Senate passes Wieckowski bill to protect low-income Californians from bank levies

Safeguards would encourage unbanked poor to open accounts and gain financial stability

May 22, 2017

Sacramento – A bill by Senator Bob Wieckowski (D-Fremont) to automatically protect up to $4,800 of a person’s bank account from a bank levy passed the Senate floor today.  The bill, SB 298, will help low-income Californians avoid falling deeper into poverty and will encourage people who rely on check-cashing services and money orders to return to traditional banking services.

“When families have their accounts wiped out by a bank levy, it puts them in grave financial danger that often leads to homelessness, hunger and illness,” said Wieckowski, a member of the Senate Judiciary Committee.  “This bill provides a real safety net for families and individuals.  The current process to get a claim of exemption from the levy is too burdensome to provide any meaningful relief for consumers.  The process takes too long and families are left without any funds.”

SB 298 does not eliminate anyone’s debt, but it does protect the $4,800 from a bank levy and extends the amount of time that individuals have to file a claim of exemption with the courts.

According to a Federal Deposit Insurance Corporation study, 15 percent of households earning $15,000 to $30,000 in California lack bank accounts.  SB 298 is co-sponsored by the Western Center on Law and Poverty and the California Low-Income Consumer Coalition (CLICC).

"Western Center has been working for years to address the $20 million in fees spent by CalWORKs recipients just to withdraw their meager benefits each month using their EBT (Electronic Benefit Transfer) Cards,” said Jessica Bartholow of the Western Center. “One of the strategies to help them avoid these fees is to have them sign up for direct deposit. But focus groups with CalWORKs recipients found that they are afraid to bank because they have either been subject to a levy or know of people who have been and were left with nothing to pay their bills.”

CLICC’s Jith Meganathan said SB 298 will help many families get back on track.

“This bill will allow low-income consumers who’ve fallen into debt to maintain some stability in their lives.  It ultimately increases the chances that they regain financial footing, and are able to pay their debts.”

Senator Wieckowski represents the 10th District, which includes southern Alameda County and northeast Santa Clara County.