Wieckowski bill protecting low-income Californians from devastating effects of bank levies advances in Assembly

Bank levies can empty the accounts of people living paycheck to paycheck

June 27, 2017

Sacramento – The Assembly Judiciary Committee today approved a bill by Senator Bob Wieckowski (D-Fremont) to allow low-income Californians to shield up to $4,800 from bank levies so they can maintain enough financial stability to pay day-to-day expenses and avoid falling deeper into debt.

“SB 298 will provide people who are struggling to make ends meet the knowledge that they will be able to protect $4,800 from a bank levy and avoid being left penniless,” said Wieckowski, a member of the Senate Judiciary Committee.  “The current system of going through the courts to get a claim of exemption is not effective. By the time an exemption is granted, the money has been taken and it could be months before the person can access it again.  Sixteen states provide protection from bank levies and California should join them to help people regain their financial footing.”

SB 298 will not eliminate a person’s debt, but it would automatically protect $4,800, an amount equal to two months of work at the state’s minimum wage level. At the committee hearing, several consumer organizations and legal service providers testified in support of the bill.  SB 298 is co-sponsored by the California Low-Income Consumer Coalition (CLICC) and the Western Center on Law and Poverty. 

“California law recognizes that debtors should retain some assets in order to maintain stability in their lives — home equity, retirement accounts, even jewelry & art,” said CLICC’s Jith Meganathan.  “But there is no protection for the single asset that low-income Californians most need: a bank account. SB 298 will fill that gaping hole.”

Creditors can use a handful of tools to collect a debt, including placing a lien on real property, seizing assets, garnishing wages or getting a bank levy.  There are protections limiting wage garnishments to 25 percent of a person’s paycheck, but 100 percent of an individual’s bank account can be frozen and turned over to a debt collector.

This is one reason why many of California’s poor do not use banking services, opting instead for higher-priced options, such as check-cashing services and money orders.  A 2015 study by the Federal Deposit Insurance Corporation, found that 15 percent of California households earning between $15,000-$30,000 do not have bank accounts.

SB 298 is also supported by the East Bay Community Law Center, Consumers Union, California Reinvestment Coalition, Law Foundation of Silicon Valley, United Way, Courage Campaign, Health Access, and many other organizations. 

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