Bill that would block debt collectors from levying last dollars from California’s poor introduced

With the highest poverty rate in the nation, low-income Californians need the protection offered by SB 616

SACRAMENTO – Low-income Californians would finally get the protection they need from debt collectors who are attempting to zero-out their checking accounts with a bill introduced Friday, February 22, by Senator Bob Wieckowski (D-Fremont).  SB 616 prevents collectors from taking the last $2,000 from an individual’s account, ensuring that people have some minimal money to pay for daily living expenses.

“A substantial number of people are surviving paycheck-to-paycheck and our current laws are inadequate to protect them against a debt collector who seeks to empty out every last penny of their account,” said Wieckowski, a member of the Senate Judiciary Committee.  “Current law recognizes the importance of making sure people can pay for the basic necessities, but fails from a practical standpoint because the process to seek exemptions from a bank levy is too slow and cumbersome to match the speed with which collectors move.”

Currently, procedures for recovering levied funds through the courts can take several months. But families can have their lives turned upside down by a sudden illness or injury, unemployment, or an eviction before they get their money returned to their account.

Creditors also have other steps they can take to collect a debt, such as garnishing wages, seizing assets or putting a lien on real property.  But unlike with wage garnishments, there are no limitations on how much money can be seized in a bank levy.

“In over 10 years as a legal aid attorney, I saw how many families are one financial set back away from crisis.  California’s bank levy laws allow creditors to empty people’s bank accounts down to the last penny, meaning no money for rent, transportation to work, or child care,” said Rebecca Miller, an attorney with the Western Center on Law and Poverty.  “California should join other states that protect a minimal amount in a person’s bank accounts so they can afford their basic needs.”

The $2,000 that is protected from a levy by SB 616 is less than the amount allowed under the federal Supplemental Nutrition Assistance Program. If the bill is signed into law, California would join more than 15 other states that provide protection from bank levies.