Existing law permits a judgment creditor to apply to the court for an order requiring the judgment debtor, or another person who is in possession and control of property of the judgment debtor, to appear before the court to provide information to aid in the enforcement of a money judgment, as specified. Existing law requires the judgment creditor to personally serve a copy of that order on the judgment debtor not less than 10 days before the date set for the examination. Existing law permits the court to issue a warrant for the arrest of, a warrant to compel the attendance of, and may hold in contempt, a judgment debtor who fails to appear in response to such an order.

This bill would extend the notice of the examination required to be given to the judgment debtor to not less than 30 days before the examination. The bill would authorize a judgment debtor in a case involving consumer debt, as defined, to serve a financial affidavit signed under penalty of perjury, as specified, and file with the court a notice of financial affidavit and proof of service in lieu of appearing for the examination. If the judgment debtor files the notice and proof of service, the bill would require the court to cancel the financial examination unless the judgment creditor files, under oath, as specified, a notice of motion for an order determining the need for the debtor to appear for a debtors examination. If the judgment creditor files such a notice of motion in a timely manner, the bill would require the court to decide, either on the pleadings or through a hearing, whether the judgment debtor must appear for a debtors examination, as provided. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would also prohibit a court from issuing a warrant for the arrest of a judgment debtor in a case concerning consumer debt based on the judgment debtors failure to appear or failure to file a judgment debtors financial affidavit. In these circumstances, the bill would authorize the court to issue an order to show cause to determine whether a warrant to compel the judgment debtors attendance should be issued, which the judgment debtor could satisfy by filing a judgment debtors financial affidavit described above. The bill would require the Judicial Council to create and update its forms to reflect these changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law permits a judgment creditor to apply to the court for an order requiring the judgment debtor, or another person who is in possession and control of property of the judgment debtor, to appear before the court to provide information to aid in the enforcement of a money judgment, as specified. Existing law requires the judgment creditor to personally serve a copy of that order on the judgment debtor not less than 10 days before the date set for the examination. Existing law permits the court to issue a warrant for the arrest of, a warrant to compel the attendance of, and may hold in contempt, a judgment debtor who fails to appear in response to such an order.

This bill would extend the notice of the examination required to be given to the judgment debtor to not less than 30 days before the examination. The bill would authorize a judgment debtor in a case involving consumer debt, as defined, to serve a financial affidavit signed under penalty of perjury, as specified, and file with the court a notice of financial affidavit and proof of service in lieu of appearing for the examination. If the judgment debtor files the notice and proof of service, the bill would require the court to cancel the financial examination unless the judgment creditor files, under oath, as specified, a notice of motion for an order determining the need for the debtor to appear for a debtors examination. If the judgment creditor files such a notice of motion in a timely manner, the bill would require the court to decide, either on the pleadings or through a hearing, whether the judgment debtor must appear for a debtors examination, as provided. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would also prohibit a court from issuing a warrant for the arrest of a judgment debtor in a case concerning consumer debt based on the judgment debtors failure to appear or failure to file a judgment debtors financial affidavit. In these circumstances, the bill would authorize the court to issue an order to show cause to determine whether a warrant to compel the judgment debtors attendance should be issued, which the judgment debtor could satisfy by filing a judgment debtors financial affidavit described above. The bill would require the Judicial Council to create and update its forms to reflect these changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law permits a judgment creditor to apply to the court for an order requiring the judgment debtor, or another person who is in possession and control of property of the judgment debtor, to appear before the court to provide information to aid in the enforcement of a money judgment, as specified. Existing law requires the judgment creditor to personally serve a copy of that order on the judgment debtor not less than 10 days before the date set for the examination. Existing law permits the court to issue a warrant for the arrest of, a warrant to compel the attendance of, and may hold in contempt, a judgment debtor who fails to appear in response to such an order.

This bill would extend the notice of the examination required to be given to the judgment debtor to not less than 30 days before the examination. The bill would authorize a judgment debtor in a case involving consumer debt, as defined, to file and serve a judgment debtors financial affidavit signed under penalty of perjury, as specified, and file with the court a notice of financial affidavit and proof of service in lieu of appearing for the examination. If the judgment debtor files the affidavit, notice and proof of service, the bill would require the court to cancel the financial examination unless the judgment creditor files, under oath, a notice of opposition and as specified, a notice of motion for an order determining the need for the debtor to appear for a debtors examination. If the judgment creditor files such pleadings such a notice of motion in a timely manner, the bill would require the court to hold a hearing to determine whether decide, either on the pleadings or through a hearing, whether the judgment debtor must appear for a debtors examination, as provided. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would also prohibit a court from issuing a warrant for the arrest of a judgment debtor in a case concerning consumer debt based on the judgment debtors failure to appear or failure to file a judgment debtors financial affidavit. In these circumstances, the bill would authorize the court to issue an order to show cause to determine whether a warrant to compel the judgment debtors attendance should be issued, which the judgment debtor could satisfy by filing a judgment debtors financial affidavit described above. The bill would require a court the Judicial Council to create and update language included in its orders its forms to reflect these changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law permits a judgment creditor to apply to the court for an order requiring the judgment debtor, or another person who is in possession and control of property of the judgment debtor, to appear before the court to provide information to aid in the enforcement of a money judgment, as specified. Existing law requires the judgment creditor to personally serve a copy of that order on the judgment debtor not less than 10 days before the date set for the examination. Existing law permits the court to issue a warrant for the arrest of, a warrant to compel the attendance of, and may hold in contempt, a judgment debtor who fails to appear in response to such an order.

This bill would extend the notice of the examination required to be given to the judgment debtor to not less than 30 days before the examination. The bill would authorize a judgment debtor in a case involving consumer debt, as defined, to file and serve a judgment debtors financial statement affidavit under penalty of perjury perjury, as specified, in lieu of appearing for the examination. The bill would specify the information to be included in the judgment debtors financial statement and the financial statement of the debtors spouse, as applicable. The bill would require the financial statement to be filed under seal. If the judgment debtor files a judgment debtors financial statement, the affidavit, the bill would require the court to cancel the financial examination unless the judgment creditor presents evidence to the contrary and the court determines that there are nonexempt assets warranting the examination. files, under oath, a notice of opposition and a notice of motion for an order determining the need for the debtor to appear for a debtors examination. If the judgment creditor files such pleadings in a timely manner, the bill would require the court to hold a hearing to determine whether the judgment debtor must appear for a debtors examination, as provided. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would also prohibit a court from issuing a warrant for the arrest of a judgment debtor in a case concerning consumer debt based on the judgment debtors failure to appear or failure to file a judgment debtors financial statement. affidavit. In these circumstances, the bill would authorize the court to issue an order to show cause to determine whether a warrant to compel the judgment debtors attendance should be issued, which the judgment debtor could satisfy by filing a judgment debtors financial statement affidavit described above. The bill would require a court to update language included in its orders to reflect these changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law permits a judgment creditor to apply to the court for an order requiring the judgment debtor, or another person who is in possession and control of property of the judgment debtor, to appear before the court to provide information to aid in the enforcement of a money judgment, as specified. Existing law requires the judgment creditor to personally serve a copy of that order on the judgment debtor not less than 10 days before the date set for the examination. Existing law permits the court to issue a warrant for the arrest of, a warrant to compel the attendance of, and may hold in contempt, a judgment debtor who fails to appear in response to such an order.

This bill would extend the notice of the examination required to be given to the judgment debtor to not less than 30 days before the examination, and would provide that, instead of appearing for examination, a judgment debtor may file a financial affidavit examination. The bill would authorize a judgment debtor in a case involving consumer debt, as defined, to file and serve a judgment debtors financial statement under penalty of perjury stating that their income and assets are exempt from enforcement. If in lieu of appearing for the examination. The bill would specify the information to be included in the judgment debtors financial statement and the financial statement of the debtors spouse, as applicable. The bill would require the financial statement to be filed under seal. If the judgment debtor files an affidavit, a judgment debtors financial statement, the bill would require the court to cancel the financial examination unless the judgment creditor presents evidence to the contrary and the court determines that there are non-exempt nonexempt assets warranting the examination. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would also prohibit a court from issuing a warrant for the arrest of a judgment debtor in a limited civil case case concerning consumer debt based on the judgment debtors failure to appear or failure to file a financial affidavit. judgment debtors financial statement. In these circumstances, the bill would authorize the court to issue an order to show cause to determine whether a warrant to compel the judgment debtors attendance should be issued, which the judgment debtor could satisfy by filing the affidavit a judgment debtors financial statement described above. The bill would also prohibit the issuance of an arrest warrant or the imprisonment of any judgment debtor for the judgment debtors failure to satisfy their debt or for contempt of or failure to comply with a court order to pay a debt in a limited civil case. The bill would require a court to update language included in its orders to reflect these changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law permits a judgment creditor to apply to the court for an order requiring the judgment debtor, or another person who is in possession and control of property of the judgment debtor, to appear before the court to provide information to aid in the enforcement of a money judgment, as specified. Existing law requires the judgment creditor to personally serve a copy of that order on the judgment debtor not less than 10 days before the date set for the examination. Existing law permits the court to issue a warrant for the arrest of, a warrant to compel the attendance of, and may hold in contempt, a judgment debtor who fails to appear in response to such an order.

This bill would extend the notice of the examination required to be given to the judgment debtor to not less than 30 days before the examination, and would provide that, instead of appearing for examination, a judgment debtor may file a financial affidavit under penalty of perjury stating that their income and assets are exempt from enforcement. If the judgment debtor files an affidavit, the bill would require the court to cancel the financial examination unless the judgment creditor presents evidence to the contrary and the court determines that there are non-exempt assets warranting the examination. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program.

This bill would also prohibit a court from issuing a warrant for the arrest of a judgment debtor in a limited civil case based on the judgment debtors failure to appear or failure to file a financial affidavit. In these circumstances, the bill would authorize the court to issue an order to show cause to determine whether a warrant to compel the judgment debtors attendance should be issued, which the judgment debtor could satisfy by filing the affidavit described above. The bill would also prohibit the issuance of an arrest warrant or the imprisonment of any judgment debtor for the judgment debtors failure to satisfy their debt or for contempt of or failure to comply with a court order to pay a debt in a limited civil case. The bill would require a court to update language included in its orders to reflect these changes.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1119

Author:(Wicks)

As Amended Ver:September 6, 2023

Majority vote

SUMMARY

Establishes an alternative for judgment debtors in consumer actions to submit financial information concerning their claim of exemption and removes the threat of arrest upon a debtor's failure to comply.

Major Provisions

1. Extends the time period in which a judgment creditor is required to personally serve a copy of the order on the judgment debtor from no less than 10 days to no less than 30 days before the date set for the debtor's examination.
2. Updates the notice to judgment debtor language, as specified.
3. Establishes new procedures for ascertaining the assets of judgment debtors holding consumer debt, as specified.
4. Updates the notice to judgment debtor requirement to include language regarding the affidavit option in cases involving consumer debt.
5. Defines consumer debt to mean, any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, but not debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee, or rental debt.
6. Defines, for the purpose of this bill, "rental debt" to mean unpaid rent or other unpaid financial obligation of a tenant under the tenancy that has come due.
7. Permits judgment debtors of consumer debt to file a detailed affidavit in a form prescribed by the court and filed under penalty of perjury as an alternative to appearing in court for an examination to determine whether their assets and income are exempt from paying the debt.
8. Requires the filing specified in 7), above, to include the following information:
9. The total number of people relying on the judgment debtor for support, including spouse, dependents, and other household members.
10. Gross monthly income from employment, including withholdings and take-home pay;
11. Total monthly income from all sources other than employment;
12. Property owned, including cash, bank accounts, real estate equity, vehicles (e.g., cars, motorcycles, and boats), jewelry, securities, certificates of deposit, entity ownership, life insurance policies, and tax refunds.
13. Itemized monthly expenses;
14. Any outstanding debts, including balance owed and to whom; and
15. Any other facts which support the claim of exemption.
16. Establishes that in cases concerning consumer debt where the debtor claims property is exempt to the extent necessary for support of the judgment debtor and the spouse and dependents of the judgment debtor, the financial affidavit specified in 8) must include pertinent financial information about the debtor’s spouse and dependents, as specified.
17. Requires that the filed affidavit be served on the judgment creditor no less than 15 days prior to the date set for the examination.
18. Requires courts to acknowledge receipt of a properly signed and filed financial affidavit and to cancel any debtor examination upon receipt.
19. Establishes that if the affidavit is not timely served and filed, the court must continue to conduct the examination.
20. Clarifies the procedures a judgment creditor may undertake to challenge the judgment debtor's declaration that their income and assets are exempt.
21. Requires, at the conclusion of a hearing, a judge to determine if a judgment debtor must sit for an examination.
22. Clarifies that for a matter involving consumer debt, no warrant for arrest or warrant to appear can be issued for a debtor who fails to appear for their examination or fails to file their financial statement, and instead requires a court to issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.
23. Applies these changes, except for paragraph 1), effective January 1, 2025.

Senate Amendments

Streamline the relevant court processes and delay the implementation date.

COMMENTS

This bill creates an efficient alternative for debtors in cases concerning consumer debt to share their financial information with the courts and their creditors. Under existing law, the debtor's examination is a formal court proceeding in which the judgment creditor may question the debtor to obtain information about the location and value of the judgment debtor's assets, including paychecks and other sources of income, bank accounts, stocks and other investments, and personal and real property. The examination also focuses on other individuals in a debtor's life and their effect on the debtor's financial situation, such as a spouse and dependents. Even creditors who have expressed opposition to creating an alternative financial statement procedure concede that the current examination process is expensive and burdensome.

Opponents of the bill equate taking away a creditor's right to examine a judgment debtor to taking away a litigant's right to take the deposition of their opponent, and argue that this bill deprives creditors of their "core judgment enforcement tools." But, unlike in traditional civil lawsuits, which might deal with a wide range of issues necessitating prolonged examination, the issues arising in judgment exemption proceedings is the debtor's financial situation. Utilizing the opposition's comparison to civil litigation, the disclosure of this information is more analogous to a request for production of documents, a written exercise, than a deposition. Accordingly, the financial affidavit alternative introduced by this bill provides a creditor with similar information under penalty of perjury without needlessly forcing debtors to appear in court, potentially taking them away from employment needed to pay off their debt. The bill also provides a mechanism for creditors to challenge the debtor's claim of exemption, similar to a discovery motion, and if a court finds they have a reasonable basis for the challenge the judgment creditor can still order an in-court examination.

This bill provides judgment debtors in consumer debt cases another opportunity to comply with a court order before an arrest warrant can issue. If a judgment debtor fails, for whatever reason, to timely file a financial affidavit or appear for an examination, this bill provides for the court to issue an order to show cause so that the debtor may remedy any failure to appear and provide a reasonable explanation to the court prior to the court issuing any warrants to appear. An order to show cause is a court order requiring the involved parties to explain, prove, or justify an event, action, behavior, or other factor affecting the case at hand. In the context of personal consumer debt, this gives a debtor an opportunity to explain why they failed to comply and to cure their failure before a bench warrant issues.

Opponents of the bill argue that "[t]he measure seeks to usurp the Court's ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether." But this bill does not deprive any court of its authority to enforce its orders; a court can hold a judgment debtor in a case concerning consumer debt in contempt, including by issuing a bench warrant, but is simply required to first issue an order to show cause. This added safeguard is common in many types of civil cases, including those concerning child support and alimony.

According to the Author

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

Arguments in Support

The co-sponsors of this bill argue:

There is a growing recognition in California and throughout the nation that no consumer should face jail over a debt being owed, period. That is true even when the violation is the debtor's failure to appear rather than the debt itself – a distinction without meaning to the ordinary families whose lives could be thrown into tumult by an arrest warrant. This bill does not take away any collection tools. It simply makes clear that no one should be arrested, or threatened with arrest, over a consumer debt. Most people think debtors' prisons are an outdated and unfair vestige of the past. This bill will assure that they are.

Arguments in Opposition

The California Association of Judgment Professionals write in opposition:

The measure seeks to usurp the Court's ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether. Code of Civil Procedure ("CCP") Section 501 already provides: "A person may not be imprisoned in a civil action for debt or tort, whether before or after judgment. Nothing in this section affects any power a court may have to imprison a person who violates a court order." There simply are no "debtor's prisons" in California. Failure to appear for a court-ordered judgment debtor's examination is an offense against the dignity and authority of the court. "The power to punish for contempt is inherent in all courts; its existence is essential to the preservation of order in judicial proceedings, and to the enforcement of the judgments, orders, and writs of the courts, and, consequently to the due administration of justice." [Bessette v. W. B. Conkey Co. (1904) 194 U.S. 324 citing Ex Parte Robinson, 19 Wall. 505, 86 U. S. 510]

The Court has inherent power to punish civil contempt, but that power has already been tempered in civil proceedings by procedural safeguards in existing law. CCP Sections 1209-1222 outlines the procedures the Court is mandated to use in implementing its power to conduct court business and to enforce its lawful orders in the civil context, whereas Penal Code Section 166 is implemented in a criminal context. Under CCP Section 1219, the Court's power to demand compliance is coercive rather than penal in nature. CCP Section 708.170(a) and Section 1993 also provide Courts the power to demand compliance, which is exercised by first bringing the Judgment Debtor before the court to ANSWER for failure to appear

FISCAL COMMENTS

According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

VOTES:

ASM JUDICIARY: 7-2-2

YES: Maienschein, Connolly, Haney, Pacheco, Papan, Reyes, Robert Rivas

NO: Essayli, Sanchez

ABS, ABST OR NV: Dixon, Kalra

ASM APPROPRIATIONS: 12-4-0

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Wilson

NO: Megan Dahle, Dixon, Mathis, Sanchez

ASSEMBLY FLOOR: 53-18-9

YES: Addis, Aguiar-Curry, Alvarez, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

ABS, ABST OR NV: Arambula, Bains, Gabriel, Pacheco, Ramos, Rodriguez, Blanca Rubio, Soria, Valencia

SENATE FLOOR: 30-9-1

YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener

NO: Alvarado-Gil, Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk

ABS, ABST OR NV: Caballero

ASSEMBLY FLOOR: 57-18-5

YES: Addis, Aguiar-Curry, Alvarez, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Santiago, Schiavo, Ting, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

ABS, ABST OR NV: Arambula, Bains, Blanca Rubio, Soria, Valencia

UPDATED

VERSION: September 6, 2023

CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0001042 FN:

 THIRD READING  

Bill No: AB 1119

Author: Wicks (D)

Amended: 9/6/23 in Senate

Vote: 21

SENATE JUDICIARY COMMITTEE: 8-2, 7/11/23

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Min, Stern, Wiener

NOES: Wilk, Niello

NO VOTE RECORDED: Laird

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 53-18, 6/1/23 - See last page for vote

SUBJECT: Enforcement of judgments

SOURCE: California Low-Income Consumer Coalition

National Consumer Law Center

DIGEST:

This bill exempts judgment debtors from being subject to arrest and punishment for contempt for failing to appear at a debtor’s examination in a case concerning consumer debt and provides a separate process for meeting the same goals of the in person examination.

Senate Floor Amendments of 9/6/23 streamline the relevant court processes and delay the implementation date.

ANALYSIS:

Existing law:

1. Defines “judgment creditor” as a person in whose favor a judgment is rendered. (Code Civ. Proc. § 680.240.)
2. Defines “judgment debtor” as a person against whom a judgment is rendered. (Code Civ. Proc. § 680.250.)
3. Defines “money judgment” as that part of a judgment which requires the payment of money. (Code Civ. Proc. § 680.270.)
4. Provides for enforceability of judgments in a civil action, including money judgements. (Code Civ. Proc. § 681.010.)
5. Provides that all property of a judgment debtor is subject to enforcement of a money judgment, unless specifically exempted from collection. (Code Civ. Proc. § 695.010.)
6. Provides statutory exemptions from collection in satisfaction of a money judgment. (Code Civ. Proc. § 703.010 et seq.)
7. Requires a court, upon application from a judgment creditor, to issue an order requiring the judgment debtor to appear before the court to furnish information to aid in enforcement of the money judgment, and requires the order to contain a notice to the judgment debtor stating that if the judgment debtor fails to appear, they may be subject to arrest and punishment for contempt of court and required to pay reasonable attorney fees incurred by the creditor. (Code Civ. Proc. § 708.110.)
8. Requires the judgment creditor to personally serve a copy of the order on the judgment debtor not less than 10 days before the date set for the examination. Service shall be made in the manner specified. Service of the order creates a lien on the personal property of the judgment debtor for a period of one year from the date of the order unless extended or sooner terminated by the court. (Code Civ. Proc. § 708.110(d).)
9. Authorizes the court, if an order requiring a person to appear for an examination was served, as provided, and the person fails to appear, to do either of the following:
   1. Pursuant to a warrant, have the person brought before the court to answer for the failure to appear and may punish the person for contempt.
   2. Issue a warrant for the arrest of the person who failed to appear as required by the court order. (Civ. Proc. Code § 708.170(a)(1).)
10. Permits a court to issue an order of contempt for disobedience of any lawful judgment, order, or process of the court. (Civ. Proc. Code § 1209(a)(5).)
11. Permits a court to issue an arrest warrant for any person who failed to appear pursuant to a court order. (Civ. Proc. Code § 1993(a)(1).)
12. Prohibits a person from being imprisoned in a civil action for debt or tort, whether before or after judgment. This does not affect any power a court may have to imprison a person who violates a court order. (Civ. Proc. Code § 501.)

This bill:

1. Extends the timeline for service of the order to appear for examination to 30 days before the date set for the examination.
2. Authorizes a judgment debtor, instead of appearing at the examination, to file a judgment debtor’s financial affidavit in a form prescribed by the court and signed under penalty of perjury and serve copies of all filed documents on the judgment creditor no later than 15 days prior to the date set for the examination.
3. Provides that where the order is for a judgment debtor to appear in a case concerning consumer debt, no warrant for arrest or to appear may be issued for a debtor’s failure to appear for an examination or failure to file and serve the debtor’s financial affidavit. In such cases, the court shall issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor. Any such warrant shall be satisfied by the debtor’s appearance or the filing of a financial affidavit, as provided.
4. Defines “consumer debt” as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt does not include rental debt or debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee.
5. Provides that if the judgment debtor states in a financial affidavit signed under penalty of perjury and served on the judgment creditor and filed with the court at least 15 days prior to the examination, that all their income and assets are exempt, the court shall acknowledge receipt of the affidavit and cancel the examination, unless the judgment creditor opposes the judgment debtor’s financial affidavit, as provided. If not timely served and filed, the court shall disregard the affidavit and proceed with the examination.
6. Establishes the process for a creditor to challenge the financial affidavit and show cause why an examination is necessary. The financial affidavit and motion for an order determining the need for a debtor to appear for an examination shall constitute the pleadings, as provided. The court in its discretion may rule upon these pleadings or order the production of evidence.
7. Requires a judgment debtor, and their spouse, as specified, to include specified information in the financial affidavit, including information on income and assets owned.
8. Updates the notice to be provided by the court to the debtor accordingly.
9. Applies these changes, except for paragraph 1), effective January 1, 2025.

Background

Frequently, when a court reaches a decision in a case, it orders the losing party (the judgment debtor) to give money to the winning party (the judgment creditor). If the judgment debtor does not pay up voluntarily, the judgment creditor has a few different options for trying to collect what it is owed. One option for the judgment creditor is to force the judgment debtor to attend a debtor examination: a court appearance under oath in which the judgment creditor may inquire about the debtor’s property and obtain liens on that property to satisfy the outstanding debt. Existing law empowers the court to issue a warrant for the arrest of an individual debtor who does not appear.

This bill establishes a different system for obtaining this information when the underlying judgment is for consumer debt, debt arising from transactions primarily carried out for personal, family, or household purposes. Such debtors are not subject to arrest and punishment for contempt simply for failing to appear for the debtor examination. The bill affords them a different process to submit financial affidavits signed under penalty of perjury.

The bill is co-sponsored by the California Low-Income Consumer Coalition and the National Consumer Law Center. Support comes from various legal services entities, including Bet Tzedek Legal Services. The bill is opposed by the California Association of Judgment Professionals.

Comments

The author states:

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

The scope of the issue was reported on by the American Civil Liberties Union:

An estimated 77 million Americans—one in three adults—have a debt that has been turned over to a private collection agency. Thousands of these debtors are arrested and jailed each year because they owe money. Millions more are threatened with jail. The debts owed can be as small as a few dollars and can involve every kind of consumer debt, from car payments to utility bills to student loans to medical fees. These trends devastate communities across the country as unmanageable debt and household financial crisis become ubiquitous, and they impact Black and Latino communities most harshly due to longstanding racial and ethnic gaps in poverty and wealth.

Debtors’ prisons were abolished by Congress in 1833 and are thought to be a relic of the Dickensian past. In reality, private debt collectors—empowered by the courts and prosecutors’ offices—are using the criminal justice system to punish debtors and terrorize them into paying even when a debt is in dispute or when a debtor has no ability to pay.

The criminalization of private debt happens when judges, at the request of collection agencies, issue arrest warrants for people who failed to appear in court to deal with unpaid civil debt judgments. In many cases, the debtors were unaware they were sued or had not received notice to show up in court.

Tens of thousands of these warrants are issued annually, but the total number is unknown because states and local courts do not typically track these orders as a category of arrest warrants.^[1]

This bill seeks to provide a more efficient and humane approach to debtor’s examinations when the judgment to be enforced arises from consumer debt. “Consumer debt” is defined as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt explicitly does not include rental debts or debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee. The process remains the same for all other debts.

For this population of debtors, the court is no longer authorized to issue a warrant for their arrest or to hold them in contempt for simply failing to appear. However, the debtor remains potentially liable for the judgment creditor’s attorney’s fees for failing to appear.

In lieu of appearing at the examination, the consumer is permitted to file a judgment debtor’s financial affidavit that must be signed under penalty of perjury. The debtor must serve copies of all filed documents on the judgment creditor no later than 15 days prior to the date set for the examination. This bill requires a judgment debtor, and their spouse, as specified, to include detailed information in the financial affidavit, including:

• Person and relation of any dependent.
• Gross monthly income, including withholdings and take-home pay.
• Total monthly income.
• Money received from other sources.
• Property owned, including cash, bank accounts, real estate equity and other personal property.
• Itemized monthly expenses.
• Any outstanding debts, including balance owed and to whom.
• Any other facts which support the claim of exemption.

If the debtor states in the financial affidavit that all their income and assets are exempt, the court is to cancel the examination, unless the judgment creditor opposes the judgment debtor’s financial affidavit. This bill provides a clear process for ordering the debtor’s appearance for an examination and for a hearing on the matter and the production of evidence at the discretion of the court. If copies of the financial affidavit are not timely served and filed, the court shall disregard the affidavit and shall not cancel the examination.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT: (Verified 9/6/23)

California Low-Income Consumer Coalition (co-source)

National Consumer Law Center (co-source)

Bet Tzedek Legal Services

Centro Legal De LA Raza

Community Legal Services in East Palo Alto

Elder Law & Advocacy

Katharine & George Alexander Community Law Center

Legal Aid of Marin

Legal Aid Society of San Bernardino

Legal Assistance for Seniors

Open Door Legal

Public Counsel

Public Law Center

Riverside Legal Aid

Watsonville Law Center

OPPOSITION: (Verified 9/6/23)

California Association of Judgment Professionals

ARGUMENTS IN SUPPORT: The California Low-Income Consumer Coalition and the National Consumer Law Center write:

Almost 2 out of 3 debt cases in California are default judgments in favor of debt collectors where consumers were not able to defend themselves in court. This is often because they were never served with proper notice, have work or child care commitments they can’t miss, are unaware they have to take action, or are afraid to interact with the judicial system. The difficulty most people have in navigating the court system significantly contributes to failures to appear, and even judgment-proof individuals or people who don’t actually owe the debt may feel compelled to pay because of a fear of arrest.

AB 1119 will rebalance the power dynamic between debt collectors and families with consumer debt. . . .

ARGUMENTS IN OPPOSITION: The California Association of Judgment Professionals writes:

We respectfully want to lodge our opposition to §708.170(b), because the measure provides no way the courts can effectively and efficiently comply with the logistics of how the statute can possibly be [implemented].

ASSEMBLY FLOOR: 53-18, 6/1/23

AYES: Addis, Aguiar-Curry, Alvarez, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Reyes, Luz Rivas, Robert Rivas, Santiago, Schiavo, Ting, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NOES: Alanis, Chen, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Mathis, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis

NO VOTE RECORDED: Arambula, Bains, Gabriel, Pacheco, Ramos, Rodriguez, Blanca Rubio, Soria, Valencia

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

9/7/23 10:24:24

**** END ****

1. A Pound of Flesh: The Criminalization of Private Debt (2018) ACLU, https://www.aclu.org/report/pound-flesh-criminalization-private-debt [as of Aug. 21, 2023]. ↑

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 1119 (Author:Wicks)

Version: May 30, 2023

Hearing Date: July 11, 2023

Fiscal: Yes

Urgency: No

Consultant: CK

SUBJECT

Enforcement of judgments

DIGEST

This bill exempts judgment debtors from being subject to arrest and punishment for contempt for failing to appear at a debtor’s examination in a case concerning consumer debt and provides a separate process for meeting the same goals of the in person examination.

EXECUTIVE SUMMARY

Frequently, when a court reaches a decision in a case, it orders the losing party (the judgment debtor) to give money to the winning party (the judgment creditor). If the judgment debtor does not pay up voluntarily, the judgment creditor has a few different options for trying to collect what it is owed. One option for the judgment creditor is to force the judgment debtor to attend a debtor examination: a court appearance under oath in which the judgment creditor may inquire about the debtor’s property and obtain liens on that property to satisfy the outstanding debt. Existing law empowers the court to issue a warrant for the arrest of an individual debtor who does not appear.

This bill establishes a different system for obtaining this information when the underlying judgment is for consumer debt, debt arising from transactions primarily carried out for personal, family, or household purposes. Such debtors are not subject to arrest and punishment for contempt simply for failing to appear for the debtor examination. The bill affords them a different process to submit financial affidavits signed under penalty of perjury.

The bill is co-sponsored by the California Low-Income Consumer Coalition and the National Consumer Law Center. Support comes from various legal services entities, including Bet Tzedek Legal Services. The bill is opposed by the California Association of Judgment Professionals.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Defines “judgment creditor” as a person in whose favor a judgment is rendered. (Code Civ. Proc. § 680.240.)
2. Defines “judgment debtor” as a person against whom a judgment is rendered. (Code Civ. Proc. § 680.250.)
3. Defines “money judgment” as that part of a judgment which requires the payment of money. (Code Civ. Proc. § 680.270.)
4. Provides for enforceability of judgments in a civil action, including money judgements. (Code Civ. Proc. § 681.010.)
5. Provides that all property of a judgment debtor is subject to enforcement of a money judgment, unless specifically exempted from collection. (Code Civ. Proc. § 695.010.)
6. Provides statutory exemptions from collection in satisfaction of a money judgment. (Code Civ. Proc. § 703.010 et seq.)
7. Requires a court, upon application from a judgment creditor, to issue an order requiring the judgment debtor to appear before the court to furnish information to aid in enforcement of the money judgment, and requires the order to contain a notice to the judgment debtor stating that if the judgment debtor fails to appear, they may be subject to arrest and punishment for contempt of court and required to pay reasonable attorney fees incurred by the creditor. (Code Civ. Proc. § 708.110.)
8. Requires the judgment creditor to personally serve a copy of the order on the judgment debtor not less than 10 days before the date set for the examination. Service shall be made in the manner specified. Service of the order creates a lien on the personal property of the judgment debtor for a period of one year from the date of the order unless extended or sooner terminated by the court. (Code Civ. Proc. § 708.110(d).)
9. Authorizes the court, if an order requiring a person to appear for an examination was served, as provided, and the person fails to appear, to do either of the following:
   1. Pursuant to a warrant, have the person brought before the court to answer for the failure to appear and may punish the person for contempt.
   2. Issue a warrant for the arrest of the person who failed to appear as required by the court order. (Civ. Proc. Code § 708.170(a)(1).)
10. Provides that if the person’s failure to appear is without good cause, the judgment creditor shall be awarded reasonable attorney’s fees incurred in the examination proceeding. Attorney’s fees awarded against the judgment debtor shall be added to and become part of the principal amount of the judgment. A person who willfully makes an improper service of an order for an examination which subsequently results in an arrest of the person who fails to appear is guilty of a misdemeanor. (Civ. Proc. Code § 708.170.)
11. Permits a court to issue an order of contempt for disobedience of any lawful judgment, order, or process of the court. (Civ. Proc. Code § 1209(a)(5).)
12. Permits a court to issue an arrest warrant for any person who failed to appear pursuant to a court order. (Civ. Proc. Code § 1993(a)(1).)
13. Prohibits a person from being imprisoned in a civil action for debt or tort, whether before or after judgment. This does not affect any power a court may have to imprison a person who violates a court order. (Civ. Proc. Code § 501.)
14. Defines debt for purposes of the Fair Debt Collection Practices Act as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. (15 U.S.C.S. § 1692a(5).)

This bill:

1. Extends the timeline for service of the order to appear for examination to 30 days before the date set for the examination.
2. Authorizes a judgment debtor, instead of appearing at the examination, to file a judgment debtor’s financial affidavit in a form prescribed by the court and signed under penalty of perjury and serve copies of all filed documents on the judgment creditor no later than 10 days prior to the date set for the examination. Such documents will be filed under seal.
3. Provides that where the order is for a judgment debtor to appear in a case concerning consumer debt, no warrant for arrest or to appear may be issued for a debtor’s failure to appear for an examination or failure to file and serve the debtor’s financial affidavit. In such cases, the court shall issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor. Any such warrant shall be satisfied by the debtor’s appearance or the filing of a financial affidavit.
4. Defines “consumer debt” as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt does not include rental debt or debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee.
5. Provides that if the judgment debtor states in a financial affidavit signed under penalty of perjury and served on the judgment creditor and filed with the court at least 15 days prior to the examination, that all their income and assets are exempt, the court shall acknowledge receipt of the affidavit and cancel the examination, unless the judgment creditor opposes the judgment debtor’s financial affidavit. If not timely served and filed, the court shall disregard the affidavit and proceed with the examination.
6. Establishes the process for a creditor to challenge the financial affidavit and show cause why an examination is necessary. The financial affidavit and notice of opposition to the financial affidavit shall constitute the pleadings. The court in its discretion may rule upon these pleadings or order the production of evidence.
7. Requires a judgment debtor, and their spouse, as specified, to include the following information in the financial affidavit:
   1. Person and relation of any dependent.
   2. Gross monthly income, including withholdings and take-home pay.
   3. Total monthly income.
   4. Money received from other sources.
   5. Property owned, including cash, bank accounts, real estate equity and other personal property.
   6. Itemized monthly expenses.
   7. Any outstanding debts, including balance owed and to whom.
   8. Any other facts which support the claim of exemption.
8. Updates the notice to be provided by the court to the debtor accordingly.

COMMENTS

1. Money judgments in California

Pursuant to the Enforcement of Judgments Law, Code of Civil Procedure section 680.010 et seq., a “money judgment” is that part of a judgment which requires the payment of money. A “judgment creditor” is the person in whose favor a judgment is rendered, and a “judgment debtor” is the person against whom a judgment is rendered.

When a money judgment is entered in a court of this state, the judgment creditor is given a specified amount of time to enforce such judgment. However, this period of enforceability may be extended by filing an application for renewal of the judgment with the court in which the judgment was entered.

The law provides a number of different mechanisms that judgment creditors can use to try to collect the money they are owed from the judgment debtors. For example, a judgment creditor can have a lien imposed on any property that the judgment debtor owns. (Code Civ. Proc. § 697.010 et seq.) A judgment creditor can arrange to have the money taken out of the judgment debtor’s financial accounts through a bank levy. (Code Civ. Proc. § 700.140 et seq.) A judgment creditor can also arrange to have some of the judgment debtor’s wages garnished for purposes of satisfying the debt owed. (Code Civ. Proc. § 706.010 et seq.)

To establish what property, accounts, assets, and sources of the income the judgment debtor has, the law provides for debtor’s examinations. The judgment creditor can apply to the court for an order requiring the judgment debtor to appear before the court at a specified time and place in order to furnish information to aid in the judgment creditor’s enforcement of the money judgment.

The judgment creditor must personally serve a copy of the order on the judgment debtor not less than 10 days before the date set for the examination. Such service creates a lien on the personal property of the judgment debtor for a period of one year from the date of the order unless extended or sooner terminated by the court. The order must include a clear notice to the debtor: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, you may be subject to arrest and punishment for contempt of court and the court may make an order requiring you to pay the reasonable attorney’s fees incurred by the judgment creditor in this proceeding.”

Currently, if a judgment debtor fails to appear, the court is authorized to have the person brought before the court to answer for the failure to appear pursuant to a warrant, and may punish the person for contempt. The law also authorizes the court to issue a warrant for the arrest of the person who failed to appear as required by the court order.

1. Humanizing the debtor’s examination for consumers

The role of the debtor’s examination is obviously important to the debt collection process; it allows for a proper accounting of the assets and income that can be used to satisfy the lawfully imposed money judgment. However, those most likely to be subject to arrest for failure to appear at these examinations are lower income consumers that are not sophisticated actors when it comes to court processes. This bill seeks to address this arguably inhumane element of the collection process.

The author explains the need for the bill:

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

The scope of the issue was reported on by the American Civil Liberties Union:

An estimated 77 million Americans—one in three adults—have a debt that has been turned over to a private collection agency. Thousands of these debtors are arrested and jailed each year because they owe money. Millions more are threatened with jail. The debts owed can be as small as a few dollars and can involve every kind of consumer debt, from car payments to utility bills to student loans to medical fees. These trends devastate communities across the country as unmanageable debt and household financial crisis become ubiquitous, and they impact Black and Latino communities most harshly due to longstanding racial and ethnic gaps in poverty and wealth.

Debtors’ prisons were abolished by Congress in 1833 and are thought to be a relic of the Dickensian past. In reality, private debt collectors—empowered by the courts and prosecutors’ offices—are using the criminal justice system to punish debtors and terrorize them into paying even when a debt is in dispute or when a debtor has no ability to pay.

The criminalization of private debt happens when judges, at the request of collection agencies, issue arrest warrants for people who failed to appear in court to deal with unpaid civil debt judgments. In many cases, the debtors were unaware they were sued or had not received notice to show up in court.

Tens of thousands of these warrants are issued annually, but the total number is unknown because states and local courts do not typically track these orders as a category of arrest warrants.^[1]

This bill seeks to provide a more efficient and humane approach to debtor’s examinations when the judgment to be enforced arises from consumer debt. “Consumer debt” is defined as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt explicitly does not include rental debts or debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee. The process remains the same for all other debts.

For this population of debtors, the court is no longer authorized to issue a warrant for their arrest or to hold them in contempt for simply failing to appear. However, the debtor remains potentially liable for the judgment creditor’s attorney’s fees for failing to appear.

In lieu of appearing at the examination, the consumer is permitted to file a judgment debtor’s financial affidavit that must be signed under penalty of perjury. The debtor must serve copies of all filed documents on the judgment creditor no later than 10 days prior to the date set for the examination. The bill requires a judgment debtor, and their spouse, as specified, to include detailed information in the financial affidavit, including:

• Person and relation of any dependent.
• Gross monthly income, including withholdings and take-home pay.
• Total monthly income.
• Money received from other sources.
• Property owned, including cash, bank accounts, real estate equity and other personal property.
• Itemized monthly expenses.
• Any outstanding debts, including balance owed and to whom.
• Any other facts which support the claim of exemption.

If the debtor states in the financial affidavit that all their income and assets are exempt, the court is to cancel the examination, unless the judgment creditor opposes the judgment debtor’s financial affidavit. The bill provides a clear process for filing a notice of opposition and for a hearing on the matter and the production of evidence at the discretion of the court. If copies of the financial affidavit are not timely served and filed, the court shall disregard the affidavit and shall not cancel the examination.

1. Stakeholder positions

The co-sponsors of the bill, the California Low-Income Consumer Coalition and the National Consumer Law Center, write:

In California, once a plaintiff creditor or debt collector has obtained a judgment against a consumer, the debt collector may seek to “examine” the consumer to determine their assets. If the defendant fails to appear for the debtor’s examination, which involves going to court, the judge in the case may order a bench or an arrest warrant to be issued for the defendant. Whether or not the warrant actually results in jail time for the defendant, it may exacerbate a future minor infraction – such as being pulled over for a broken taillight – for a low-income worker who might then be subject to arrest.

Almost 2 out of 3 debt cases in California are default judgments in favor of debt collectors where consumers were not able to defend themselves in court. This is often because they were never served with proper notice, have work or child care commitments they can’t miss, are unaware they have to take action, or are afraid to interact with the judicial system. The difficulty most people have in navigating the court system significantly contributes to failures to appear, and even judgment-proof individuals or people who don’t actually owe the debt may feel compelled to pay because of a fear of arrest.

AB 1119 will rebalance the power dynamic between debt collectors and families with consumer debt by:

1. Reducing the need for court appearances: People who get a notice to appear in court, but whose income and property value are under the threshold protected by existing California law, would be able to file a financial affidavit rather than taking up court time. The court may still order the debtor to be examined if the plaintiff can present sufficient evidence of higher income. .
2. Making Clear there is no jail time for smaller debts: In limited civil cases, where debts are $25,000 or less, when debtors fail to appear in court as scheduled, the court could still issue an order to show cause to determine whether to issue a warrant; but under this bill even if a warrant is issued, no one in a limited civil case would be jailed for failure to pay or failure to comply with an order to pay.

There is a growing recognition in California and throughout the nation that no consumer should face jail over a debt being owed, period.

In opposition, the California Association of Judgment Professionals writes:

We respectfully want to lodge our opposition to §708.170(b), because the measure provides no way the courts can effectively and efficiently comply with the logistics of how the statute can possibly be [implemented].

Existing law provides an option for low-income consumer debtors: A money judgment is a court order. If any judgment debtor of a judgment based upon “consumer debt”, whether low-income or otherwise, truly cannot pay off the judgment and does not want to file bankruptcy to discharge the debt completely and does not want to be ordered to appear at a judgment debtor examination, that debtor has the current ability to obtain a court order to pay the judgment in payments or installments.1 Doing so would stave off the judgment creditor’s enforcement of the judgment, which is much easier and simpler for all concerned.

SUPPORT

California Low-Income Consumer Coalition (co-sponsor)

National Consumer Law Center (co-sponsor)
Bet Tzedek Legal Services

Centro Legal De LA Raza

Community Legal Services in East Palo Alto

Elder Law & Advocacy

Katharine & George Alexander Community Law Center

Legal Aid of Marin

Legal Aid Society of San Bernardino

Legal Assistance for Seniors

Open Door Legal

Public Counsel

Public Law Center

Riverside Legal Aid

Watsonville Law Center

OPPOSITION

California Association of Judgment Professionals

RELATED LEGISLATION

Pending Legislation:

AB 1139 (Garcia, 2023) applies the Tribal Court Civil Money Judgment to specified judgments relating to tribal taxes, and related interest and penalties. AB 1139 is currently on the Senate Floor.

AB 1414 (Kalra, 2023) prohibits the use of common counts in actions for collection of consumer debt. The bill excludes consumer debt from the definition of “book account.” AB 1414 is currently on the Senate Floor.

Prior Legislation:

SB 1200 (Skinner, Ch. 883, Stats. 2022) placed restrictions on the renewal of certain money judgments and reduces the interest rate applied to certain outstanding money judgments and extends the period of time within which a judgment debtor can move to vacate or modify a renewal.

AB 1580 (Committee on Judiciary, Ch. 30, Stats. 2021) set forth procedures for identifying a natural person who must appear – and can be held accountable for failing to appear – at a debtor’s examination on behalf of an organization, when that organization fails to specify someone else who will appear on its behalf.

PRIOR VOTES:

Assembly Floor (Ayes 53, Noes 18)

Assembly Floor (Ayes 57, Noes 18)

Assembly Appropriations Committee (Ayes 12, Noes 4)

Assembly Judiciary Committee (Ayes 7, Noes 2)

**************

1. A Pound of Flesh: The Criminalization of Private Debt (2018) ACLU, https://www.aclu.org/report/pound-flesh-criminalization-private-debt [as of June 24, 2023]. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 1119

Author:(Wicks)

As Amended Ver:May 30, 2023

Majority vote

SUMMARY

Establishes an alternative for judgment debtors in consumer actions to submit financial information concerning their claim of exemption and removes the threat of arrest upon a debtor's failure to comply.

Major Provisions

1. Extends the time period in which a judgment creditor is required to personally serve a copy of the order on the judgment debtor from no less than 10 days to no less than 30 days before the date set for the debtor's examination.
2. Establishes new procedures for ascertaining the assets of judgment debtors holding consumer debt, as specified.
3. Updates the notice to judgment debtor requirement to include language regarding the affidavit option in cases involving consumer debt.
4. Defines consumer debt to mean, any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, but not debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee, or rental debt.
5. Defines, for the purpose of this bill, "rental debt" to mean unpaid rent or other unpaid financial obligation of a tenant under the tenancy that has come due.
6. Permits judgment debtors of consumer debt to file a detailed affidavit under penalty of perjury as an alternative to appearing in court for an examination to determine whether their assets and income are exempt from paying the debt.
7. Requires the filing specified in 6), above, to include the following information:
8. The person and relation of any dependents;
9. Gross monthly income, including withholdings and take-home pay;
10. Total monthly income;
11. Money received from other sources;
12. Property owned, including cash, bank accounts, real estate equity and other personal property;
13. Itemized monthly expenses;
14. Any outstanding debts, as specified; and
15. Any other facts which support the claim of exemption.
16. Provides that financial affidavits specified in 6), above, are to be submitted by the debtor and are presumptively filed under seal.
17. Requires that filed affidavits be served on the judgment creditor no less than 15 days prior to the date set for the hearing.
18. Requires courts to acknowledge receipt of a properly signed and filed financial affidavit and to cancel any debtor examination upon receipt.
19. Establishes that if the affidavit is not timely served and filed, the court must continue to conduct the examination.
20. Prohibits any further examination of judgment debtor after a properly signed, filed and served financial affidavit, as specified in 6), above, unless the judgment creditor presents evidence of the judgment debtors' non-exempt income or assets and the court has a reasonable basis to believe scheduling an examination is warranted.
21. Clarifies the procedures a judgment creditor may undertake to challenge the judgment debtor's declaration that their income and assets are exempt as follows:
    1. Requires a judgment creditor to file a notice of opposition and notice of motion for an order determining the need for the debtor to appear for a debtor's examination within 15 days;
    2. Requires the notice in a) to be filed under oath and include a statement of facts showing good cause as to why a debtor's examination is necessary;
    3. Requires a hearing on the matter within 30 days of the submission of the notice of the motion and requires the notice to be served on the debtor within 15 days of the hearing;
    4. Provides that the financial affidavit and the notice of opposition are to serve as the pleadings in the matter;
    5. Provides that a court may, at its discretion, seek additional evidence; and
    6. Requires, at the conclusion of a hearing, a judge to determine if a judgment debtor must sit for an examination.
22. Clarifies that for a matter involving consumer debt, no warrant for arrest or warrant to appear can be issued for a debtor who fails to appear for their examination or fails to file their financial statement, and instead requires a court to issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.

COMMENTS

This bill creates an efficient alternative for debtors in cases concerning consumer debt to share their financial information with the courts and their creditors. Under existing law, the debtor's examination is a formal court proceeding in which the judgment creditor may question the debtor to obtain information about the location and value of the judgment debtor's assets, including paychecks and other sources of income, bank accounts, stocks and other investments, and personal and real property. The examination also focuses on other individuals in a debtor's life and their effect on the debtor's financial situation, such as a spouse and dependents. Even creditors who have expressed opposition to creating an alternative financial statement procedure concede that the current examination process is expensive and burdensome.

Opponents of the bill equate taking away a creditor's right to examine a judgment debtor to taking away a litigant's right to take the deposition of their opponent, and argue that this bill deprives creditors of their "core judgment enforcement tools." But, unlike in traditional civil lawsuits, which might deal with a wide range of issues necessitating prolonged examination, the issues arising in judgment exemption proceedings is the debtor's financial situation. Utilizing the opposition's comparison to civil litigation, the disclosure of this information is more analogous to a request for production of documents, a written exercise, than a deposition. Accordingly, the financial affidavit alternative introduced by this bill provides a creditor with similar information under penalty of perjury without needlessly forcing debtors to appear in court, potentially taking them away from employment needed to pay off their debt. The bill also provides a mechanism for creditors to challenge the debtor's claim of exemption, similar to a discovery motion, and if a court finds they have a reasonable basis for the challenge the judgment creditor can still order an in-court examination.

This bill provides judgment debtors in consumer debt cases another opportunity to comply with a court order before an arrest warrant can issue. If a judgment debtor fails, for whatever reason, to timely file a financial affidavit or appear for an examination, this bill provides for the court to issue an order to show cause so that the debtor may remedy any failure to appear and provide a reasonable explanation to the court prior to the court issuing any warrants to appear. An order to show cause is a court order requiring the involved parties to explain, prove, or justify an event, action, behavior, or other factor affecting the case at hand. In the context of personal consumer debt, this gives a debtor an opportunity to explain why they failed to comply and to cure their failure before a bench warrant issues.

Opponents of the bill argue that "[t]he measure seeks to usurp the Court's ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether." But this bill does not deprive any court of its authority to enforce its orders; a court can hold a judgment debtor in a case concerning consumer debt in contempt, including by issuing a bench warrant, but is simply required to first issue an order to show cause. This added safeguard is common in many types of civil cases, including those concerning child support and alimony.

According to the Author

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

Arguments in Support

The co-sponsors of this bill argue:

There is a growing recognition in California and throughout the nation that no consumer should face jail over a debt being owed, period. That is true even when the violation is the debtor's failure to appear rather than the debt itself – a distinction without meaning to the ordinary families whose lives could be thrown into tumult by an arrest warrant.

This bill does not take away any collection tools. It simply makes clear that no one should be arrested, or threatened with arrest, over a consumer debt. Most people think debtors' prisons are an outdated and unfair vestige of the past. This bill will assure that they are.

Arguments in Opposition

The California Association of Judgment Professionals write in opposition:

The measure seeks to usurp the Court's ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether. Code of Civil Procedure ("CCP") Section 501 already provides: "A person may not be imprisoned in a civil action for debt or tort, whether before or after judgment. Nothing in this section affects any power a court may have to imprison a person who violates a court order." There simply are no "debtor's prisons" in California. Failure to appear for a court-ordered judgment debtor's examination is an offense against the dignity and authority of the court. "The power to punish for contempt is inherent in all courts; its existence is essential to the preservation of order in judicial proceedings, and to the enforcement of the judgments, orders, and writs of the courts, and, consequently to the due administration of justice." [Bessette v. W. B. Conkey Co. (1904) 194 U.S. 324 citing Ex Parte Robinson, 19 Wall. 505, 86 U. S. 510]

The Court has inherent power to punish civil contempt, but that power has already been tempered in civil proceedings by procedural safeguards in existing law. CCP Sections 1209-1222 outlines the procedures the Court is mandated to use in implementing its power to conduct court business and to enforce its lawful orders in the civil context, whereas Penal Code Section 166 is implemented in a criminal context. Under CCP Section 1219, the Court's power to demand compliance is coercive rather than penal in nature. CCP Section 708.170(a) and Section 1993 also provide Courts the power to demand compliance, which is exercised by first bringing the Judgment Debtor before the court to ANSWER for failure to appear.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, costs to the courts of an unknown amount (Trial Court Trust Fund, General Fund). The Judicial Council reports courts must cancel existing hearings and notify judgment debtors of the alternative filing option created by this bill. Judicial Council reports that administrative costs resulting from this bill for creating new forms would likely be absorbable. Additionally, there are potential cost savings to the courts from replacing financial examinations in court with paper filings. Although courts are not funded on the basis of workload, increased pressure on the Trial Court Trust Fund and staff workload may create a need for increased funding for courts from the General Fund.

VOTES

ASM JUDICIARY: 7-2-2

YES: Maienschein, Connolly, Haney, Pacheco, Papan, Reyes, Robert Rivas

NO: Essayli, Sanchez

ABS, ABST OR NV: Dixon, Kalra

ASM APPROPRIATIONS: 12-4-0

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Wilson

NO: Megan Dahle, Dixon, Mathis, Sanchez

UPDATED

VERSION: May 30, 2023

CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0001042

ASSEMBLY THIRD READING

ATR Bill Id:AB 1119

Author:(Wicks)

As Amended Ver:March 29, 2023

Majority vote

SUMMARY

Establishes an alternative for judgment debtors in consumer actions to submit financial information concerning their claim of exemption and removes the threat of arrest upon a debtor's failure to comply.

Major Provisions

1. Extends the time period in which a judgment creditor is required to personally serve a copy of the order on the judgment debtor from no less than 10 days to no less than 30 days before the date set for the debtor's examination.
2. Establishes new procedures for ascertaining the assets of judgment debtors holding consumer debt, as specified.
3. Updates the notice to judgment debtor requirement to include language regarding the financial statement option in cases involving consumer debt.
4. Defines consumer debt to mean, any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, but not debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee, or rental debt.
5. Defines, for the purpose of this bill, "rental debt" to mean unpaid rent or other unpaid financial obligation of a tenant under the tenancy that has come due.
6. Permits judgment debtors of consumer debt to file a detailed financial statement under penalty of perjury as an alternative to appearing in court for an examination to determine whether their assets and income are exempt from paying the debt.
7. Requires the filing specified in 6), above, to include the following information:
8. The person and relation of any dependents;
9. Gross monthly income, including withholdings and take-home pay;
10. Total monthly income;
11. Money received from other sources;
12. Property owned, including cash, bank accounts, real estate equity and other personal property;
13. Itemized monthly expenses;
14. Any outstanding debts, as specified; and
15. Any other facts which support the claim of exemption.
16. Provides that financial statements specified in 6), above, are to be submitted by the debtor and are presumptively filed under seal.
17. Requires that filed financial statements be served on the judgment creditor no less than 10 days prior to the date set for the hearing.
18. Requires courts to acknowledge receipt of a properly signed and filed financial affidavit and to cancel any debtor examination upon receipt.
19. Prohibits any further examination of judgment debtor after a properly signed, filed and served financial statement, as specified in 6), above, unless the judgment creditor presents evidence of the judgment debtors' non-exempt income or assets and the court has a reasonable basis to believe scheduling an examination is warranted.
20. Clarifies a creditors' right to challenge the claim of exemption by providing evidence of the judgment debtor's non-exempt income or assets.
21. Provides that a court is to determine whether there is a reasonable basis to believe that there are non-exempt assets or income warranting the scheduling for an examination of the debtor.
22. Clarifies that for a matter involving consumer debt, no warrant for arrest or warrant to appear can be issued for a debtor who fails to appear for their examination or fails to file their financial statement, and instead requires a court to issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.

COMMENTS

This bill creates an efficient alternative for debtors in cases concerning consumer debt to share their financial information with the courts and their creditors. Under existing law, the debtor's examination is a formal court proceeding in which the judgment creditor may question the debtor to obtain information about the location and value of the judgment debtor's assets, including paychecks and other sources of income, bank accounts, stocks and other investments, and personal and real property. The examination also focuses on other individuals in a debtor's life and their effect on the debtor's financial situation, such as a spouse and dependents. Even creditors who have expressed opposition to creating an alternative financial statement procedure concede that the current examination process is expensive and burdensome.

This bill creates an efficient alternative for debtors to provide – and for creditors to obtain – the information needed to determine whether a debtor is exempt from payment of their consumer judgment debt. The bill requires the debtor to complete detailed information about their financial income and obligations, targeting similar information the creditor could have obtained vis-a-vis the in-person examination system. There are no prescribed questions during the examination process, but the California courts' self-help website contains lists of potential questions to ask during a debtor exam that closely track the information in the financial statement required under this bill. (See https://selfhelp.courts.ca.gov/small-claims/after-trial/collect-money/debtors-examination/questions.) The mandated categories of information in this bill largely track the information currently required in wage garnishment cases, as detailed in Judicial Council Form EJ-165. This information is shared with the creditor and the court, while being shielded from public disclosure. The bill also creates a mechanism by which a creditor can challenge a finding that a debtor is exempt.

Opponents of the bill equate taking away a creditor's right to examine a judgment debtor to taking away a litigant's right to take the deposition of their opponent, and argue that this bill deprives creditors of their "core judgment enforcement tools." But, unlike in traditional civil lawsuits, which might deal with a wide range of issues necessitating prolonged examination, the issues arising in judgment exemption proceedings is the debtor's financial situation. Utilizing the opposition's comparison to civil litigation, the disclosure of this information is more analogous to a request for production of documents, a written exercise, than a deposition. Accordingly, the financial statement alternative introduced by this bill provides a creditor with similar information under penalty of perjury without needlessly forcing debtors to appear in court, potentially taking them away from employment needed to pay off their debt. The bill also provides a mechanism for creditors to challenge the debtor's claim of exemption, similar to a discovery motion, and if a court finds they have a reasonable basis for the challenge the judgment creditor can still order an in-court examination.

This bill provides judgment debtors in consumer debt cases another opportunity to comply with a court order before an arrest warrant can issue. If a judgment debtor fails, for whatever reason, to timely file a financial statement or appear for an examination, this bill provides for the court to issue an order to show cause so that the debtor may remedy any failure to appear and provide a reasonable explanation to the court prior to the court issuing any warrants to appear. An order to show cause is a court order requiring the involved parties to explain, prove, or justify an event, action, behavior, or other factor affecting the case at hand. In the context of personal consumer debt, this gives a debtor an opportunity to explain why they failed to comply and to cure their failure before a bench warrant issues.

Opponents of the bill argue that "[t]he measure seeks to usurp the Court's ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether." But this bill does not deprive any court of its authority to enforce its orders; a court can hold a judgment debtor in a case concerning consumer debt in contempt, including by issuing a bench warrant, but is simply required to first issue an order to show cause. This added safeguard is common in many types of civil cases, including those concerning child support and alimony.

According to the Author

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

Arguments in Support

The co-sponsors of this bill argue:

There is a growing recognition in California and throughout the nation that no consumer should face jail over a debt being owed, period. That is true even when the violation is the debtor's failure to appear rather than the debt itself – a distinction without meaning to the ordinary families whose lives could be thrown into tumult by an arrest warrant.

This bill does not take away any collection tools. It simply makes clear that no one should be arrested, or threatened with arrest, over a consumer debt. Most people think debtors' prisons are an outdated and unfair vestige of the past. This bill will assure that they are.

Arguments in Opposition

The California Association of Judgment Professionals write in opposition:

The measure seeks to usurp the Court's ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether. Code of Civil Procedure ("CCP") Section 501 already provides: "A person may not be imprisoned in a civil action for debt or tort, whether before or after judgment. Nothing in this section affects any power a court may have to imprison a person who violates a court order." There simply are no "debtor's prisons" in California. Failure to appear for a court-ordered judgment debtor's examination is an offense against the dignity and authority of the court. "The power to punish for contempt is inherent in all courts; its existence is essential to the preservation of order in judicial proceedings, and to the enforcement of the judgments, orders, and writs of the courts, and, consequently to the due administration of justice." [Bessette v. W. B. Conkey Co. (1904) 194 U.S. 324 citing Ex Parte Robinson, 19 Wall. 505, 86 U. S. 510]

The Court has inherent power to punish civil contempt, but that power has already been tempered in civil proceedings by procedural safeguards in existing law. CCP Sections 1209-1222 outlines the procedures the Court is mandated to use in implementing its power to conduct court business and to enforce its lawful orders in the civil context, whereas Penal Code Section 166 is implemented in a criminal context. Under CCP Section 1219, the Court's power to demand compliance is coercive rather than penal in nature. CCP Section 708.170(a) and Section 1993 also provide Courts the power to demand compliance, which is exercised by first bringing the Judgment Debtor before the court to ANSWER for failure to appear.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, costs to the courts of an unknown amount (Trial Court Trust Fund, General Fund). The Judicial Council reports courts must cancel existing hearings and notify judgment debtors of the alternative filing option created by this bill. Judicial Council reports that administrative costs resulting from this bill for creating new forms would likely be absorbable. Additionally, there are potential cost savings to the courts from replacing financial examinations in court with paper filings. Although courts are not funded on the basis of workload, increased pressure on the Trial Court Trust Fund and staff workload may create a need for increased funding for courts from the General Fund.

VOTES

ASM JUDICIARY: 7-2-2

YES: Maienschein, Connolly, Haney, Pacheco, Papan, Reyes, Robert Rivas

NO: Essayli, Sanchez

ABS, ABST OR NV: Dixon, Kalra

ASM APPROPRIATIONS: 12-4-0

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Wilson

NO: Megan Dahle, Dixon, Mathis, Sanchez

UPDATED

VERSION: March 29, 2023

CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0000246

Date of Hearing: April 26, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1119

Author:(Wicks) – As Amended Ver:March 29, 2023

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill allows a judgement debtor to file a detailed financial statement under penalty of perjury instead of appearing in court for an examination of the judgment debtor’s assets and income, and prohibits a court from issuing a warrant for arrest or to appear if a judgment debtor fails to appear for a court-ordered examination in a consumer debt action. This bill also requires a court to provide a judgment debtor with specified notices about their alternative filing options and the consequences for failure to appear at a court-ordered hearing.

FISCAL EFFECT:

Costs to the courts of an unknown amount (Trial Court Trust Fund, General Fund). The Judicial Council reports courts must cancel existing hearings and notify judgment debtors of the alternative filing option created by this bill. Judicial Council reports that administrative costs resulting from this bill for creating new forms would likely be absorbable. Additionally, there are potential cost savings to the courts from replacing financial examinations in court with paper filings. Although courts are not funded on the basis of workload, increased pressure on the Trial Court Trust Fund and staff workload may create a need for increased funding for courts from the General Fund.

COMMENTS:

1) Author’s Statement. According to the author:

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants. The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

2) Background. As detailed in the analysis of this bill by the Assembly Committee on Judiciary, consumer debt is widespread in the United States, and there is increasing awareness of the negative effects of criminalizing private debt. Existing law requires a consumer debtor to appear in court for a financial examination at which they provide detailed information about their property and debts. This information is provided to help a creditor collect an unpaid judgment against the consumer debtor. If a consumer debtor fails to appear in court for a financial examination, the court may issue a bench warrant for their arrest. If the consumer debtor comes into contact with law enforcement, they may be arrested due to the warrant.

This bill makes two substantive changes to this process. First, it allows a consumer debtor to file a detailed financial statement under penalty of perjury rather than appearing in court for a financial examination. This allows a consumer debtor to provide salient financial information to a creditor without the onerous and potentially intimidating process of appearing in court. Second, this bill prohibits a court from issuing a bench warrant if a consumer debtor fails to appear in court for a financial examination. Instead, a court must issue an order to show cause to determine whether to issue a warrant to compel the debtor to appear in court. This eliminates the possibility that a consumer debtor may be arrested and potentially incarcerated as a result of their failure to appear in a consumer debt proceeding.

It is difficult to anticipate how significant the costs resulting from this bill would be because there is little data about how widespread these proceedings are. As noted by the Assembly Committee on Judiciary, there does not appear to be any comprehensive data about how many arrest warrants are currently issued for failure to appear in court for a consumer debt financial examination.

Analysis Prepared by: Annika Carlson / APPR. / (916) 319-2081

Date of Hearing: March 28, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

ABPCA Bill Id:AB 1119

Author:(Wicks) – As Introduced Ver:February 15, 2023

As Proposed to be Amended

SUBJECT: Enforcement of judgments

KEY ISSUES:

1. SHOULD A JUDGMENT DEBTOR IN A CONSUMER CASE BE ALLOWED TO SUBMIT A SWORN, DETAILED FINANCIAL STATEMENT INSTEAD of APPEARing in court FOR An EXAMINATION?
2. SHOULD a judgment debtor’s FAILURE TO fill out an alternative financial statement TRIGGER A COURT TO ISSUE AN ORDER TO SHOW CAUSE INSTEAD OF A BENCH WARRANT FOR THEIR ARREST?

SYNOPSIS

Under current law, a judgment creditor may obtain an order directing a judgment debtor to appear in court for a debtor’s examination. In a debtor's examination, the judgment debtor must answer questions under oath about their property and debts. This information is meant to assist the judgment creditor in ascertaining information about the debtor’s assets and collecting an unpaid judgment. If the individual fails to appear for the debtor’s examination, the court has the power to issue a bench warrant for their arrest. If and when the individual eventually makes contact with law enforcement or the court system, they will be arrested pursuant to the warrant and can then be questioned by the judgment creditor under oath. Debt collectors argue that this is an important tool and incentive to ensure that debtors do not evade their responsibility to repay their debts. Consumer advocates, conversely, argue that requiring a debtor in a consumer debt case to appear for an examination under threat of arrest is unnecessarily burdensome and disproportionately impacts indigent individuals who have difficulty navigating the legal system.

This bill, co-sponsored by the California Low-Income Consumer Coalition and the National Consumer Law Center, would amend the process for examining a judgment debtor in a consumer debt action by permitting the debtor to submit a sworn financial statement providing much of the same information they would be asked about in an examination. It would also require a court to issue an order to show cause on the debtor in the event they fail to comply, providing them an opportunity to explain and cure why they may have failed to submit such a statement, before issuing a bench warrant for their arrest.

Opponents state they would consider removing their opposition if certain amendments strengthening the procedure for submitting financial information were included. The amendments are incorporated into the SUMMARY of the bill, below, and explained in the analysis, including by discussing how the author’s amendments to the bill seek to address those concerns. However it is unclear if these amendments will fully address all of the opposition’s concerns. Proposed amendments defining consumer debt as excluding rental debt appear to address the concerns of the California Apartment Association, which has indicated to the Committee that it is likely to remove its opposition upon adoption of the proposed amendments.

SUMMARY: Establishes an alternative for judgment debtors in consumer actions to submit financial information concerning their claim of exemption and removes the threat of arrest upon a debtor’s failure to comply. Specifically, this bill:

1. Extends the time period in which a judgment creditor is required to personally serve a copy of the order on the judgment debtor from no less than 10 days to no less than 30 days before the date set for the debtor’s examination.
2. Establishes new procedures for ascertaining the assets of judgment debtors holding consumer debt, as specified.
3. Updates the notice to judgment debtor requirement to include language regarding the financial statement option in cases involving consumer debt.
4. Defines consumer debt to mean, any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, but not debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee, or rental debt.
5. Defines, for the purpose of this bill, “rental debt” to mean unpaid rent or other unpaid financial obligation of a tenant under the tenancy that has come due.
6. Permits judgment debtors of consumer debt to file a detailed financial statement under penalty of perjury as an alternative to appearing in court for an examination to determine whether their assets and income are exempt from paying the debt.
7. Requires the filing specified in 6) to include the following information:
8. The person and relation of any dependents;
9. Gross monthly income, including withholdings and take-home pay;
10. Total monthly income;
11. Money received from other sources;
12. Property owned, including cash, bank accounts, real estate equity and other personal property;
13. Itemized monthly expenses;
14. Any outstanding debts, as specified; and
15. Any other facts which support the claim of exemption.
16. Provides that financial statements specified in 6) are to be submitted by the debtor and are presumptively filed under seal.
17. Requires that filed financial statements be served on the judgment creditor no less than 10 days prior to the date set for the hearing.
18. Requires courts to acknowledge receipt of a properly signed and filed financial affidavit and to cancel any debtor examination upon receipt.
19. Prohibits any further examination of judgment debtor after a properly signed, filed and served financial statement, as specified in 6), unless the judgment creditor presents evidence of the judgment debtors’ non-exempt income or assets and the court has a reasonable basis to believe scheduling an examination is warranted.
20. Clarifies a creditors’ right to challenge the claim of exemption by providing evidence of the judgment debtor’s non-exempt income or assets.
21. Provides that a court is to determine whether there is a reasonable basis to believe that there are non-exempt assets or income warranting the scheduling for an examination of the debtor.
22. Clarifies that for a matter involving consumer debt, no warrant for arrest or warrant to appear can be issued for a debtor who fails to appear for their examination or fails to file their financial statement, and instead requires a court to issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.

EXISTING LAW:

1. Defines “judgment creditor” as a person in whose favor a judgment is rendered. (Code of Civil Procedure Section 680.240. Unless otherwise noted, all further references are tothe Code of Civil Procedure.)
2. Defines “judgment debtor” as a person against whom a judgment is rendered. (Section 680.250.)
3. Provides that all property of a judgment debtor is subject to enforcement of a money judgment, unless specifically exempted from collection. (Section 695.010.)
4. Provides statutory exemptions from collection in satisfaction of a money judgment. (Section 703.010 et seq.)
5. Requires a court, upon application from a judgment creditor, to issue an order requiring the judgment debtor to appear before the court to furnish information to aid in enforcement of the money judgment, and requires the order to contain a notice to the judgment debtor stating that if the judgment debtor fails to appear, they may be subject to arrest and punishment for contempt of court and required to pay reasonable attorney fees incurred by the creditor. (Section 708.110.)
6. Permits a court to issue an order of contempt for “disobedience of any lawful judgment, order, or process of the court.” (Section 1209(a)(5).)
7. Permits a court to issue an arrest warrant for any person who failed to appear pursuant to a court order. (Section 1993(a)(1).)
8. Prohibits imprisonment in a civil action for debt or tort, whether before or after judgment. (Section 501.)
9. Defines consumer debt as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. (15 U.S.C. Section 1692a.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: The amount of consumer debt in this country is staggering. And while consumer debt affects all Californians, it disproportionately impacts indigent and low-income individuals who may have additional difficulty navigating the legal system as a result of their financial status. The existing law provides for an in-court examination process to determine whether an individual is exempt from their judgment debt obligation. The process, even for represented debtors, can be cumbersome and carries the threat of arrest if the debtor—even unknowingly and unintentionally—fails to appear. This bill proposes a more efficient system for obtaining the same information from a judgment debtor in a case concerning consumer debt, and builds in additional safeguards for consumers before the law authorizes a warrant for their arrest.

This bill maintains the current system of in-court examination and threat of arrest for failure to appear for judgment debtors in cases involving non-consumer debt. Thus, more sophisticated judgment debtors in commercial cases resulting from business or wage debt, for example, would still be subject to the examination process that would allow for more probing questions by creditors to determine the veracity of any exemption claim.

The bill alters the examination procedure in cases concerning consumer debt in two main ways. First, it permits a judgment debtor to submit a detailed financial disclosure form under penalty of perjury in support of their claim of exemption from collection as an alternative to the in-person examination method. Second, it eliminates the practice of issuing a bench warrant for a debtor’s failure to appear for a debt examination and provides an opportunity for the judgment debtor to explain their failure to comply before an arrest warrant is issued.

According to the author:

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

How common is collection of private debt? According to a 2018 ACLU report on the criminalization of private debt, an “estimated 77 million Americans—one in three adults—have a debt that has been turned over to a private collection agency. Thousands of these debtors are arrested and jailed each year because they owe money. Millions more are threatened with jail. The debts owed can be as small as a few dollars and can involve every kind of consumer debt, from car payments to utility bills to student loans to medical fees.” (ACLU, A Pound of Flesh: The Criminalization of Private Debt (2018), available at: https://www.aclu.org/report/pound-flesh-criminalization-private-debt.)

The criminalization of private debt happens when judges, at the request of collection agencies, issue arrest warrants for people who failed to appear in court to deal with unpaid civil debt judgments. Often times, judgment debtors are unaware that they were sued or had not received notice to show up in court. The Committee was unable to find conclusive data regarding how many arrest warrants for failing to appear for a debt collection examination have been issued in California, and how many of those actually resulted in incarceration. Even if the numbers of people actually jailed is not significant, the problems posed by the criminalization of private debt clearly are significant on an individual basis.

First, private consumer debt is ubiquitous. According to the ACLU’s 2018 report on criminalization of private debt, the people who are jailed or threatened with jail often are the most vulnerable Americans, living paycheck to paycheck. In the more than 1,000 cases reviewed by the ACLU in which civil court judges issued arrest warrants for debtors:

[M]any were struggling to recover after the loss of a job, mounting medical bills, the death of a family member, a divorce, or an illness. They included retirees or people with disabilities who are unable to work. Some were subsisting solely on Social Security, unemployment insurance, disability benefits, or veterans’ benefits—income that is legally protected from outstanding debt judgments.

Second, arrest warrants, even if they do not result in jailing, can cause long-lasting harm because such warrants may be entered into background check databases, with serious consequences for future employment, housing applications, education opportunities and access to security clearances. And while these debt-related arrest warrants might not trigger incarceration in and of themselves, arrests could happen if such a warrant comes up when police pull a person for a broken taillight or traffic violation, or where the person is a witness to an incident and police discover the warrant after obtaining that person’s identifying information.

How the debtors’ examination system functions now. Currently, if a plaintiff wins a money judgment against a defendant, and the defendant fails to pay that judgment, the plaintiff (the “judgment creditor”) may obtain an order directing the defendant (“judgment debtor”) to appear in court for a debtor’s examination. In a debtor's examination, a judgment debtor must answer questions under oath about their property and debts. This information is meant to assist the judgment creditor in collecting an unpaid judgment. A debtor’s examination is a sufficiently common procedure that the Judicial Council has promulgated form EJ-125, entitled “Application and Order for Appearance and Judgment,” to facilitate the process of obtaining a court order compelling a judgment debtor to appear for an examination.

If the judgment debtor is an individual, the procedure for obtaining the debtor’s appearance is straightforward: the judgment creditor must obtain an order from the court requiring the individual to appear for an examination and personally serve the order on that individual at least ten days before the date of the examination. (Code of Civil Procedure Section 708.110 (a), (d).)

Consequences for individuals who fail to appear at a debtor’s examination. Under existing law, if the individual fails to appear for the debtor’s examination, the court has the power to issue a bench warrant for their arrest. (Code of Civil Procedure Section 708.170 (a).) When a bench warrant is issued, the police do not immediately search for and apprehend the individual named in the warrant. Rather, when that individual eventually makes contact with law enforcement (e.g., when stopped for speeding) or the court system (e.g., when appearing for a child custody proceeding), the individual is arrested pursuant to the warrant. The judgment creditor is then contacted and given the opportunity to question the judgment debtor under oath.

This bill creates an efficient alternative for debtors in cases concerning consumer debt to share their financial information with the courts and their creditors. Under existing law, the debtor’s examination is a formal court proceeding in which the judgment creditor may question the debtor to obtain information about the location and value of the judgment debtor’s assets, including paychecks and other sources of income, bank accounts, stocks and other investments, and personal and real property. The examination also focuses on other individuals in a debtor’s life and their effect on the debtor’s financial situation, such as a spouse and dependents. Even creditors who have expressed opposition to creating an alternative financial statement procedure concede that the current examination process is expensive and burdensome.

This bill creates an efficient alternative for debtors to provide—and for creditors to obtain—the information needed to determine whether a debtor is exempt from payment of their consumer judgment debt. The bill requires the debtor to complete detailed information about their financial income and obligations, targeting similar information the creditor could have obtained vis-a-vis the in-person examination system. There are no prescribed questions during the examination process, but the California courts’ self-help website contains lists of potential questions to ask during a debtor exam that closely track the information in the financial statement required under this bill. (See https://selfhelp.courts.ca.gov/small-claims/after-trial/collect-money/debtors-examination/questions.) The mandated categories of information in this bill largely track the information currently required in wage garnishment cases, as detailed in Judicial Council Form EJ-165. This information is shared with the creditor and the court, while being shielded from public disclosure. The bill also creates a mechanism by which a creditor can challenge a finding that a debtor is exempt.

Opponents of the bill equate taking away a creditor’s right to examine a judgment debtor to taking away a litigant’s right to take the deposition of their opponent, and argue that this bill deprives creditors of their “core judgment enforcement tools.” But, unlike in traditional civil lawsuits, which might deal with a wide range of issues necessitating prolonged examination, the issues arising in judgment exemption proceedings is the debtor’s financial situation. Utilizing the opposition’s comparison to civil litigation, the disclosure of this information is more analogous to a request for production of documents, a written exercise, than a deposition. Accordingly, the financial statement alternative introduced by this bill provides a creditor with similar information under penalty of perjury without needlessly forcing debtors to appear in court, potentially taking them away from employment needed to pay off their debt. The bill also provides a mechanism for creditors to challenge the debtor’s claim of exemption, similar to a discovery motion, and if a court finds they have a reasonable basis for the challenge the judgment creditor can still order an in-court examination.

The California Association of Collectors expressed concern with the introduced version of the bill that sought to allow a judgment debtor to file an affidavit declaring that they are exempt from enforcement of judgment. The author’s proposed amendments, described in detail below, replace the generic affidavit requirement with a detailed financial disclosure statement, which would provide underlying information to the court and the creditor to determine whether a debtor’s claim of exemption is substantiated.

This bill provides judgment debtors in consumer debt cases another opportunity to comply with a court order before an arrest warrant can issue. If a judgment debtor fails, for whatever reason, to timely file a financial statement or appear for an examination, this bill provides for the court to issue an order to show cause so that the debtor may remedy any failure to appear and provide a reasonable explanation to the court prior to the court issuing any warrants to appear. An order to show cause is a court order requiring the involved parties to explain, prove, or justify an event, action, behavior, or other factor affecting the case at hand. In the context of personal consumer debt, this gives a debtor an opportunity to explain why they failed to comply and to cure their failure before a bench warrant issues.

Opponents of the bill argue that “[t]he measure seeks to usurp the Court’s ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether.” But this bill does not deprive any court of its authority to enforce its orders; a court can hold a judgment debtor in a case concerning consumer debt in contempt, including by issuing a bench warrant, but is simply required to first issue an order to show cause. This added safeguard is common in many types of civil cases, including those concerning child support and alimony.

Author’s Amendments. In order to target judgment debtors who owe consumer debt, which is the objective of this bill, the author has agreed to amend the bill in order to remove the distinction between limited and non-limited civil, and replace it with judgment for consumer debt and non-consumer debt. The author additionally proposes to adopt the definition of consumer debt from the federal Fair Debt Collection Practices Act (15 U.S.C. Section 1692, et seq.) and added in language expressly excluding wage debt in order to assuage concern by various stakeholders.

The author’s amendments would also clarify that the financial statement submitted by the debtor must include detailed financial information about the debtor and their spouse, signed under penalty of perjury. Accordingly, as proposed to be amended, Code of Civil Procedure Section 708.110 subdivisions (e) through (k) will now read:

(e) If the order is for a judgment debtor to appear in a case concerning consumer debt, the order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, the court may make an order requiring you to pay the reasonable attorney's fees incurred by the judgment creditor in this proceeding. Instead of appearing at the examination, you may file a judgment debtor’s financial statement in a form prescribed by the court and signed under penalty of perjury and serve copies of all filed documents on the judgment creditor no later than 10 days prior to the date set for the examination.”

(f) (e) If the order is for a judgment debtor to appear in a case other than a case concerning consumer debt designated as a limited civil case, the order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, you may be subject to arrest and punishment for contempt of court and the court may make an order requiring you to pay the reasonable attorney’s fees incurred by the judgment creditor in this proceeding. If all your income and assets are exempt from enforcement of judgment, as provided by law, then instead of appearing at the time and place specified in this order, you may file a financial affidavit in a form prescribed by the court and signed under penalty of perjury.”

(f) If the order is for a judgment debtor to appear in a case designated as a limited civil case, the order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, the court may make an order requiring you to pay the reasonable attorney's fees incurred by the judgment creditor in this proceeding. If all of your income and assets are exempt from enforcement of judgment, as provided by law, you may submit a financial affidavit in a form prescribed by the court and signed under penalty of perjury.”

(g) If the judgment debtor files a judgment debtor’s financial statement, states in a financial affidavit, signed under penalty of perjury, and filed with the court, pursuant to subsection (e), the court shall acknowledge receipt of the judgment debtor’s financial statement and cancel the examination. No further examinations of the judgment debtor may be scheduled unless the judgment creditor presents evidence of the judgment debtor’s non-exempt income or assets and the court determines that there is a reasonable basis to believe that there are non-exempt assets or income warranting the scheduling of an examination of the debtor.

(h) A judgment debtor’s financial statement shall include the following information from the judgment debtor, under penalty of perjury. A spouse of a judgment debtor, if any, must also submit the below information under penalty of perjury unless the judgment debtor and spouse are living separate and apart.

1. Person and relation of any dependent
2. Gross monthly income, including withholdings and take-home pay
3. Total monthly income
4. Money received from other sources
5. Property owned, including cash, bank accounts, real estate equity and other personal property
6. Itemized monthly expenses
7. Any outstanding debts, including balance owed and to whom
8. Any other facts which support the claim of exemption

(i) Any judgment debtor in a case concerning consumer debt electing to file a financial statement in lieu of appearing in court must serve copies of all filed documents on the judgment creditor no later than 10 days prior to the date set for the examination.

(j) All documents filed by the judgment debtor pursuant to subsection (g) shall be filed under seal.

(k) “Consumer debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt does not include debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee.

(l) For purposes of this section, consumer debt does not include rental debt.

(m) For purposes of this section, “rental debt” means unpaid rent or other unpaid financial obligation of a tenant under the tenancy that has come due.

Additionally, Code of Civil Procedure Section 708.170, will now read:

(a) If an order requiring a person to appear for an examination under section 708.110(f) was served by a sheriff, marshal, a person specially appointed by the court in the order, or a registered process server, and the person fails to appear… or fails to file a financial affidavit with the court:

(b) Notwithstanding paragraph (1) of subdivision (a), Section 1209 or 1993, or any other applicable law or court rule, for a case concerning consumer debt:

(1) For a matter designated as a limited civil case, nNo warrant for arrest or to appear shall be issued for a judgment debtor who fails to appear for an examination under Section 708.110 or file and serve the judgment debtor’s financial statement. In such cases, the court shall issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.

(2) The court shall provide a judgment debtor who is ordered to appear pursuant to an order to show cause described in paragraph (1) with a reasonable opportunity to complete and file a financial affidavit described in subdivision (g) of Section 708.110. The warrant to compel the attendance of the judgment debtor shall be satisfied by the judgment debtor’s appearance or the filing of a signed financial affidavit.

(3) A person shall not be imprisoned or jailed for failure to pay a debt arising in a limited civil case, nor shall any person be imprisoned or jailed for contempt of or failure to comply with a court order to pay a debt in a limited civil case.

(c) A person who willfully makes an improper service of an order for an examination which subsequently results in the arrest pursuant to subdivision (a) of the person who fails to appear is guilty of a misdemeanor.

Additional references to arrest warrants contained in Code of Civil Procedure Sections 1209 and 1993 will be removed to conform to the above-described changes proposed by the bill.

These amendments are designed to address many of the concerns raised by judgment creditors associations in opposition to the bill in print. It is unclear whether these author amendments will fully resolve their concerns and remove their opposition.

The Apartment Association also raised additional concerns in their late letter of opposition. The author’s office and the Apartment Association have agreed to continue working together to address these concerns should the bill advance out of the Committee.

ARGUMENTS IN SUPPORT: The co-sponsors of the bill argue:

There is a growing recognition in California and throughout the nation that no consumer should face jail over a debt being owed, period. That is true even when the violation is the debtor’s failure to appear rather than the debt itself – a distinction without meaning to the ordinary families whose lives could be thrown into tumult by an arrest warrant.

This bill does not take away any collection tools. It simply makes clear that no one should be arrested, or threatened with arrest, over a consumer debt. Most people think debtors’ prisons are an outdated and unfair vestige of the past. This bill will assure that they are.

ARGUMENTS IN OPPOSITION: The California Association of Judgment Professionals write in opposition:

The measure seeks to usurp the Court’s ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether. Code of Civil Procedure (“CCP”) §501 already provides: “A person may not be imprisoned in a civil action for debt or tort, whether before or after judgment. Nothing in this section affects any power a court may have to imprison a person who violates a court order.” There simply are no “debtor’s prisons” in California. Failure to appear for a court-ordered judgment debtor’s examination is an offense against the dignity and authority of the court. “The power to punish for contempt is inherent in all courts; its existence is essential to the preservation of order in judicial proceedings, and to the enforcement of the judgments, orders, and writs of the courts, and, consequently to the due administration of justice.” [Bessette v. W. B. Conkey Co. (1904) 194 U.S. 324 citing Ex Parte Robinson, 19 Wall. 505, 86 U. S. 510]

The Court has inherent power to punish civil contempt, but that power has already been tempered in civil proceedings by procedural safeguards in existing law. CCP §§1209-1222 outlines the procedures the Court is mandated to use in implementing its power to conduct court business and to enforce its lawful orders in the civil context, whereas Penal Code §166 is implemented in a criminal context. Under CCP §1219, the Court’s power to demand compliance is coercive rather than penal in nature. CCP §708.170(a) and §1993 also provide Courts the power to demand compliance, which is exercised by first bringing the Judgment Debtor before the court to ANSWER for failure to appear.

Related Legislation. AB 1266 (Kalra) would prohibit judges from issuing bench warrants when the underlying charge is an infraction. It was introduced on February 16, 2023, and will be heard in Assembly Public Safety on March 28, 2023.

SB 1477 (Wieckowski) as introduced in 2022, contained a restriction on issuing arrest warrants in debt matters. The provision was dropped before it was signed by Governor Newsom in 2022. Status: Chap. 849, Stats. 2022

REGISTERED SUPPORT / OPPOSITION:

Support

California Low-Income Consumer Coalition (co-sponsor)

National Consumer Law Center (co-sponsor)

Oppose Unless Amended

California Association of Collectors, Inc.

Opposition

California Apartment Association (bill in print)

California Association of Judgment Professionals

Interwest Judgment Recovery

Judgment Recovery Assistance, LLC

Judgment Recovery of Southern California

Justice Matters

Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334

Date of Hearing: March 21, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

ABPCA Bill Id:AB 1119

Author:(Wicks) – As Introduced Ver:February 15, 2023

As Proposed to be Amended

SUBJECT: Enforcement of judgments

KEY ISSUES:

1. SHOULD A JUDGMENT DEBTOR IN A CONSUMER CASE BE ALLOWED TO SUBMIT A SWORN, DETAILED FINANCIAL STATEMENT INSTEAD of APPEARing in court FOR An EXAMINATION?
2. SHOULD a judgment debtor’s FAILURE TO fill out an alternative financial statement TRIGGER A COURT TO ISSUE AN ORDER TO SHOW CAUSE INSTEAD OF A BENCH WARRANT FOR THEIR ARREST?

SYNOPSIS

Under current law, a judgment creditor may obtain an order directing a judgment debtor to appear in court for a debtor’s examination. In a debtor's examination, the judgment debtor must answer questions under oath about their property and debts. This information is meant to assist the judgment creditor in ascertaining information about the debtor’s assets and collecting an unpaid judgment. If the individual fails to appear for the debtor’s examination, the court has the power to issue a bench warrant for their arrest. If and when the individual eventually makes contact with law enforcement or the court system, they will be arrested pursuant to the warrant and can then be questioned by the judgment creditor under oath. Debt collectors argue that this is an important tool and incentive to ensure that debtors do not evade their responsibility to repay their debts. Consumer advocates, conversely, argue that requiring a debtor in a consumer debt case to appear for an examination under threat of arrest is unnecessarily burdensome and disproportionately impacts indigent individuals who have difficulty navigating the legal system.

This bill, co-sponsored by the California Low-Income Consumer Coalition and the National Consumer Law Center, would amend the process for examining a judgment debtor in a consumer debt action by permitting the debtor to submit a sworn financial statement providing much of the same information they would be asked about in an examination. It would also require a court to issue an order to show cause on the debtor in the event they fail to comply, providing them an opportunity to explain and cure why they may have failed to submit such a statement, before issuing a bench warrant for their arrest.

Opponents state they would consider removing their opposition if certain amendments strengthening the procedure for submitting financial information were included. The amendments are incorporated into the SUMMARY of the bill, below, and explained in the analysis, including by discussing how the author’s amendments to the bill seek to address those concerns. However it is unclear if these amendments will fully address all of the opposition’s concerns.

SUMMARY: Establishes an alternative for judgment debtors in consumer actions to submit financial information concerning their claim of exemption and removes the threat of arrest upon a debtor’s failure to comply. Specifically, this bill:

1. Extends the time period in which a judgment creditor is required to personally serve a copy of the order on the judgment debtor from no less than 10 days to no less than 30 days before the date set for the debtor’s examination.
2. Establishes new procedures for ascertaining the assets of judgment debtors holding consumer debt, as specified.
3. Updates the notice to judgment debtor requirement to include language regarding the financial statement option in cases involving consumer debt.
4. Defines consumer debt to mean, “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, but not debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee.
5. Permits judgment debtors of consumer debt to file a detailed financial statement under penalty of perjury as an alternative to appearing in court for an examination to determine whether their assets and income are exempt from paying the debt.
6. Requires the filing specified in 5) to include the following information:
7. The person and relation of any dependents;
8. Gross monthly income, including withholdings and take-home pay;
9. Total monthly income;
10. Money received from other sources;
11. Property owned, including cash, bank accounts, real estate equity and other personal property;
12. Itemized monthly expenses;
13. Any outstanding debts, as specified; and
14. Any other facts which support the claim of exemption.
15. Provides that financial statements specified in 5) are to be submitted by the debtor and are presumptively filed under seal.
16. Requires that filed financial statements be served on the judgment creditor no less than 10 days prior to the date set for the hearing.
17. Requires courts to acknowledge receipt of a properly signed and filed financial affidavit and to cancel any debtor examination upon receipt.
18. Prohibits any further examination of judgment debtor after a properly signed, filed and served financial statement, as specified in 5), unless the judgment creditor presents evidence of the judgment debtors’ non-exempt income or assets and the court has a reasonable basis to believe scheduling an examination is warranted.
19. Clarifies a creditors’ right to challenge the claim of exemption by providing evidence of the judgment debtor’s non-exempt income or assets.
20. Provides that a court is to determine whether there is a reasonable basis to believe that there are non-exempt assets or income warranting the scheduling for an examination of the debtor.
21. Clarifies that for a matter involving consumer debt, no warrant for arrest or warrant to appear can be issued for a debtor who fails to appear for their examination or fails to file their financial statement, and instead requires a court to issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.

EXISTING LAW:

1. Defines “judgment creditor” as a person in whose favor a judgment is rendered. (Code of Civil Procedure Section 680.240. Unless otherwise noted, all further references are tothe Code of Civil Procedure.)
2. Defines “judgment debtor” as a person against whom a judgment is rendered. (Section 680.250.)
3. Provides that all property of a judgment debtor is subject to enforcement of a money judgment, unless specifically exempted from collection. (Section 695.010.)
4. Provides statutory exemptions from collection in satisfaction of a money judgment. (Section 703.010 et seq.)
5. Requires a court, upon application from a judgment creditor, to issue an order requiring the judgment debtor to appear before the court to furnish information to aid in enforcement of the money judgment, and requires the order to contain a notice to the judgment debtor stating that if the judgment debtor fails to appear, they may be subject to arrest and punishment for contempt of court and required to pay reasonable attorney fees incurred by the creditor. (Section 708.110.)
6. Permits a court to issue an order of contempt for “disobedience of any lawful judgment, order, or process of the court.” (Section 1209(a)(5).)
7. Permits a court to issue an arrest warrant for any person who failed to appear pursuant to a court order. (Section 1993(a)(1).)
8. Prohibits imprisonment in a civil action for debt or tort, whether before or after judgment. (Section 501.)
9. Defines consumer debt as any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. (15 U.S.C. Section 1692a.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: The amount of consumer debt in this country is staggering. And while consumer debt affects all Californians, it disproportionately impacts indigent and low-income individuals who may have additional difficulty navigating the legal system as a result of their financial status. The existing law provides for an in-court examination process to determine whether an individual is exempt from their judgment debt obligation. The process, even for represented debtors, can be cumbersome and carries the threat of arrest if the debtor—even unknowingly and unintentionally—fails to appear. This bill proposes a more efficient system for obtaining the same information from a judgment debtor in a case concerning consumer debt, and builds in additional safeguards for consumers before the law authorizes a warrant for their arrest.

This bill maintains the current system of in-court examination and threat of arrest for failure to appear for judgment debtors in cases involving non-consumer debt. Thus, more sophisticated judgment debtors in commercial cases resulting from business or wage debt, for example, would still be subject to the examination process that would allow for more probing questions by creditors to determine the veracity of any exemption claim.

The bill alters the examination procedure in cases concerning consumer debt in two main ways. First, it permits a judgment debtor to submit a detailed financial disclosure form under penalty of perjury in support of their claim of exemption from collection as an alternative to the in-person examination method. Second, it eliminates the practice of issuing a bench warrant for a debtor’s failure to appear for a debt examination and provides an opportunity for the judgment debtor to explain their failure to comply before an arrest warrant is issued.

According to the author:

AB 1119 greatly impacts underserved and marginalized communities, as those are the communities most likely to be impacted by the proposed changes. Low-income, or indigent, defendants are often sued in limited civil court to collect medical and consumer debts. Many defendants do not understand the process of the judicial system, and are either too scared, or do not understand how, to respond to lawsuits. This results in a disproportionate number of default judgments occurring in collection lawsuits, particularly against low-income/indigent defendants.

The bill would provide a way for those low-income/indigent defendants to share with the court that they are exempt from collection under California law. In addition, the bill would also help low-income/indigent defendants avoid issues that might occur from the simple existence of the warrant.

How common is collection of private debt? According to a 2018 ACLU report on the criminalization of private debt, an “estimated 77 million Americans—one in three adults—have a debt that has been turned over to a private collection agency. Thousands of these debtors are arrested and jailed each year because they owe money. Millions more are threatened with jail. The debts owed can be as small as a few dollars and can involve every kind of consumer debt, from car payments to utility bills to student loans to medical fees.” (ACLU, A Pound of Flesh: The Criminalization of Private Debt (2018), available at: https://www.aclu.org/report/pound-flesh-criminalization-private-debt.)

The criminalization of private debt happens when judges, at the request of collection agencies, issue arrest warrants for people who failed to appear in court to deal with unpaid civil debt judgments. Often times, judgment debtors are unaware that they were sued or had not received notice to show up in court. The Committee was unable to find conclusive data regarding how many arrest warrants for failing to appear for a debt collection examination have been issued in California, and how many of those actually resulted in incarceration. Even if the numbers of people actually jailed is not significant, the problems posed by the criminalization of private debt clearly are significant on an individual basis.

First, private consumer debt is ubiquitous. According to the ACLU’s 2018 report on criminalization of private debt, the people who are jailed or threatened with jail often are the most vulnerable Americans, living paycheck to paycheck. In the more than 1,000 cases reviewed by the ACLU in which civil court judges issued arrest warrants for debtors:

[M]any were struggling to recover after the loss of a job, mounting medical bills, the death of a family member, a divorce, or an illness. They included retirees or people with disabilities who are unable to work. Some were subsisting solely on Social Security, unemployment insurance, disability benefits, or veterans’ benefits—income that is legally protected from outstanding debt judgments.

Second, arrest warrants, even if they do not result in jailing, can cause long-lasting harm because such warrants may be entered into background check databases, with serious consequences for future employment, housing applications, education opportunities and access to security clearances. And while these debt-related arrest warrants might not trigger incarceration in and of themselves, arrests could happen if such a warrant comes up when police pull a person for a broken taillight or traffic violation, or where the person is a witness to an incident and police discover the warrant after obtaining that person’s identifying information.

How the debtors’ examination system functions now. Currently, if a plaintiff wins a money judgment against a defendant, and the defendant fails to pay that judgment, the plaintiff (the “judgment creditor”) may obtain an order directing the defendant (“judgment debtor”) to appear in court for a debtor’s examination. In a debtor's examination, a judgment debtor must answer questions under oath about their property and debts. This information is meant to assist the judgment creditor in collecting an unpaid judgment. A debtor’s examination is a sufficiently common procedure that the Judicial Council has promulgated form EJ-125, entitled “Application and Order for Appearance and Judgment,” to facilitate the process of obtaining a court order compelling a judgment debtor to appear for an examination.

If the judgment debtor is an individual, the procedure for obtaining the debtor’s appearance is straightforward: the judgment creditor must obtain an order from the court requiring the individual to appear for an examination and personally serve the order on that individual at least ten days before the date of the examination. (Code of Civil Procedure Section 708.110 (a), (d).)

Consequences for individuals who fail to appear at a debtor’s examination. Under existing law, if the individual fails to appear for the debtor’s examination, the court has the power to issue a bench warrant for their arrest. (Code of Civil Procedure Section 708.170 (a).) When a bench warrant is issued, the police do not immediately search for and apprehend the individual named in the warrant. Rather, when that individual eventually makes contact with law enforcement (e.g., when stopped for speeding) or the court system (e.g., when appearing for a child custody proceeding), the individual is arrested pursuant to the warrant. The judgment creditor is then contacted and given the opportunity to question the judgment debtor under oath.

This bill creates an efficient alternative for debtors in cases concerning consumer debt to share their financial information with the courts and their creditors. Under existing law, the debtor’s examination is a formal court proceeding in which the judgment creditor may question the debtor to obtain information about the location and value of the judgment debtor’s assets, including paychecks and other sources of income, bank accounts, stocks and other investments, and personal and real property. The examination also focuses on other individuals in a debtor’s life and their effect on the debtor’s financial situation, such as a spouse and dependents. Even creditors who have expressed opposition to creating an alternative financial statement procedure concede that the current examination process is expensive and burdensome.

This bill creates an efficient alternative for debtors to provide—and for creditors to obtain—the information needed to determine whether a debtor is exempt from payment of their consumer judgment debt. The bill requires the debtor to complete detailed information about their financial income and obligations, targeting similar information the creditor could have obtained vis-a-vis the in-person examination system. There are no prescribed questions during the examination process, but the California courts’ self-help website contains lists of potential questions to ask during a debtor exam that closely track the information in the financial statement required under this bill. (See https://selfhelp.courts.ca.gov/small-claims/after-trial/collect-money/debtors-examination/questions.) The mandated categories of information in this bill largely track the information currently required in wage garnishment cases, as detailed in Judicial Council Form EJ-165. This information is shared with the creditor and the court, while being shielded from public disclosure. The bill also creates a mechanism by which a creditor can challenge a finding that a debtor is exempt.

Opponents of the bill equate taking away a creditor’s right to examine a judgment debtor to taking away a litigant’s right to take the deposition of their opponent, and argue that this bill deprives creditors of their “core judgment enforcement tools.” But, unlike in traditional civil lawsuits, which might deal with a wide range of issues necessitating prolonged examination, the issues arising in judgment exemption proceedings is the debtor’s financial situation. Utilizing the opposition’s comparison to civil litigation, the disclosure of this information is more analogous to a request for production of documents, a written exercise, than a deposition. Accordingly, the financial statement alternative introduced by this bill provides a creditor with similar information under penalty of perjury without needlessly forcing debtors to appear in court, potentially taking them away from employment needed to pay off their debt. The bill also provides a mechanism for creditors to challenge the debtor’s claim of exemption, similar to a discovery motion, and if a court finds they have a reasonable basis for the challenge the judgment creditor can still order an in-court examination.

The California Association of Collectors expressed concern with the introduced version of the bill that sought to allow a judgment debtor to file an affidavit declaring that they are exempt from enforcement of judgment. The author’s proposed amendments, described in detail below, replace the generic affidavit requirement with a detailed financial disclosure statement, which would provide underlying information to the court and the creditor to determine whether a debtor’s claim of exemption is substantiated.

This bill provides judgment debtors in consumer debt cases another opportunity to comply with a court order before an arrest warrant can issue. If a judgment debtor fails, for whatever reason, to timely file a financial statement or appear for an examination, this bill provides for the court to issue an order to show cause so that the debtor may remedy any failure to appear and provide a reasonable explanation to the court prior to the court issuing any warrants to appear. An order to show cause is a court order requiring the involved parties to explain, prove, or justify an event, action, behavior, or other factor affecting the case at hand. In the context of personal consumer debt, this gives a debtor an opportunity to explain why they failed to comply and to cure their failure before a bench warrant issues.

Opponents of the bill argue that “[t]he measure seeks to usurp the Court’s ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether.” But this bill does not deprive any court of its authority to enforce its orders; a court can hold a judgment debtor in a case concerning consumer debt in contempt, including by issuing a bench warrant, but is simply required to first issue an order to show cause. This added safeguard is common in many types of civil cases, including those concerning child support and alimony.

Author’s Amendments. In order to target judgment debtors who owe consumer debt, which is the objective of this bill, the author has agreed to amend the bill in order to remove the distinction between limited and non-limited civil, and replace it with judgment for consumer debt and non-consumer debt. The author additionally proposes to adopt the definition of consumer debt from the federal Fair Debt Collection Practices Act (15 U.S.C. Section 1692, et seq.) and added in language expressly excluding wage debt in order to assuage concern by various stakeholders.

The author’s amendments would also clarify that the financial statement submitted by the debtor must include detailed financial information about the debtor and their spouse, signed under penalty of perjury. Accordingly, as proposed to be amended, Code of Civil Procedure Section 708.110 subdivisions (e) through (k) will now read:

(e) If the order is for a judgment debtor to appear in a case concerning consumer debt, the order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, the court may make an order requiring you to pay the reasonable attorney's fees incurred by the judgment creditor in this proceeding. Instead of appearing at the examination, you may file a judgment debtor’s financial statement in a form prescribed by the court and signed under penalty of perjury and serve copies of all filed documents on the judgment creditor no later than 10 days prior to the date set for the examination.”

(f) (e) If the order is for a judgment debtor to appear in a case other than a case concerning consumer debt designated as a limited civil case, the order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, you may be subject to arrest and punishment for contempt of court and the court may make an order requiring you to pay the reasonable attorney’s fees incurred by the judgment creditor in this proceeding. If all your income and assets are exempt from enforcement of judgment, as provided by law, then instead of appearing at the time and place specified in this order, you may file a financial affidavit in a form prescribed by the court and signed under penalty of perjury.”

(f) If the order is for a judgment debtor to appear in a case designated as a limited civil case, the order shall contain the following statement in 14-point boldface type if printed or in capital letters if typed: “NOTICE TO JUDGMENT DEBTOR. If you fail to appear at the time and place specified in this order, the court may make an order requiring you to pay the reasonable attorney's fees incurred by the judgment creditor in this proceeding. If all of your income and assets are exempt from enforcement of judgment, as provided by law, you may submit a financial affidavit in a form prescribed by the court and signed under penalty of perjury.”

(g) If the judgment debtor files a judgment debtor’s financial statement, states in a financial affidavit, signed under penalty of perjury, and filed with the court, pursuant to subsection (e), the court shall acknowledge receipt of the judgment debtor’s financial statement and cancel the examination. No further examinations of the judgment debtor may be scheduled unless the judgment creditor presents evidence of the judgment debtor’s non-exempt income or assets and the court determines that there is a reasonable basis to believe that there are non-exempt assets or income warranting the scheduling of an examination of the debtor.

(h) A judgment debtor’s financial statement shall include the following information from the judgment debtor, under penalty of perjury. A spouse of a judgment debtor, if any, must also submit the below information under penalty of perjury unless the judgment debtor and spouse are living separate and apart.

1. Person and relation of any dependent
2. Gross monthly income, including withholdings and take-home pay
3. Total monthly income
4. Money received from other sources
5. Property owned, including cash, bank accounts, real estate equity and other personal property
6. Itemized monthly expenses
7. Any outstanding debts, including balance owed and to whom
8. Any other facts which support the claim of exemption

(i) Any judgment debtor in a case concerning consumer debt electing to file a financial statement in lieu of appearing in court must serve copies of all filed documents on the judgment creditor no later than 10 days prior to the date set for the examination.

(j) All documents filed by the judgment debtor pursuant to subsection (g) shall be filed under seal.

(k) “Consumer debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes. Consumer debt does not include debts incurred due to, or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee.

Additionally, Code of Civil Procedure Section 708.170, will now read:

(a) If an order requiring a person to appear for an examination under section 708.110(f) was served by a sheriff, marshal, a person specially appointed by the court in the order, or a registered process server, and the person fails to appear… or fails to file a financial affidavit with the court:

(b) Notwithstanding paragraph (1) of subdivision (a), Section 1209 or 1993, or any other applicable law or court rule, for a case concerning consumer debt:

(1) For a matter designated as a limited civil case, nNo warrant for arrest or to appear shall be issued for a judgment debtor who fails to appear for an examination under Section 708.110 or file and serve the judgment debtor’s financial statement. In such cases, the court shall issue an order to show cause to determine whether to issue a warrant to compel the attendance of the judgment debtor.

(2) The court shall provide a judgment debtor who is ordered to appear pursuant to an order to show cause described in paragraph (1) with a reasonable opportunity to complete and file a financial affidavit described in subdivision (g) of Section 708.110. The warrant to compel the attendance of the judgment debtor shall be satisfied by the judgment debtor’s appearance or the filing of a signed financial affidavit.

(3) A person shall not be imprisoned or jailed for failure to pay a debt arising in a limited civil case, nor shall any person be imprisoned or jailed for contempt of or failure to comply with a court order to pay a debt in a limited civil case.

(c) A person who willfully makes an improper service of an order for an examination which subsequently results in the arrest pursuant to subdivision (a) of the person who fails to appear is guilty of a misdemeanor.

Additional references to arrest warrants contained in Code of Civil Procedure Sections 1209 and 1993 will be removed to conform to the above-described changes proposed by the bill.

These amendments are designed to address many of the concerns raised by judgment creditors associations in opposition to the bill in print. It is unclear whether these author amendments will fully resolve their concerns and remove their opposition.

The Apartment Association also raised additional concerns in their late letter of opposition. The author’s office and the Apartment Association have agreed to continue working together to address these concerns should the bill advance out of the Committee.

ARGUMENTS IN SUPPORT: The co-sponsors of the bill argue:

There is a growing recognition in California and throughout the nation that no consumer should face jail over a debt being owed, period. That is true even when the violation is the debtor’s failure to appear rather than the debt itself – a distinction without meaning to the ordinary families whose lives could be thrown into tumult by an arrest warrant.

This bill does not take away any collection tools. It simply makes clear that no one should be arrested, or threatened with arrest, over a consumer debt. Most people think debtors’ prisons are an outdated and unfair vestige of the past. This bill will assure that they are.

ARGUMENTS IN OPPOSITION: The California Association of Judgment Professionals write in opposition:

The measure seeks to usurp the Court’s ability to enforce its orders and control its processes by eliminating civil warrants and civil contempt altogether. Code of Civil Procedure (“CCP”) §501 already provides: “A person may not be imprisoned in a civil action for debt or tort, whether before or after judgment. Nothing in this section affects any power a court may have to imprison a person who violates a court order.” There simply are no “debtor’s prisons” in California. Failure to appear for a court-ordered judgment debtor’s examination is an offense against the dignity and authority of the court. “The power to punish for contempt is inherent in all courts; its existence is essential to the preservation of order in judicial proceedings, and to the enforcement of the judgments, orders, and writs of the courts, and, consequently to the due administration of justice.” [Bessette v. W. B. Conkey Co. (1904) 194 U.S. 324 citing Ex Parte Robinson, 19 Wall. 505, 86 U. S. 510]

The Court has inherent power to punish civil contempt, but that power has already been tempered in civil proceedings by procedural safeguards in existing law. CCP §§1209-1222 outlines the procedures the Court is mandated to use in implementing its power to conduct court business and to enforce its lawful orders in the civil context, whereas Penal Code §166 is implemented in a criminal context. Under CCP §1219, the Court’s power to demand compliance is coercive rather than penal in nature. CCP §708.170(a) and §1993 also provide Courts the power to demand compliance, which is exercised by first bringing the Judgment Debtor before the court to ANSWER for failure to appear.

The California Apartment Association likewise raised concerns with the bill, as introduced;

A post judgment financial examination is a process that occurs after a thorough fact-finding legal process where the judgment creditor was successful. The purpose of the financial examination is for the court to ascertain information on a judgment debtor’s income so that a proper repayment schedule can be established. Often the law and facts regarding a debtor’s income is murky. By removing the court’s ability to engage in this process by a party simply stating that their income is exempt, AB 1119 subverts our legal process into a game of he-said she-said. Prevailing parties are often the victims of accidents, fraud, and a failure to receive goods and services legally provided, including unpaid rent. Unfortunately, AB 1119 ignores the legal rights of these parties to be made whole. This bill will harm consumers and small businesses all over this state.

Related Legislation. AB 1266 (Kalra) would prohibit judges from issuing bench warrants when the underlying charge is an infraction. It was introduced on February 16, 2023, and will be heard in Assembly Public Safety on March 28, 2023.

SB 1477 (Wieckowski) as introduced in 2022, contained a restriction on issuing arrest warrants in debt matters. The provision was dropped before it was signed by Governor Newsom in 2022. Status: Chap. 849, Stats. 2022

REGISTERED SUPPORT / OPPOSITION:

Support

California Low-Income Consumer Coalition (co-sponsor)

National Consumer Law Center (co-sponsor)

Oppose Unless Amended

California Association of Collectors, Inc.

Opposition

California Apartment Association

California Association of Judgment Professionals

Interwest Judgment Recovery

Judgment Recovery Assistance, LLC

Judgment Recovery of Southern California

Justice Matters

Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334