BILL NUMBER: SB 890 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 18, 2012
AMENDED IN SENATE MAY 27, 2011
AMENDED IN SENATE MAY 17, 2011
AMENDED IN SENATE MARCH 24, 2011
INTRODUCED BY Senator Leno
( Coauthors: Assembly Members
Butler and Wieckowski )
FEBRUARY 18, 2011
An act to add Title 1.6C.5 (commencing with Section 1788.50) to
Part 4 of Division 3 of the Civil Code, and to amend Sections
700.010, 706.103, 706.104, 706.108, and 706.122 of, and to add
Sections Section 581.5 to, the Code of
Civil Procedure, relating to debt buyers.
LEGISLATIVE COUNSEL'S DIGEST
SB 890, as amended, Leno. Debt buyers.
(1) Existing state and federal law regulate the practice of debt
collection. Existing state law prohibits a debt collector from
engaging in specified conduct, including the use of threats or
causing a telephone to ring repeatedly to annoy the person called.
Existing law prohibits a debt collector from obtaining an affirmation
from a debtor of a consumer debt that has been discharged in
bankruptcy, without clearly and conspicuously disclosing to the
debtor, in writing, the fact that the debtor is not legally obligated
to make such affirmation.
This bill would enact the Fair Debt Buyers Practices Act, which
would regulate the activities of a person or entity that has bought
consumer debt and the circumstances in which the person may bring
suit. The bill would prohibit a debt buyer, as defined, from making
any written statement in an attempt to collect a consumer debt unless
the debt buyer has valid evidence in the form of business
records possesses information that the debt
buyer is the sole owner of the specific debt at issue, the
amount of the debt balance, as specified , and
the name of the creditor at the time the debt was charged off, among
other things. The bill would require the debt buyer to make
this evidence certain documents available to the
debtor, without charge, upon receipt of a request, within 15 days.
The bill would prohibit a debt buyer from communicating with
a debtor in writing without providing a specified notice
require that a specified notice be included with the debt buyer'
s first written communication with the debtor . The bill would
require all settlement agreements between a debt buyer and a debtor
to be documented in open court or otherwise in writing and
would require a debt buyer who receives a payment on a debt to
provide a receipt or statement containing certain information. The
bill would prohibit a debt buyer from initiating a suit to collect a
debt if the statute of limitations on the cause of action has
expired. The bill would prescribe penalties for a violation of the
act and would provide that its provisions may not be waived. The bill
would require a debt buyer bringing an action on consumer debt to
include certain information in his or her complaint. The bill would
prohibit an entry of judgment in favor of a plaintiff debt buyer
unless properly authenticated business records relating to the debt
and ownership of it, among other things, are properly in evidence,
and would permit a court to dismiss a debt buyer's action to collect
with prejudice if this information is not provided or if the debt
buyer fails to appear or is not prepared on the date scheduled for
trial.
(2) Existing law establishes a process for the enforcement of
money judgments and requires a levying officer to provide certain
documents and information to a judgment debtor and to a designated
employer in connection with wage garnishment. Existing law permits a
process server also to serve an earnings withholding order on an
employer and requires that the process server also serve certain
documents at this time. Existing law requires an employer who is
served with an earnings withholding order to provide certain
documents to an employee who is a judgment debtor.
This bill would require, in the circumstances described above,
that a copy of the form that the judgment debtor may use to make a
claim of exemption and a copy of the form used to provide a financial
statement also be provided.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Title 1.6C.5 (commencing with
Section 1788.50) is added to Part 4 of Division 3 of the Civil Code,
to read:
TITLE 1.6C.5. Fair Debt Buyers Practices Act
1788.50. (a) As used in this title, "debt buyer" means a person
or entity that regularly purchases charged-off consumer loans or
consumer credit accounts, or other delinquent consumer debt. "Debt
buyer" includes a person acting on behalf of a debt buyer.
(b) Terms defined in Title 1.6C (commencing with Section 1788)
shall apply to this title.
1788.51. The requirements and remedies of this title are
cumulative to those in Title 1.6C (commencing with Section 1788) as
well as any other law.
1788.52. (a) A debt buyer shall not make any written statement in
an attempt to collect a consumer debt unless the debt buyer has in
its possession evidence, in the form of business records, all of the
following:
(1) That the debt buyer is the sole owner of the specific debt or
account at issue.
(2) The amount of the debt allegedly owed by the debtor, including
an itemized accounting of all post-charge-off fees and charges.
(3) The name of the creditor at the time of charge-off.
(4) The name and address of the debtor as it appeared on the
charge-off creditor's records.
(5) The charge-off creditor's account number associated with the
debt.
(6) If the debt is purchased on or after January 1, 2012, a copy
of the contract or other document evidencing the debtor's agreement
to the debt or, if the claim is based on debt for which no such
signed writing evidencing the original agreement exists, then copies
of documents demonstrating that the debt was incurred by the person
receiving the written statement.
(b) A debt buyer shall provide a copy of the evidence described in
subdivision (a) to the debtor, without charge, within 15 calendar
days of receipt of a debtor's request for the evidence. A debt buyer
shall also provide a copy of the materials described in paragraph (1)
or (2) of subdivision (b) of Section 1788.60 to the debtor, without
charge, within 10 business days of receipt of the debtor's request
for the materials.
(c) A debt buyer shall not communicate with a debtor in writing in
an attempt to collect a time-barred debt without clearly and
conspicuously providing the following written notice in at least
12-point boldface type on the first page of the debt buyer's first
communication with the debtor:
"BECAUSE OF THE PASSAGE OF TIME, WE MAY NOT SUE IN COURT, OR
COMMENCE AN ARBITRATION OR OTHER PROCEEDING, ON DEBT THAT IS BARRED
BY A STATUTE OF LIMITATIONS. YOU SHOULD CONSULT AN ATTORNEY, VISIT A
LOCAL SELF-HELP CENTER, OR VISIT WWW.COURTINFO.COM/SELFHELP FOR MORE
INFORMATION."
1788.54. (a) All settlement agreements between a debt buyer and a
debtor shall be in writing. A debt buyer that receives payment on a
debt shall provide a receipt or monthly statement to the individual
from whom payment is received within 15 calendar days of payment. The
receipt or statement shall clearly and conspicuously show the amount
and date paid, the name of the entity paid, the current account
number, the name of the charge-off creditor, and the account number
issued by the charge-off creditor, and the remaining balance owing,
if any.
(b) If a debt buyer accepts a payment as payment in full or as a
full and final compromise of the debt, a final statement that
complies with subdivision (a) shall be provided to the debtor within
15 calendar days.
1788.56. A debt buyer shall not bring suit, or initiate an
arbitration or other legal proceeding, to collect a consumer debt if
the applicable statute of limitations on the debt buyer's claim has
expired.
1788.58. In an action brought by a debt buyer on a consumer debt:
(a) The plaintiff shall disclose clearly and conspicuously on the
face of the complaint that the plaintiff is a debt buyer.
(b) The complaint shall include all of the following:
(1) A short statement, written in simple language, describing the
nature of the underlying debt and the consumer transaction from which
it is derived.
(2) All of the information set forth in paragraphs (2) to (5),
inclusive of subdivision (a) of Section 1788.52.
(3) An allegation that the debt buyer is the sole current owner of
the debt, and setting forth the names of any and all previous owners
of the debt.
(4) An allegation that the debt is not barred by the applicable
statute of limitations.
(c) In an action on a consumer debt, a debt buyer shall attach to
the complaint a copy of the contract or other writing evidencing the
original debt, signed by the defendant, unless the debt buyer
provides a sworn declaration that the documents could not be obtained
prior to the time of filing suit. If a claim is based on credit card
debt and a signed writing evidencing the original debt does not
exist, then copies of any documents generated when the credit card
was actually used shall be attached.
1788.60. (a) In an action initiated by a debt buyer, prior to the
entry of a judgment against a debtor, including a default judgment,
the plaintiff shall clearly and conspicuously disclose to the court
that it is a debt buyer and shall provide admissible evidence
satisfactory to the court to establish the amount and nature of the
debt and the identity of the debtor, including all of the information
described in subdivision (b).
(b) For the purpose of this section, the only evidence sufficient
to establish the amount and nature of the debt shall be properly
authenticated business records that the court determines are
sufficient to satisfy the requirements of Sections 1271 and 1272 of
the Evidence Code. The authenticated business records shall include
the following items:
(1) A copy of the contract or other writing evidencing the
original debt, signed by the defendant. If a claim is based on debt
for which a signed writing evidencing the original debt does not
exist, then copies of documents demonstrating that the debt was
incurred by the defendant.
(2) A copy of a writing, including, but not limited to, the bill
of sale, establishing that the debt buyer is the sole current owner
of the debt and showing from which entity the debt was acquired. If
the debt has been sold more than once after being charged off,
admissible written evidence shall be provided to establish an
unbroken chain of ownership interests. Each writing shall contain the
original account number of the debt sold or purchased, which shall
be redacted for security purposes in accordance with Rule 1.20 of the
California Rules of Court.
(3) The account number at time of charge-off.
(4) The name of the charge-off creditor.
(5) The account balance at the time of charge-off.
(6) An itemization of post-charge-off fees and charges claimed to
be owed.
(7) The date of last payment, if any.
(8) The amount of interest claimed and the basis for the interest
charged.
(9) The alleged date of default.
(c) In any action on a consumer debt, if the plaintiff who is a
debt buyer seeks a default judgment and has not complied with the
requirements of this section, the court shall not enter a default
judgment for the plaintiff and may, in its discretion, dismiss the
action with or without prejudice.
(d) In any action on a consumer debt, a debt buyer shall have the
burden of pleading and of proving that the applicable statute of
limitations has not expired. Before entering a judgment in the
action, the court shall determine on the record that the applicable
statute of limitations has not expired.
1788.62. (a) Except as otherwise provided by this section, a debt
buyer who violates any provision of this title is liable to the
person who suffers the violation in an amount equal to the sum of the
following:
(1) Any actual damage sustained by the person.
(2) The amount established pursuant to either subparagraph (A) or
(B):
(A) The case of any action by an individual, such additional
damages as the court may allow, but not more than two thousand
dollars ($2,000) per action.
(B) In the case of a class action, the amount for each named
plaintiff that could be recovered under subparagraph (A) and an
amount that the court may determine for the class, not to exceed the
lesser of five hundred thousand dollars ($500,000) or 1 percent of
the fair market value of the debt buyer.
(3) In the case of any successful action to enforce the foregoing
liability, the costs of the action, together with reasonable
attorneys' fees as determined by the court. Reasonable attorneys'
fees may be awarded to a prevailing debt buyer upon a finding by the
court that the action was brought in bad faith and for the purpose of
harassment.
(b) In determining the amount of liability under paragraph (2) of
subdivision (a), the court shall consider, among other relevant
factors, the following:
(1) In any individual action under subparagraph (A) of paragraph
(2) of subdivision (a), the frequency and persistence of
noncompliance by the debt buyer, and the nature of the noncompliance.
(2) In any class action under subparagraph (A) of paragraph (2) of
subdivision (a), the frequency and persistence of noncompliance by
the debt buyer, the nature of the noncompliance, the resources of the
debt buyer, and the number of persons adversely affected.
(c) A debt buyer shall not be held liable in any action brought
under this title if the debt buyer shows by a preponderance of
evidence that the violation was not intentional and resulted from a
bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error.
(d) An action to enforce any liability created by this title may
be brought within two years from the last violation.
1788.64. Any waiver of the provisions of this title is contrary
to public policy, and is void and unenforceable.
SECTION 1. The Legislature finds and declares the
following:
(a) The collection of debt is an appropriate business practice,
and most entities involved in the collection of debt act within the
requirements of the law, and respect the rights of consumers.
(b) According to the Federal Trade Commission and the Department
of Consumer Affairs, the debt collection industry is, however, the
source of more consumer inquiries in California than any other
industry. A significant source of consumer complaints concerns
attempts to collect debt that is not owed, has been discharged, or is
impermissible.
(c) Debt collection lawsuits brought by debt buyers have increased
sharply in recent years, and this increase has resulted in a
significant strain on the state's courts.
(d) Many collection lawsuits brought by some debt buyers are not
supported by sufficient documentation to establish the provenance of
the alleged debt. In a significant percentage of these lawsuits,
defendants never appear, resulting in default judgments where
potential defenses to collection efforts are not raised.
(e) To facilitate the collection of debt and ensure the integrity
of the debt collection process, reasonable documentation establishing
the provenance of purchased debt must be secured before action is
taken to collect it. The existence of that documentation will protect
consumers, provide needed guidance to courts, and establish clear
standards for debt buyers and the collection industry.
SEC. 2. Title 1.6C.5 (commencing with Section
1788.50) is added to Part 4 of Divis ion 3 of the
Civil Code , to read:
TITLE 1.6C.5. Fair Debt Buyers Practices Act
1788.50. (a) As used in this title, "debt buyer" means a person
or entity that purchases charged-off consumer loans or consumer
credit accounts, or other delinquent consumer debt.
(b) "Debt buyer" includes any direct or indirect parent,
subsidiary, or other affiliate of the person or entity described in
subdivision (a), and any person or entity with an ownership interest
in the purchased debt.
(c) Terms defined in Title 1.6C (commencing with Section 1788)
shall apply to this title.
(d) The provisions of this title shall apply to debt buyers on all
debt sold or resold on or after July 1, 2013.
1788.52. (a) A debt buyer shall not make any written statement to
a debtor in an attempt to collect a consumer debt unless the debt
buyer possesses the following information:
(1) That the debt buyer is the sole owner of the debt at issue, or
has authority to assert the rights of all owners of the debt.
(2) The debt balance at charge off, including an explanation of
all post-charge-off fees and charges, and the basis for their
imposition.
(3) The date of default or the date of the last payment.
(4) The name of the creditor at the time of charge off, and the
charge-off creditor's account number associated with the debt.
(5) The name and address of the debtor as it appeared in the
creditor's records at the time of charge off. For debt sold or resold
prior to July 1, 2013, the debtor's name and last known address will
satisfy the requirements of this paragraph.
(6) The names of all persons or entities that purchased the debt
after charge off, including the plaintiff debt buyer.
(b) A debt buyer shall not make any written statement to a debtor
in an attempt to collect a consumer debt unless the debt buyer has
access to, and can produce in accordance with subdivision (c), the
following documents:
(1) Business records evidencing the information required by
paragraphs (1) to (6), inclusive, of subdivision (a).
(2) A copy of a contract or other document evidencing the debtor's
agreement to the debt. If the claim is based on debt for which no
signed contract or agreement exists, a copy of a document provided to
the debtor while the account was active, demonstrating that the debt
was incurred by the debtor. The most recent monthly statement on a
credit account recording a purchase transaction, last payment, or
balance transfer shall be deemed sufficient to satisfy this
requirement.
(c) A debt buyer shall provide the documents identified in
subdivision (b) to the debtor without charge within 15 calendar days
of receipt of a debtor's written request for information regarding,
or proof of, the debt. If the debt buyer cannot provide the documents
within 15 calendar days, the debt buyer shall cease collection of
the debt until the debt buyer provides the debtor the documentation
described in subdivision (b). A debt buyer shall provide an active
postal address and an active e-mail address to which such requests
can be sent.
(d) A debt buyer's first written communication with the debtor
shall include the following notice, in 12-point type, on the first
page, with the words "VERY IMPORTANT" in bolded print:
NOTICE TO CONSUMER
DEPENDING ON HOW MUCH TIME HAS PASSED SINCE YOUR DEBT BECAME PAST
DUE, YOU MAY HAVE THE ABILITY TO STOP A DEBT COLLECTION LAWSUIT OR
OTHER LEGAL ACTION AGAINST YOU. THIS RIGHT IS CALLED A "STATUTE OF
LIMITATIONS" DEFENSE. HOWEVER, FAILURE TO PAY YOUR DEBTS MAY
NEGATIVELY IMPACT YOUR CREDIT RATING FOR A PERIOD OF UP TO SEVEN
YEARS FROM THE DATE WHEN THE DEBT WAS CHARGED OFF OR PLACED FOR
COLLECTION.
IT IS VERY IMPORTANT THAT YOU RESPOND TO THESE DOCUMENTS. TO GET
HELP, YOU CAN CONSULT AN ATTORNEY, VISIT A LOCAL SELF-HELP CENTER, OR
VISIT HTTP://WWW.COURTS.CA.GOV/SELFHELP.HTM FOR MORE INFORMATION.
(e) In the event of a conflict between the requirements of
subdivision (c) and federal law, so that it is impracticable to
comply with both, the requirements of federal law shall prevail.
1788.54. (a) All settlement agreements between a debt buyer and a
debtor shall be documented in open court or otherwise reduced to
writing. A debt buyer that receives payment on a debt shall provide,
within 30 calendar days, a receipt or monthly statement, to the
individual from whom payment is received. The receipt or statement
shall clearly and conspicuously show the amount and date paid, the
name of the entity paid, the current account number, the name of the
charge-off creditor, the account number issued by the charge-off
creditor, and the remaining balance owing, if any. The receipt or
statement may be provided electronically, at the debtor's option.
(b) A debt buyer that accepts a payment as payment in full, or as
a full and final compromise of the debt, shall provide, within 30
calendar days, a final statement that complies with subdivision (a).
A debt buyer shall not sell an interest in a resolved debt, or any
confidential personal or financial information related to the
resolved debt.
1788.56. A debt buyer shall not bring suit or initiate an
arbitration or other legal proceeding to collect a consumer debt if
the applicable statute of limitations on the debt buyer's claim has
expired.
1788.58. In an action brought by a debt buyer on a consumer debt:
(a) The complaint shall allege all of the following:
(1) That the plaintiff is a debt buyer.
(2) The nature of the underlying debt and the consumer transaction
or transactions from which it is derived, in a short and plain
statement.
(3) That the debt buyer is the sole owner of the debt at issue, or
has authority to assert the rights of all owners of the debt.
(4) The debt balance at charge off, including an explanation of
all post-charge-off fees and charges, and the basis for their
imposition.
(5) The date of default or the date of the last payment.
(6) The name of the creditor at the time of charge off, and the
charge-off creditor's account number associated with the debt.
(7) The name and address of the debtor as they appeared in the
creditor's records at the time of charge off. For debt sold or resold
prior to July 1, 2013, the debtor's name and last known address will
satisfy the requirements of this paragraph.
(8) The names of all persons or entities that purchased the debt
after charge off, including the plaintiff debt buyer.
(9) That the debt buyer has complied with Section 1788.52.
(b) The document described in paragraph (2) of subdivision (b) of
Section 1788.52, shall be attached to the complaint.
(c) The following separate written notice shall be served with the
complaint in at least 12-point type, with the words "VERY IMPORTANT"
in bolded print:
NOTICE TO CONSUMER
DEPENDING ON HOW MUCH TIME HAS PASSED SINCE YOUR DEBT BECAME PAST
DUE, YOU MAY HAVE THE ABILITY TO STOP A DEBT COLLECTION LAWSUIT OR
OTHER LEGAL ACTION AGAINST YOU. THIS RIGHT IS CALLED A "STATUTE OF
LIMITATIONS" DEFENSE. HOWEVER, FAILURE TO PAY YOUR DEBTS MAY
NEGATIVELY IMPACT YOUR CREDIT RATING FOR A PERIOD OF UP TO SEVEN
YEARS FROM THE DATE OF WHEN THE DEBT WAS CHARGED OFF OR PLACED FOR
COLLECTION.
IT IS VERY IMPORTANT THAT YOU RESPOND TO THESE DOCUMENTS. TO GET
HELP, YOU CAN CONSULT AN ATTORNEY, VISIT A LOCAL SELF-HELP CENTER, OR
VISIT HTTP://WWW.COURTS.CA.GOV/SELFHELP.HTM FOR MORE INFORMATION.
(d) In the event of a conflict between the requirements of
subdivision (c) and federal law, so that it is impracticable to
comply with both, the requirements of federal law shall prevail.
(e) The requirements of this title shall not be deemed to require
the disclosure in public records of personal, financial, or medical
information, the privacy of which is protected by any state or
federal law.
1788.60. (a) In an action initiated by a debt buyer, no default
or other judgment may be entered against a debtor unless
authenticated business records have been admitted into evidence to
establish the facts required to be alleged by paragraphs (3) to (9),
inclusive, of subdivision (a) of Section 1788.58.
(b) No default or other judgment may be entered against a debtor
unless the document described in paragraph (2) of subdivision (a) of
Section 1788.52 is admitted into evidence.
(c) In any action on a consumer debt, if a debt buyer plaintiff
seeks a default judgment and has not complied with the requirements
of this title, the court shall not enter a default judgment for the
plaintiff and may, in its discretion, dismiss the action.
1788.62. (a) A debt buyer that violates any provision of this
title with respect to any person shall be liable to that person in an
amount equal to the sum of the following:
(1) Any actual damages sustained by that person as a result of the
violation, including, but not limited to, the amount of any judgment
obtained by the debt buyer as a result of a time-barred suit to
collect a debt from that person.
(2) Additional damages in an amount as the court may allow, which
shall not be less than one hundred dollars ($100) nor greater than
one thousand dollars ($1,000).
(b) In the case of a class action, a debt buyer that violates any
provision of this title shall be liable for any additional damages
for each named plaintiff as provided for in paragraph (2) of
subdivision (a). If the court finds that the debt buyer engaged in a
pattern and practice of violating any provision of this title, the
court may award additional damages to the class in an amount not to
exceed the lesser of five hundred thousand dollars ($500,000) or 1
percent of the net worth of the debt buyer.
(c) (1) In the case of any successful action to enforce liability
under this section, the court shall award costs of the action,
together with reasonable attorney's fees as determined by the court.
(2) Reasonable attorney's fees may be awarded to a prevailing
debt buyer upon a finding by the court that the plaintiff's
prosecution of the action was not in good faith.
(d) In determining the amount of liability under subdivision (b),
the court shall consider, among other relevant factors, the frequency
and persistence of noncompliance by the debt buyer, the nature of
the noncompliance, the resources of the debt buyer, and the number of
persons adversely affected.
(e) A debt buyer shall have no civil liability under this section
if the debt buyer shows by a preponderance of evidence that the
violation was not intentional and resulted from a bona fide error,
notwithstanding the maintenance of procedures reasonably adopted to
avoid any error.
(f) An action to enforce any liability created by this title shall
be brought within one year from the last violation.
(g) Recovery in an action brought under the Rosenthal Fair Debt
Collection Practices Act (Title 1.6C (commencing with Section 1788)
or the federal Fair Debt Collection Practices Act (15 U.S.C. Sec.
1692 et seq.) shall preclude recovery for the same acts in an action
brought under this title.
1788.64. Any waiver of the provisions of this title is contrary
to public policy, and is void and unenforceable.
SEC. 2. SEC. 3. Section 581.5 is
added to the Code of Civil Procedure, to read:
581.5. In a case involving consumer debt, as defined in Section
1788.2 of the Civil Code, and as regulated under Title 1.6C.5
(commencing with Section 1788.50) of Part 4 of Division 3 of the
Civil Code, if the defendant debtor appears for trial on the
scheduled trial date, and
the plaintiff debt buyer either fails to appear or is not prepared to
proceed to trial, and the court does not find a good cause for
continuance, the court may, in its discretion, dismiss the action
with or without prejudice. Notwithstanding any other law, in this
instance, the court may award the defendant debtor's costs of
preparing for trial, including, but not limited to, lost wages and
transportation expenses.
SEC. 3. SEC. 4. Section 700.010 of
the Code of Civil Procedure is amended to read:
700.010. (a) At the time of levy pursuant to this article or
promptly thereafter, the levying officer shall serve a copy of the
following on the judgment debtor:
(1) The writ of execution.
(2) A notice of levy.
(3) If the judgment debtor is a natural person, a copy of the form
listing exemptions prepared by the Judicial Council pursuant to
subdivision (c) of Section 681.030, the list of exemption amounts
published pursuant to subdivision (e) of Section 703.150, a copy of
the form that the judgment debtor may use to make a claim of
exemption pursuant to Section 703.520, and a copy of the form the
judgment debtor may use to provide a financial statement pursuant to
Section 703.530.
(4) Any affidavit of identity, as defined in Section 680.135, for
names of the debtor listed on the writ of execution.
(b) Service under this section shall be made personally or by
mail.
SEC. 4. SEC. 5. Section 706.103 of
the Code of Civil Procedure is amended to read:
706.103. (a) The levying officer shall serve upon the designated
employer all of the following:
(1) The original and one copy of the earnings withholding order.
(2) The form for the employer's return.
(3) The notice to employee of earnings withholding order.
(4) A copy of the form that the judgment debtor may use to make a
claim of exemption.
(5) A copy of the form the judgment debtor may use to provide a
financial statement.
(b) At the time the levying officer makes service pursuant to
subdivision (a), the levying officer shall provide the employer with
a copy of the employer's instructions referred to in Section 706.127.
The Judicial Council may adopt rules prescribing the circumstances
when compliance with this subdivision is not required.
(c) No earnings withholding order shall be served upon the
employer after the time specified in subdivision (b) of Section
699.530.
SEC. 5. SEC. 6. Section 706.104 of
the Code of Civil Procedure is amended to read:
706.104. Any employer who is served with an earnings withholding
order shall:
(a) Deliver to the judgment debtor a copy of the earnings
withholding order, the notice to employee of earnings withholding, a
copy of the form that the judgment debtor may use to make a claim of
exemption, and a copy of the form the judgment debtor may use to
provide a financial statement within 10 days from the date of
service. If the judgment debtor is no longer employed by the employer
and the employer does not owe the employee any earnings, the
employer is not required to make such delivery. The employer is not
subject to any civil liability for failure to comply with this
subdivision. Nothing in this subdivision limits the power of a court
to hold the employer in contempt of court for failure to comply with
this subdivision.
(b) Complete the employer's return on the form provided by the
levying officer and mail it by first-class mail, postage prepaid, to
the levying officer within 15 days from the date of service. If the
earnings withholding order is ineffective, the employer shall state
in the employer's return that the order will not be complied with for
this reason and shall return the order to the levying officer with
the employer's return.
SEC. 6. SEC. 7. Section 706.108 of
the Code of Civil Procedure is amended to read:
706.108. (a) If a writ of execution has been issued to the county
where the judgment debtor's employer is to be served and the time
specified in subdivision (b) of Section 699.530 for levy on property
under the writ has not expired, a judgment creditor may deliver an
application for issuance of an earnings withholding order to a
registered process server who may then issue an earnings withholding
order.
(b) If the registered process server has issued the earnings
withholding order, the registered process server, before serving the
earnings withholding order, shall deposit with the levying officer a
copy of the writ of execution, the application for issuance of an
earnings withholding order, and a copy of the earnings withholding
order, and shall pay the fee provided by Section 26750 of the
Government Code.
(c) A registered process server may serve an earnings withholding
order on an employer whether the earnings withholding order was
issued by a levying officer or by a registered process server, but no
earnings withholding order may be served after the time specified in
subdivision (b) of Section 699.530. In performing this function, the
registered process server shall serve upon the designated employer
all of the following:
(1) The original and one copy of the earnings withholding order.
(2) The form for the employer's return.
(3) The notice to the employee of the earnings withholding order.
(4) A copy of the form that the judgment debtor may use to make a
claim of exemption.
(5) A copy of the form the judgment debtor may use to provide a
financial statement.
(6) A copy of the employer's instructions referred to in Section
706.127, except as otherwise prescribed in rules adopted by the
Judicial Council.
(d) Within five court days after service under this section, all
of the following shall be filed with the levying officer:
(1) The writ of execution, if it is not already in the hands of
the levying officer.
(2) Proof of service on the employer of the papers listed in
subdivision (c).
(3) Instructions in writing, as required by the provisions of
Section 687.010.
(e) If the fee provided by Section 26750 of the Government Code
has been paid, the levying officer shall perform all other duties
required by this chapter as if the levying officer had served the
earnings withholding order. If the registered process server does not
comply with subdivisions (b), where applicable, and (d), the service
of the earnings withholding order is ineffective and the levying
officer is not required to perform any duties under the order and may
terminate the order and may release any withheld earnings to the
judgment debtor.
(f) The fee for services of a registered process server under this
section shall be allowed as a recoverable cost pursuant to Section
1033.5.
SEC. 7. SEC. 8. Section 706.122 of
the Code of Civil Procedure is amended to read:
706.122. The "notice to employee of earnings withholding order"
shall contain a statement that informs the employee in simple terms
of the nature of a wage garnishment, the right to an exemption, the
procedure for claiming an exemption, and any other information the
Judicial Council determines would be useful to the employee and
appropriate for inclusion in the notice, including all of the
following:
(a) The named employer has been ordered to withhold from the
earnings of the judgment debtor the amounts required to be withheld
under Section 706.050, or such other amounts as are specified in the
earnings withholding order, and to pay these amounts over to the
levying officer for transmittal to the person specified in the order
in payment of the judgment described in the order.
(b) The manner of computing the amounts required to be withheld
pursuant to Section 706.050.
(c) The judgment debtor may be able to keep more or all of the
judgment debtor's earnings if the judgment debtor proves that the
additional earnings are necessary for the support of the judgment
debtor or the judgment debtor's family supported in whole or in part
by the judgment debtor.
(d) If the judgment debtor wishes a court hearing to prove that
amounts should not be withheld from the judgment debtor's earnings
because they are necessary for the support of the judgment debtor or
the judgment debtor's family supported in whole or in part by the
judgment debtor, the judgment debtor shall file with the levying
officer an original and one copy of the "judgment debtor's claim of
exemption" and an original and one copy of the "judgment debtor's
financial statement."
SEC. 8. SEC. 9. The provisions of
this act are severable. If any provision of this section or its
application is held invalid, that invalidity shall not affect other
provisions or applications that can be given effect without the
invalid provision or application.