SB 641 grants important due process rights to consumers as states fight abusive, unfair practices
Sacramento – Less than a week after the federal Consumer Financial Protection Bureau and 47 states announced a settlement forcing JP Morgan Chase to stop collecting on 528,000 accounts due to inaccurate information, robo-signing documents without proper verification and selling faulty, uncollectable debt, the Assembly Judiciary Committee passed a bill today by Sen. Bob Wieckowski (D-Fremont) to allow California victims of unfair debt collection practices to have their chance in court to set aside a default judgment wrongfully attached to their name.
“This is an important step forward to providing increased due process protections for California consumers,” said Wieckowski, a member of the Senate Judiciary Committee. “Legal services providers and other non-profit organizations across the state that work with low- and middle-income Californians are seeing an alarming number of debt collection cases where consumers are getting their wages garnished without ever getting a day in court.”
SB 641 permits consumers to move to set aside default judgments obtained by debt buyers within 180 days after the first actual notice of the lawsuit.
“The reforms in SB 641 are sorely needed,” said Suzanne Martindale, a staff attorney with Consumers Union. “Many Californians are not aware that a debt buyer has filed a lawsuit against them until their wages are garnished or their bank accounts are levied. Under current law, if more than two years have passed since the entry of a default judgment, a consumer may have no way to stop a garnishment or levy short of bringing an entirely new action – even if she never knew about the lawsuit or the supposed debt in question.”
Wieckowski said for working-class consumers, this injustice is especially egregious: Not only can they not afford an attorney to file a new lawsuit against the debt buyer to stop them from wrongfully taking their money, but the money coming out of their wages and their bank accounts is money they need to pay rent, buy groceries and get through the week.
SB 641 is supported by the East Bay Community Law Center, Public Counsel, Bay Area Legal Aid, the Center for Responsible Lending and the California Reinvestment Coalition, among other organizations.
Senator Wieckowski’s District 10 stretches from southern Alameda County to northeast Santa Clara County.