New law to protect Californians struggling with debt to take effect on September 1

Senator Wieckowski, consumer groups herald new law preventing debt collectors from emptying people's bank accounts

August 25, 2020

SACRAMENTO ­– Beginning next Tuesday, Californians taking on more debt through the COVID-19 pandemic, high unemployment and wildfires, will gain some added financial security when a law authored by Sen. Bob Wieckowski (D-Fremont) and supported by consumer groups and legal aid providers goes into effect.

Senate Bill 616 was approved by the Legislature and signed into law by Governor Gavin Newsom in 2019.  The law creates an automatic bank account exemption to prevent debt collectors from seizing the last $1,788 in a person’s account.

“As everyone knows, it only takes an overdraft fee, a sick child, an accident or a parking ticket to trigger a disastrous domino effect,” said Wieckowski, a member of the Senate Judiciary Committee.  “The protection in SB 616 will prevent that first domino from falling for so many families. Because of this law, tens of thousands of bank accounts will not be drained in the difficult months ahead.”

The new law does not erase a debt.  It is intended to enable people to cover daily expenses and not spiral deeper into debt. The exemption amount is tied to the California Department of Social Services’ calculated minimum basic income standard of adequate care for a family of four. The exemption will be annually updated to match the standard.

“When this bill was signed last year, we knew it would be an important safeguard for the tens of thousands of Californians every year who go through financial shock when debt collectors suddenly seize every penny in their bank account,” said Ted Mermin, director of the California Low-Income Consumer Coalition, a co-sponsor of SB 616. “But now that millions of Californians face extended unemployment and are taking on more and more debt, a law that makes sure there is some money to pay the rent or the grocery bill is even more important. All of us owe a deep round of thanks to Senator Wieckowski and his remarkable staff.”

Jessica Bartholow of the Western Center on Law & Poverty, a co-sponsor of SB 616, agreed that the law will help families in these tough times.

“Amid the pandemic, Californians are falling behind on rent payments,” Bartholow said, “and they are using whatever credit they have left to keep their families from going hungry.  Protection from aggressive debt collection is needed now more than ever.  With the implementation of SB 616, people will have breathing room to catch up on bills without a zeroed-out bank account.  SB616 also includes an exemption for FEMA payments to ensure fire victims keep their disaster payments so they can rebuild as intended.”

People who work on a daily basis with Californians dealing with debt issues, believe the new law will provide great assistance and prevent more hardship for families.

“For all advocates who have been consistently hearing from devastated consumers whose bank accounts had been levied down to zero dollars, leaving them with only the change in their pockets to pay for basic needs, September 1, 2020 will be remembered as an enormous victory for low-income Californian consumers,” said Sharon Djemal, director of the Consumer Justice Clinic of the East Bay Community Law Center. “It is also a win for banks, who can begin to rebuild trust with Californians who have previously been too afraid to deposit their hard-fought wages into bank accounts.”

“The Californians for Economic Justice coalition works to ensure all Californians can live in economic security and dignity, which is why we were proud supporters of SB 616 and are looking forward to its implementation on September 1,” said the coalition’s co-chair Marisabel Torres.  “California’s lack of oversight over harmful debt collectors, who routinely weaponize the court system for their own gain, have left consumers with very little to survive on after income has been garnished by collectors. After their bank accounts are drained, consumers are often left with overdraft fees, account closures, and unfortunately they can be pushed out of the financial mainstream.  It is especially critical now, as many people are facing increased financial stress due to the pandemic, that we keep more money for life’s necessities safe in their accounts.”

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

To contact Senator Wieckowski or the co-sponsors and supporters of SB 616 email: