California Assembly Advances Debt Collection Licensing Act with Amendments


The bill is slated for continued review by the California Assembly before consideration by the full legislature.

8/25/2020 9:00

The California Assembly Appropriations Committee ordered a second reading of the Debt Collection Licensing Act (SB 908) after a 13-5 vote to not pass the bill as amended on Aug. 20.

The legislation, from California State Sen. Bob Wieckowski, D-Fremont, would require a license for debt collectors and debt buyers. It was approved by the Assembly Banking and Finance Committee 9-3 in August.

There remains the possibility of additional amendments prior to a final Assembly floor vote or during a conference with the state Senate.

California Gov. Gavin Newsom has indicated that he would sign the bill. It passed in the California Senate 29-4.

The bill would require a license from the California Department of Business Oversight (DBO) for debt collectors and debt buyers to collect on debts in the state, ACA International previously reported.

If enacted, starting Jan. 1, 2021, the commissioner of the DBO shall take all actions necessary to prepare to be able to fully enforce the licensing and regulatory provisions of this division, including, but not limited to, adoption of all necessary regulations by Jan. 1, 2022.

This means licenses will be required starting Jan. 1, 2022. Debt collectors that apply for a license before Jan. 1, 2022 would be allowed to operate pending the approval or denial of the application.

The bill would also create a debt collection advisory committee within the DBO to advise the commissioner on matters related to debt collection.

The California Association of Collectors (CAC) and Receivables Management Association International supported the bill before the August vote by the Assembly Banking and Finance Committee.

Advocates with the CAC worked with the bill’s authors to ensure the licensing system protects consumers and is workable for the accounts receivable management (ARM) industry.

ACA is following this legislation and will provide an update on the CAC’s advocacy efforts and amendments to the bill.

Meanwhile, another bill from Wieckowski, signed by Gov. Newsom in 2019, is set to go into effect Sept. 1, 2020.

According to the legislation on enforcement of money judgments and exemptions, “Existing law authorizes a judgment creditor to levy upon the earnings of a judgment debtor through specified wage garnishment procedures, and specifies the maximum amount of a judgment debtor’s disposable earnings, as defined, that are subject to that garnishment. Existing law specifies certain property of a judgment debtor as exempt, including 75% of paid earnings of an employee that can be traced into deposit accounts or in the form of cash or its equivalent if prior to payment to the employee those earnings were not subject to an earnings withholding order or an earnings assignment order for support.”

Senate Bill 616, which was signed by Gov. Newsom last year, specifies “that disposable earnings that would otherwise not be subject to levy under the wage garnishment procedures described above are exempt. The bill would exempt from levy money provided to the judgment debtor by the Federal Emergency Management Agency.”

The bill would also exempt from a levy money in a judgment debtor’s deposit account in an amount equal to or less than the minimum basic standard of adequate care for a family of four, as specified. The bill would require a levy against a judgment debtor’s deposit account to include a description of these requirements. The bill would also exempt from a levy money in a judgment debtor’s deposit account that is not otherwise exempt under these provisions to the extent that money is necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor.

For more information on how the ACA Licensing staff can assist with your licensing needs, please contact us at [email protected] or call (952) 926-6547.

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