SB 1477 would help middle-income consumers pay down debt, avoid deeper financial crisis
SACRAMENTO — Californians struggling to pay down their debts while dealing with rising costs from inflation and supply shortages will get assistance to help them avoid falling deeper into financial crisis if Governor Newsom signs a bill passed by the Senate last night.
SB 1477 by Senator Bob Wieckowski (D-Fremont) updates the wage garnishment formulas, beginning in September 2023, that would enable workers to protect a larger amount of their paycheck from garnishment. A middle income earner with two children, making the median income for Sacramento County for example, would be able to keep an additional $99 in their paycheck based on a committee analysis of the bill. The bill does not eliminate a debtor’s legal obligation to pay a debt.
“Minimum wage workers are already protected, but for lower and middle-income Californians this bill will provide enormous assistance and enable people to pay their bills, put food on the table and manageably pay down their debt,” said Wieckowski, a member of the Senate Judiciary Committee. “The pandemic has not hit everyone equally. Those with the fewest resources, especially people of color, are the ones shouldering a heavier burden financially. SB 1477 will help lift people out of the cycle of debt. I’ve worked hard on these issues during my 12 years in the Legislature and it’s gratifying to see this important legislation overwhelmingly approved.”
The wage garnishment formulas were last adjusted by the Legislature in 2015, when Sen. Wieckowski’s SB 501 was approved. Since that adjustment took effect in July 2016, California’s Consumer Price Index increased by 21.7 percent.
“The National Consumer Law Center (NCLC) is a proud sponsor of SB 1477, which will prevent thousands of dollars in wages from being seized annually from working families for old debts,” said Michael Best, staff attorney at NCLC. “We are grateful to Senator Wieckowski for his leadership in protecting wages from seizure in this and past sessions, and look forward to the Governor signing this consumer protection into law.”
Wage garnishment, where collectors with a court order force an employer to send them a large share of a worker’s paycheck before they ever see it, is very harmful to low-income people and middle-class workers in high cost regions of the state. Roughly a half-million Californians experience wage garnishment annually. Almost two-thirds of debt collection cases result in default judgments in favor of the debt collectors, who are often large, national corporations. At the end of 2020, nearly one third of Californians in communities of color and almost 20 percent of people in white communities had a debt in collection. One recent study found 98 percent of defendants did not have legal representation.
A study reviewed the 20 largest debt buyers in the 10 most populous counties in California and found the average wage collection was about $6,000.
Senator Wieckowski’s bill is cosponsored by the National Consumer Law Center, Western Center on Law and Poverty and Public Law Center.
SB 1477 is a part of the Building the California Dream Alliance priority legislation package. The Alliance was founded in 2015 to offer a counterbalance to the influence of anti-worker, anti-environment and special interest policies.
Senator Wieckowski represents the 10th Senate District, which includes southern Alameda County and parts of Santa Clara County.