Debt collectors will no longer be allowed to empty out a person's account
SACRAMENTO – With income inequality on the rise in California, Governor Gavin Newsom today signed a bill by State Senator Bob Wieckowski (D-Fremont) to prevent debt collection agencies from emptying out a consumer’s bank account and leaving people without any funds to cover day-to-day expenses.
Under Wieckowski’s SB 616, debt collectors must leave $1,724 in the account. The bill is supported by legal aid providers, advocates for low-income consumers and statewide progressive organizations, who see the legislation as a key anti-poverty measure.
“People who are living paycheck to paycheck need the protection that this bill will provide to give them more financial security,” said Wieckowski, a member of the Senate Judiciary Committee. “Our current claim of exemption process for people to show they cannot live without any money in the bank is too burdensome and inefficient to meet the timely needs of low-income Californians. By preventing collectors from getting everything, California is moving in the direction of several other states that have similar crucial consumer protections. We do not want people living on the streets because debt collectors, who don’t have the greatest track record for accuracy, claim someone owes an old debt. This bill does not eliminate debt, but it gives people the ability to pay rent, medical expenses and other daily costs while they pay down or contest the debt.”
The state Department of Social Services (DSS) has determined the $1,724 amount is the lowest possible for a family of four to survive in urban California. The amount is updated annually by DSS to reflect the changing cost of living in the state.
“This is the year that California puts an end to predatory debt collection practices. I was proud to present this bill on the Assembly floor to my colleagues as a co-author of SB 616 because I represent a district that is majority Latino, which studies show are more likely to be impacted by the current collection process,” said Assemblywoman Luz Rivas (D-Arleta). “Millions of Californians are living on the edge, paycheck to paycheck, with barely enough to cover their needs. It is time we give our most vulnerable communities a fighting chance to get out of a cycle of debt.”
Proponents of SB 616 highlight its importance at a time when the White House is stripping away consumer protection laws.
“When the Consumer Financial Protection Bureau is weakening the Federal Fair Debt Collection Practices Act, Californians need this protection now more than ever,” said Jessica Bartholow, legislative advocate with the Western Center for Law and Poverty.
“For three years, legal aid organizations that work with low-income consumers have made it their top priority to rein in unchecked bank levies,” said Ted Mermin, director of the California Low-Income Consumer Coalition. “Having a debt in collections – like 1 of every 3 Californians – should not mean putting your home, your car, or your job at risk. Now, thanks to the untiring efforts of advocates and legislators – and most of all, the clients who told their stories – we won’t have that system any more. This is a good day for California.”
Sixteen other states have levy protection laws ranging between $300 and $10,000.
Besides the Western Center on Law and Poverty and CLICC, SB 616 is supported by the California Democratic Party, California Asset Building Coalition, Building the California Dream Alliance and many others.
Senator Wieckowski represents the 10th District, which includes southern Alameda County and parts of Santa Clara County.