CA SB 1477 (Wieckowski) Eliminates Wage Garnishment for Most Debtors, Decreasing Affordable Credit and Harming Small Businesses

Wage garnishment is the primary last option for creditors, including small businesses, to recover on court-ordered judgments for unpaid debts, and CA SB 1477 would exempt the vast majority of debtors from wage garnishment. The legislation would render most judgments meaningless in California by exempting the vast majority of debtors from wage garnishment without any regard to the consumer’s individual financial situation. 

• As amended, CA SB 1477 would slash the allowable wage garnishment to 0% for $31/hr. or less wage-earning debtors, needlessly exempting them from any wage garnishment, and allowing them to walk away from repaying their debts. Most debtors earn below this individual income level and would become judgment proof.
• For the debtors not completely exempt under CA SB 1477, only a miniscule amount of wage garnishment would be allowed, forcing consumers into a perpetual debt cycle. For example, only 3% wage garnishment would be allowed for $36/hr. wage earners, which means they would be paying down their judgments for years longer due to CA SB 1477 as interest and fees pile on.
• CA SB 1477 would restrict access to affordable credit. If creditors are unable to recover on outstanding debts using the last option of wage garnishment, study after study shows that access to affordable credit will go down for consumers who need it the most. Simply put, there will be higher risk extending credit to low credit score Californians. As a result, a low credit score parent doing back to school shopping will be more likely to be declined a credit card to use for those critical purchases.
• CA SB 1477’s broad brush approach would be the final breaking point for many small businesses, rental owners, small medical offices, dentists, and others that provide critical goods and services. These creditors would support an exemption for debtors experiencing a medical or financial hardship. Unfortunately, rather than consider a need-based proposal, this legislation would automatically eliminate wage garnishment for the vast majority of judgment debtors, hurting small to large creditors as a result.
• Recently enacted laws already increased protections for consumers and these protections adjust automatically. California debtors already have some of the largest protections in the country from wage garnishment due to a 2016 law (CA SB 501- Wieckowski) which automatically increases the exemptions as the local minimum wage increases.  Additionally, debtors can request an extra reduction or complete exemption by filing out a simple form provided to them before garnishment.
• CA SB 1477 proponents support a much lower wage garnishment exemption level outside of the state. The sponsors of the bill have recently supported a $51,000/year wage garnishment exemption threshold outside of California. This level would make California have by far the highest exemption level in the country but the proponents are unwilling to agree to their own standard for this state.

For the reasons above, please urge your California State Assemblymember to
VOTE NO on CA SB 1477.