Senate passes Wieckowski bill to prevent debt collectors from zeroing out Californians' bank accounts

SB 616 protects people from being left with no funds to cover living expenses

May 29, 2019

SACRAMENTO – Californians living paycheck-to-paycheck would no longer lose all their money to aggressive debt collectors under a bill passed today by the California Senate.  SB 616, authored by Senator Bob Wieckowski (D-Fremont) prevents collectors from levying the last $2,000 in an account.  The bill now heads to the Assembly.

“This bill ends the debt-collector-takes-all approach that keeps people in poverty, increases the number of people opting not to use banks at all, and leaves more Californians one step away from financial disaster,” said Wieckowski, a member of the Senate Judiciary Committee and a bankruptcy attorney, who has worked with struggling families trying to turn their finances around.  “If we are serious about helping people escape poverty, then we should prevent debt collectors from emptying an account and leaving individuals with no way to cover day-to-day expenses.  SB 616 does not erase a debt, but it leaves people with some financial stability to pay bills and avoid going further in debt.”

When low-income Californians, or someone they know, lose everything in their checking account to a debt collector’s bank levy, they are more likely to stop using banking services.  Their options become higher-priced check-cashing services and money orders that will lead them deeper into debt.

SB 616 brings equity to California’s debt collection laws. Existing law includes protections from excessive wage garnishment, but not for levies on bank accounts.  People can file a claim of exemption to show they need the money to cover the basic necessities of life, but that process is cumbersome.  Decades of experience show it can take weeks or months for our court system to process the claim, leaving people without financial resources in the meantime.

Sixteen other states provide levy protections, ranging from $300 to $10,000.

“We are thrilled with today’s floor vote,” said Jessica Bartholow, policy advocate, with the Western Center on Law & Poverty. “We are looking forward to joining the 16 other states in protecting enough in a bank account to cover a family’s basic needs.”

“Harsh bank levy practices are one of the many reasons why Californians go unbanked,” said Sabrina Hamm, managing director of the California Asset Building Coalition.  “That’s why we support SB 616 to reduce the harm caused by bank levies.”

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