BILL ANALYSIS Ó
AB 1945
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 1945 (Wieckowski) - As Amended: March 28, 2014
SUBJECT : ENFORCEMENT OF MONEY JUDGMENTS: EXEMPTIONS: DOMESTIC
PARTNERS
KEY ISSUE : SHOULD IT BE EXPRESSLY CLARIFIED THAT THE DOMESTIC
PARTNER OF A JUDGMENT DEBTOR MAY CLAIM THE SAME COMMUNITY
PROPERTY-RELATED EXEMPTIONS THAT A SPOUSE OF A JUDGMENT DEBTOR
IS ENTITLED TO UNDER EXISTING LAW?
SYNOPSIS
According to the author, this bill provides helpful
clarification on the issue of whether registered domestic
partners can file jointly in bankruptcy and claim the same
property exemptions that spouses in a marriage can. With
respect to a debtor's eligibility to claim property exemptions,
current state law does not expressly authorize registered
domestic partners to claim the exemptions. Specifically, CCP
Section 703.020 authorizes the exemptions only for the debtor,
and in the case of community property, for the spouse of the
judgment debtor whether or not the spouse is also a judgment
debtor under the judgment. Family Code Section 297.5, however,
provides that registered domestic partners have the same rights,
protections and benefits, and shall be subject to the same
responsibilities, obligations, and duties under law, as are
granted to and imposed upon spouses. For this reason, despite
the lack of express statutory authority, it appears that
existing law allows registered domestic partners to file jointly
in bankruptcy and, with respect to community property, claim the
property exemptions in the same manner as spouses. This bill
simply codifies those principles and is reflective of existing
law. This bill has no known opposition.
SUMMARY : Clarifies the availability of specified property
exemptions to the domestic partner of a judgment debtor.
Specifically, this bill provides that, in the case of community
property, the domestic partner of the judgment debtor may claim
exemptions from enforcement of judgment whether or not he or she
is also a judgment debtor under the judgment.
AB 1945
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EXISTING LAW :
1)Specifies 21 different types of property and the conditions
under and amount of which a judgment debtor may claim an
exemption from enforcement of a money judgment. (Code of
Civil Procedure Sections 704.010 through 704.210.)
2)Provides eleven categories of exemptions, modeled after
federal law [11 U.S.C. § 522, subd. (d)] which the bankruptcy
debtor may elect to claim instead of the Section 704
exemptions described above. These exemptions include, among
other things, the debtor's interest in real property, motor
vehicles, jewelry and tools of the trade, up to specified
amounts. (Section 703.140(b).)
3)Provides that all of the above exemptions apply only to
property of a natural person. (Section 703.020(a).)
4)Permits, in all cases, the judgment debtor or a person acting
on behalf of the judgment debtor to claim any of these
exemptions, and in the case of community property, the spouse
of the judgment debtor, whether or not the spouse is also a
judgment debtor under the judgment. (Section 703.020(b).)
5)Provides that registered domestic partners shall have the same
rights, protections, and benefits, and shall be subject to the
same responsibilities, obligations, and duties under law,
whether they derive from statutes, administrative regulations,
court rules, government policies, common law, or any other
provisions or sources of law, as are granted to and imposed
upon spouses. (Family Code Section 297.5(a).)
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
COMMENTS : According to the author, this bill provides helpful
clarification of existing law on the issue of whether registered
domestic partners can file jointly in bankruptcy and claim the
same property exemptions that spouses in a marriage can.
Specifically, this bill clarifies that, in the case of community
property, the domestic partner of a judgment debtor may claim
exemptions from enforcement of judgment whether or not he or she
is also a judgment debtor under the judgment.
Background on Exemption Statutes. Both the federal Bankruptcy
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Code and California law provide numerous exemptions that are
intended to save bankruptcy debtors and their families from
extreme hardship. "The fundamental purpose behind exemptions in
bankruptcy is to ensure that the debtor is not left destitute
and dependent upon the public purse after distribution of his
assets to creditors. Along with the discharge of debts,
exemptions are the principal means by which the bankruptcy
proceeding allows the debtor to rehabilitate himself and his
family financially. Thus, exemptions provide the debtor with a
fresh start, and 'shift the burden of providing the debtor with
minimal financial support from society to the debtor's
creditors.'" (Exemptions Under the Bankruptcy Code: Using
California's New Homestead Law as a Medium for Analysis. 72
California Law Review 922 (1984).)
The exemption provision of the U.S. Bankruptcy Code has two key
provisions. The first permits the debtor to choose between the
Code's exemptions and those provided by the debtor's state of
domicile. The second exemption provision of the Code, however,
allows the states to completely negate the Code's exemptions and
instead apply only their own exemption provisions to the
bankruptcy case. (Id. at 925.) Under this so-called "opt-out
provision," California has chosen to opt-out of the federal
exemption scheme, so California residents filing for bankruptcy
are limited to the exemptions afforded under state law. (In re
Rolland, Bkrtcy.C.D.Cal.2004, 317 B.R. 402.)
Under state law, California bankruptcy debtors have two sets of
exemption options to choose from, one set of state law
nonbankruptcy exemptions (hereafter "Section 704 exemptions")
and a second set modeled after federal bankruptcy exemptions
(hereafter "Section 703 exemptions"); however, the debtor may
choose only one set of exemptions. (In re Steward, 9th Cir. BAP
(Cal.) 1998, 227 B.R. 895.)
This bill clarifies that domestic partners filing jointly for
bankruptcy are entitled to claim the same property exemptions
that spouses may claim. With respect to a debtor's eligibility
to claim property exemptions, current state law does not
expressly authorize registered domestic partners to claim the
exemptions. Specifically, CCP Section 703.020 authorizes the
exemptions only for the debtor, and in the case of community
property, for the spouse of the judgment debtor whether or not
the spouse is also a judgment debtor under the judgment. Family
Code Section 297.5, however, provides that registered domestic
AB 1945
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partners have the same rights, protections and benefits, and
shall be subject to the same responsibilities, obligations, and
duties under law, as are granted to and imposed upon spouses.
By logical extension, registered domestic partners are entitled
to claim the property exemptions in the same manner as spouses
under existing law, including in cases of community property
when the partners have filed jointly in bankruptcy.
According to the author, an experienced bankruptcy attorney,
this bill is needed to eliminate reported uncertainty as to
whether domestic partners may jointly file for bankruptcy and
claim the same property exemptions as married couples. The
author notes that in 2011, the U.S. Bankruptcy Court of the
Central District of CA in 2011 held that same-sex individuals
lawfully married under state law are entitled to file a joint
bankruptcy petition, despite the contrary command of the federal
Defense of Marriage Act (DOMA). To uphold the definition of
marriage under DOMA in this case and deny the joint petition,
the court concluded, would have violated the debtors' equal
protection rights under the Fifth Amendment, either under
heightened scrutiny or under rational basis review (In re:
Balas, 449 BR 567 (Case No. 2:11-bk-17831 TD)). The subsequent
invalidation of DOMA by the U.S. Supreme Court in 2013 may have
helped eliminate any distinction between same-sex and
opposite-sex marriages, but according to the author, some
uncertainty remains as to the rights of registered domestic
partners to jointly file for bankruptcy under existing law.
Accordingly, this bill amends CCP Section 703.020 to codify
existing law that permits domestic partners to file jointly for
bankruptcy and entitles the domestic partner of the debtor to
claim the same property exemptions that a spouse may claim.
Because the spouse of the judgment debtor may claim exemptions
whether or not the spouse is also a judgment debtor under the
judgment, similarly this bill would allow the domestic partner
of the debtor to claim exemptions whether or not the domestic
partner is also a judgment debtor under the judgment.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
AB 1945
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None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334