BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1388|
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THIRD READING
Bill No: AB 1388
Author: Wieckowski (D), et al.
Amended: 6/10/11 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-1, 6/28/11
AYES: Evans, Corbett, Leno
NOES: Blakeslee
NO VOTE RECORDED: Harman
ASSEMBLY FLOOR : 49-26, 5/2/11 - See last page for vote
SUBJECT : Earnings withholding orders
SOURCE : Western Center on Law & Poverty
DIGEST : This bill strikes the for common necessaries of
life in an earnings withholding order exception, thus
providing that wages cannot be levied for debt incurred for
the common necessaries of life if those wages are necessary
for the support of the debtor or his/her family, and also
codifies an exception for debt incurred pursuant to an
order or award for the payment of attorney's fees under
specified Family Code sections, and make a related
clarifying change.
ANALYSIS : Existing law requires an employer to withhold
the amounts required by an earnings withholding order from
all earnings of the employee payable for any pay period of
the employee which ends during the withholding period, as
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specified. (Code Civ. Proc. Sec. 706.022.)
Existing law provides that the portion of the judgment
debtor's earnings that the debtor proves is necessary for
the support of the debtor, or his/her family, is exempt
from levy unless:
The debt was incurred for the common necessaries of life
furnished to the judgment debtor or the family of the
judgment debtor.
The debt was incurred for personal services rendered by
an employee or former employee of the judgment debtor.
The order is seeks to collect a state tax liability.
(Code Civ. Proc. Sec. 706.051.)
This bill strikes the above exception for common
necessaries of life, and adds an exemption for debt
incurred pursuant to an order or award for the payment of
attorney's fees under specified sections of the Family
Code.
This bill provides that the cross-reference to "common
necessaries of life," contained in a section related to the
waiver of court fees and costs, refers to that term as the
above section read prior to January 1, 2012
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/28/11)
Western Center on Law & Poverty (source)
California Church IMPACT
California Immigrant Policy Center
California National Organization for Women
Consumer Attorneys of California
East Bay Community Law Center
Los Angeles Center for Law and Justice
OPPOSITION : (Verified 6/28/11)
California Association of Collectors
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USCB, Inc.
ARGUMENTS IN SUPPORT : According to the author's office,
Amending this antiquated section of law by removing Code
Civ. Proc. Section 706.051(c)(1) will merely give
individuals the opportunity to prove to a judge that they
can't currently afford a garnishment or levy. Debtors
cannot file Claims of Exemption from garnishments and
levies that stem from medical bills, food, shelter or other
common necessities of life. This leads to the perverse
situation in which someone who runs up a huge gambling debt
at a casino can escape having his/her wages garnished, but
a debtor taken to the ER after a car accident will lose 25
percent of his/her wages till the medical bill is paid.
For low-income workers, wage garnishments can quickly turn
into homelessness and hunger. This is especially cruel
because medical debts are considered a common necessity of
life and are often the least voluntary of debts: no one
chooses to fall ill. With budget cuts to Medi-Cal, Healthy
Families, Indigent Care, and nearly all other
health-related programs, many more of the working poor are
going to have medical bills, especially emergency room
bills that they can't pay. Eliminating � 706.051(c)(1)
will not erase anyone's debt for the common necessities of
life. It will simply provide for more reasonable repayment
options to be negotiated, or for repayment to be delayed
until it no longer means disaster for the debtor's family.
The East Bay Community Law Center, in support, further
asserts, "�I]t makes no sense to permit debt collectors to
garnish poor people's wages and deny them access to food
and shelter until the debtor can manage to explain to the
sheriff or court what has happened. Section 706.051 of the
Code of Civil Procedure provides that a debtor who can
establish that the funds seized by a debt collector are
"necessary for the support" of her family can get those
funds back. But the law as currently written contains an
odd exception allowing the debt collector to take the money
if the debt was incurred "for the common necessaries of
life." . . . AB 1388 would correct this aberration and
simply provide that debt collectors cannot take away the
very wages that allow poor people to survive.
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ARGUMENTS IN OPPOSITION : USCB, Inc., in opposition,
contends that this bill would "further frustrate the
ability of creditors to collect debts which are lawfully
owed," and that "In this age of plastic, by expanding the
exemption to cover this type of debt, debtors will be able
to increase the likelihood that they will escape having to
pay debts they lawfully owe. As a result, creditors will
be forced to charge higher interest rates to those
consumers who do pay their debts.
The California Association of Collectors notes that the
"policy rationale for excluding common necessaries of life
from the claim of exemption process was to protect
consumers from creditors refusing to extend credit for
those necessaries," and contends that the "net effect of
taking medical care and hospital services out of the
definition will be to encourage health care providers to
demand payment prior to rendering of services. Consumers
will be forced to pay using bank credit cards with higher
interest rates and penalties."
ASSEMBLY FLOOR :
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Campos, Carter, Cedillo, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Hall, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mitchell, Monning, Perea, V. Manuel P�rez, Portantino,
Skinner, Solorio, Swanson, Torres, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Garrick, Grove, Hagman, Halderman, Harkey,
Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Charles Calderon, Gorell, Mendoza, Pan,
Vacancy
RJG:do 6/29/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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