The governor of California has signed into law a bill that limits how much debt collectors can garnish from an individual’s bank account when seeking repayment on unpaid debts.
SB 616, which will go into effect on Sept. 1, 2020, will allow individuals to keep $1,724 in their account if subjected to a garnishment order. The $1,724 represents what the state Department of Social Services considers to be the least amount of money a family of four needs to survive, according to a published report. The amount is updated every year.
“People who are living paycheck to paycheck need the protection that this bill will provide to give them more financial security,” said state Sen. Bob Wieckowski, who authored the legislation. “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.”
For individuals who hold multiple accounts at the same institution, judgment holders will be able to request a hearing before a judge to determine how the exemption should be applied. The same is true for individuals who hold multiple accounts at multiple institutions.
“We’ve fought for this reform for so many years because for too long, our clients were completely vulnerable to the whims of debt collectors. When their bank accounts are emptied, our clients are thrown into a financial tailspin – and sometimes even into homelessness.” said Sharon Djemal, director of East Bay Community Law Center’s Consumer Justice Clinic, in a statement. “This bill is a significant step toward providing some basic financial stability to low-income Californians.”