Wieckowski bill allowing poor Californians to shield the last of their earnings from bank levies, advances in Assembly

In state with highest poverty rate, SB 298 prevents collectors from levying final $2,000

August 15, 2018

SACRAMENTO – Debt collectors who are levying the earnings of low-income Californians would be prevented from taking the last $2,000 from peoples’ accounts under Senate Bill 298 by Senator Bob Wieckowski (D-Fremont).  The bill was approved today by the Assembly Appropriations Committee and now heads to the floor.

California has the highest level of poverty in the nation when the cost of living is factored in and SB 298 would help people break the cycle of poverty.

“Current law already recognizes that allowing people to seek exemptions from a bank levy so they have enough savings to pay for basic necessities is sound public policy,” said Wieckowski, a member of the Senate Judiciary Committee. “Now we must also recognize that the current process takes too long and fails the very people it was designed to protect. SB 298 provides timely protection that shields vulnerable people from losing their entire savings.”

Currently, procedures for recovering levied funds through the courts take four to six months. Disaster in the form of an eviction, unemployment, or illness often strike well before a person’s money is returned. 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.

"Just because people owe money to debt collectors doesn't mean you don’t have to pay rent. Allowing debt collection levies to take every penny in a bank account, leaves people vulnerable to eviction, said Jessica Bartholow of the Western Center on Law and Poverty and chairperson of the California Asset Building Coalition. "SB 298 doesn't forgive the debt. In fact, if passed, we believe that low-income debt payers will be more likely, not less, to pay down debt because they won't be destabilized by a zeroed-out bank account." 

The $2,000 that is protected from a levy by SB 298 is less than the amount allowed under the federal Supplemental Nutrition Assistance Program. If the bill is signed into law, California would join 16 other states that provide protection from levies.

The bill is co-sponsored by California Low Income Consumer Coalition, Western Center on Law and Poverty, and the East Bay Community Law Center.  More than 30 other organizations support SB 298.

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