SB 1099: Bankruptcy: debtors.

(1)Existing law prohibits the seller or holder of a conditional sale contract for a motor vehicle from accelerating the maturity of any part or all of the amount due under the contract or repossessing the vehicle in the absence of default in the performance of any of the buyers obligations under the contract.

This bill would provide that neither the act of filing a bankruptcy petition by the buyer or other person liable on the contract nor the status of either of those persons as a debtor in bankruptcy constitutes a default in the performance of any of the buyers obligations under the contract and neither may be used as a basis for accelerating the maturity of any part or all of the amount due under the contract or for repossessing the motor vehicle. The bill would provide that a provision of a contract that states that the act of filing a petition commencing a case for bankruptcy under Title 11 of the United States Code by the buyer or other individual liable on the contract or the status of either of those persons as a debtor in bankruptcy is a default is void and unenforceable.

(2)Existing law identifies various types of property of a judgment debtor that are exempt from the enforcement of a money judgment. Existing law provides that property described in statute as exempt may be claimed within the time and in the manner prescribed in the applicable enforcement procedure, and property described in statute as exempt without making a claim is not subject to any procedure for enforcement of a money judgment. Existing law provides that these general exemptions are applicable in a federal bankruptcy case regardless of whether a money judgment is being enforced by execution sale or other procedure, unless the debtor elects certain alternative exemptions.

This bill would provide that, in a federal bankruptcy case, the value of the property claimed as exempt and debtors general and alternative exemptions with respect to such property shall be determined as of the date the bankruptcy petition is filed. The bill would provide that, in a case where the debtors equity in a residence is less than or equal to the amount of the debtors allowed homestead exemption as of the date the bankruptcy petition is filed, any appreciation in the value of the debtors interest in the property during the pendency of the case is exempt.

Existing law authorizes spouses who jointly file a bankruptcy petition to elect jointly to utilize the general exemptions or the alternative exemptions, but not both. Existing law provides that, if a bankruptcy petition is filed individually, and not jointly, for a spouse, the general exemptions are applicable, except that, if both of the spouses waive in writing the right to claim, during the period the bankruptcy case is pending, the general exemptions, then they may elect to utilize the alternative exemptions.

This bill would provide that a waiver is not required from a debtor who is living separate and apart from their spouse as of the date the bankruptcy petition is filed, unless, on the petition date, the debtor and the debtors spouse shared an ownership interest in property that could be exempted as a homestead, as specified.

Existing law includes an alternative exemption for the debtors right to receive benefits, compensation, alimony, support, separate maintenance, and a payment under certain plans or contracts, as specified.

This bill would add an alternative exemption for the debtors right to receive the aggregate interest, not to exceed $7,500, in vacation credits or accrued, or unused, vacation pay, sick leave, family leave, or wages, as defined.

Existing law includes alternative exemptions for the debtors right to receive, or property that is traceable to, an award under a crime victims reparation law and various payments, including a payment on account of the wrongful death of an individual of whom the debtor was a dependent, a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of that individuals death, a payment on account of personal bodily injury of the debtor or an individual of whom the debtor is a dependent, and a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent to the extent reasonably necessary for the support of the debtor and a dependent of the debtor.

This bill would add an alternative exemption for a payment under a settlement agreement arising out of or regarding the debtors employment, to the extent reasonably necessary for the support of the debtor, the debtors spouse, and a dependent of the debtor. The bill would make the exemption for payment on account of a wrongful death and payment under a life insurance contract applicable, as well, to a payment regarding an individual of whom the debtor was a spouse. The bill would make the exemption for payment on account of personal bodily injury applicable, as well, to a payment on account of personal bodily injury of the debtors spouse. The bill would make the exemption for a payment in compensation of loss of future earnings applicable, as well, to a payment regarding an individual of whom the debtor is or was a spouse, and would provide that the exemption applies, as well, to the extent reasonably necessary for the support of the debtors spouse.

Existing law exempts any combination of the aggregate equity in motor vehicles, the proceeds of an execution sale of a motor vehicle, and the proceeds of insurance or other indemnification for the loss, damage, or destruction of a motor vehicle in the amount of $3,325. Existing law includes an alternative exemption not to exceed $5,850 in value for the debtors interest in one or more motor vehicles.

This bill would increase the amounts of the general and alternative exemptions for motor vehicles to $7,500.

Existing law includes a general exemption for health aids reasonably necessary to enable the judgment debtor or the spouse or a dependent of the judgment debtor to work or sustain health, and prosthetic and orthopedic appliances, and an alternative exemption for professionally prescribed health aids for the debtor or a dependent of the debtor.

This bill would provide that a vehicle converted for use by the debtor, the debtors spouse, or a dependent of the debtor, who has a disability, is a health aid under the general exemption and a professionally prescribed health aid under the alternative exemption. The bill would provide examples of conversions of a vehicle for use by a person who has a disability. The bill would make the alternative exemption applicable, as well, to professionally prescribed health aids for the debtors spouse.

Existing law includes an alternative exemption for the debtors right to receive alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.

This bill would add a general exemption matching the existing alternative exemption.

Existing law provides that vacation credits, as defined, are exempt from enforcement of a money judgment without making a claim.

This bill would expand this general exemption to include, in addition, accrued or unused vacation pay, sick leave, or family leave. The bill would limit the exemption to the aggregate interest, not to exceed $7,500, and would delete the provision exempting the property without making a claim.

(3)Existing law provides that, in the absence of default in the performance of a borrowers obligations under a loan secured in whole or in part by a lien on a motor vehicle, as defined, a licensee may not accelerate the maturity of any part or all of the amount due on the loan or repossess the motor vehicle.

This bill would provide that neither the act of filing a bankruptcy petition by the borrower or other person liable on the loan nor the status of either of those persons as a debtor in bankruptcy constitutes a default in the performance of any of the borrowers obligations under the loan and neither may be used as a basis for accelerating the maturity of any part or all of the amount due under the loan or for repossessing the motor vehicle. The bill would provide that a provision of a contract that states that the act of filing a petition commencing a case for bankruptcy under Title 11 of the United States Code by the buyer or other individual liable on the contract or the status of either of those persons as a debtor in bankruptcy is a default is void and unenforceable.

This bill would incorporate additional changes to Section 703.140 of the Code of Civil Procedure proposed by SB 956 to be operative only if this bill and SB 956 are enacted and this bill is enacted last.