from the enforcement of money
judgments.
ASSEMBLY FLOOR : 75-0, 4/8/13
AYES: Achadjian, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Maienschein, Medina,
Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel P�rez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,
Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Alejo, Conway, Lowenthal, Mansoor, Vacancy
AL:nl 6/5/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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