AB 3283: Enforcement of judgments: claims of exemption.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-09-12
Current Status:
Passed
(2024-09-12: Chaptered by Secretary of State - Chapter 229, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Existing law provides that property that has been levied upon in a civil action may be claimed as exempt by a judgment debtor who files a claim of exemption with the levying officer. Existing law requires a judgment creditor who opposes a claim of exemption to file with the court a notice of opposition to the claim of exemption and a notice of motion for an order determining the claim of exemption. Existing law provides that filing an exemption and notice of opposition of a claim to exemption constitute pleadings. Existing law provides that a defendant makes an appearance in a civil action when the defendant files certain pleadings or motions, such as an answer to a complaint.
This bill would instead provide that a claim of exemption and notice of opposition to a claim of exemption do not constitute an appearance, and would limit the courts power over the claimant to deciding the claim of exemption.
This bill would incorporate additional changes to Section 703.580 of the Code of Civil Procedure proposed by AB 2837 to be operative only if this bill and AB 2837 are enacted and this bill is enacted last.
Existing law provides that property that has been levied upon in a civil action may be claimed as exempt by a judgment debtor who files a claim of exemption with the levying officer. Existing law requires a judgment creditor who opposes a claim of exemption to file with the court a notice of opposition to the claim of exemption and a notice of motion for an order determining the claim of exemption. Existing law provides that filing an exemption and notice of opposition of a claim to exemption constitute pleadings. Existing law provides that a defendant makes an appearance in a civil action when the defendant files certain pleadings or motions, such as an answer to a complaint.
This bill would instead provide that a claim of exemption and notice of opposition to a claim of exemption do not constitute an appearance, and would limit the courts power over the claimant to deciding the claim of exemption.
This bill would incorporate additional changes to Section 703.580 of the Code of Civil Procedure proposed by AB 2837 to be operative only if this bill and AB 2837 are enacted and this bill is enacted last.
Existing law provides that property that has been levied upon in a civil action may be claimed as exempt by a judgment debtor who files a claim of exemption with the levying officer. Existing law requires a judgment creditor who opposes a claim of exemption to file with the court a notice of opposition to the claim of exemption and a notice of motion for an order determining the claim of exemption. Existing law provides that filing an exemption and notice of opposition of a claim to exemption constitute pleadings. Existing law provides that a defendant makes an appearance in a civil action when the defendant files certain pleadings or motions, such as an answer to a complaint.
This bill would instead provide that a claim of exemption and notice of opposition to a claim of exemption do not constitute an appearance, and would limit the courts power over the claimant to deciding the claim of exemption.
This bill would incorporate additional changes to Section 703.580 of the Code of Civil Procedure proposed by AB 2837 to be operative only if this bill and AB 2837 are enacted and this bill is enacted last.
Existing law provides that property that has been levied upon in a civil action may be claimed as exempt by a judgment debtor who files a claim of exemption with the levying officer. Existing law requires a judgment creditor who opposes a claim of exemption to file with the court a notice of opposition to the claim of exemption and a notice of motion for an order determining the claim of exemption. Existing law provides that filing an exemption and notice of opposition of a claim to exemption constitute pleadings. Existing law provides that a defendant makes an appearance in a civil action when the defendant files certain pleadings or motions, such as an answer to a complaint.
This bill would instead provide that a claim of exemption and notice of opposition to a claim of exemption do not constitute an appearance, and would limit the courts power over the claimant to deciding the claim of exemption.
(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If not satisfied, the court shall order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part. Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment. No findings are required in a proceeding under this section.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
SEC. 1.5.Section 703.580 of the Code of Civil Procedure is amended to read:703.580.(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If a claim of exemption asserts that money in a judgment debtors deposit account is or was necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor as provided in Section 704.225, the court shall review the judgment debtors financial statement and make findings thereon. If not satisfied, the court may order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part.
(1)Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment.
(2)Where the judgment upon which the writ is issued is for personal debt, as defined in subdivision (d) of Section 683.110, the court shall order the return of any property that was exempt without the need for a claim and that was levied upon within the 12 months preceding the date of the order on the claim of exemption. This paragraph does not limit a judges authority to order, for good cause, the return of any exempt property taken more than 12 months preceding the date of the order on the claim of exemption.
(3)Where the judgment upon which the writ is issued is for personal debt, as defined in subdivision (d) of Section 683.110, the court shall order the return of any property that the debtor has demonstrated would have been exempt by claim of exemption and that was levied upon within the six months preceding the date of the order on the claim of exemption. This paragraph does not limit a judges authority to order, for good cause, the return of any exempt property taken more than six months preceding the date of the order on the claim of exemption.
(4)If property is exempt without the need for a claim under this title or as a result of a claim of exemption, the court shall order the return of the exempt property from the levying officer, judgment creditor, or other person who is in possession of the property, to the judgment debtor. A levying officer shall return the exempt property within 20 business days of receipt of notice of the order. A judgment creditor shall return the exempt property within 10 business days of entry of the order.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
SEC. 2.Section 1.5 of this bill incorporates amendments to Section 703.580 of the Code of Civil Procedure proposed by both this bill and Assembly Bill 2837. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 703.580 of the Code of Civil Procedure, and (3) this bill is enacted after Assembly Bill 2837, in which case Section 1 of this bill shall not become operative.
(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If not satisfied, the court shall order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part. Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment. No findings are required in a proceeding under this section.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
SEC. 1.5.Section 703.580 of the Code of Civil Procedure is amended to read:703.580.(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If a claim of exemption asserts that money in a judgment debtors deposit account is or was necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor as provided in Section 704.225, the court shall review the judgment debtors financial statement and make findings thereon. If not satisfied, the court may order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part.
(1)Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment.
(2)Where the judgment upon which the writ is issued is for personal debt, as defined in subdivision (d) of Section 683.110, the court shall order the return of any property that was exempt without the need for a claim and that was levied upon within the 12 months preceding the date of the order on the claim of exemption. This paragraph does not limit a judges authority to order, for good cause, the return of any exempt property taken more than 12 months preceding the date of the order on the claim of exemption.
(3)Where the judgment upon which the writ is issued is for personal debt, as defined in subdivision (d) of Section 683.110, the court shall order the return of any property that the debtor has demonstrated would have been exempt by claim of exemption and that was levied upon within the six months preceding the date of the order on the claim of exemption. This paragraph does not limit a judges authority to order, for good cause, the return of any exempt property taken more than six months preceding the date of the order on the claim of exemption.
(4)If property is exempt without the need for a claim under this title or as a result of a claim of exemption, the court shall order the return of the exempt property from the levying officer, judgment creditor, or other person who is in possession of the property, to the judgment debtor. A levying officer shall return the exempt property within 20 business days of receipt of notice of the order. A judgment creditor shall return the exempt property within 10 business days of entry of the order.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
SEC. 2.Section 1.5 of this bill incorporates amendments to Section 703.580 of the Code of Civil Procedure proposed by both this bill and Assembly Bill 2837. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 703.580 of the Code of Civil Procedure, and (3) this bill is enacted after Assembly Bill 2837, in which case Section 1 of this bill shall not become operative.
(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If not satisfied, the court shall order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part. Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment. No findings are required in a proceeding under this section.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
SEC. 1.5.Section 703.580 of the Code of Civil Procedure is amended to read:703.580.(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute the pleadings, subject to the power of the court to permit amendments in the interest of justice. an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If a claim of exemption asserts that money in a judgment debtors deposit account is or was necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor as provided in Section 704.225, the court shall review the judgment debtors financial statement and make findings thereon. If not satisfied, the court shall may order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part. Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment. No findings are required in a proceeding under this section.
(1)Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment.
(2)Where the judgment upon which the writ is issued is for personal debt, as defined in subdivision (d) of Section 683.110, the court shall order the return of any property that was exempt without the need for a claim and that was levied upon within the 12 months preceding the date of the order on the claim of exemption. This paragraph does not limit a judges authority to order, for good cause, the return of any exempt property taken more than 12 months preceding the date of the order on the claim of exemption.
(3)Where the judgment upon which the writ is issued is for personal debt, as defined in subdivision (d) of Section 683.110, the court shall order the return of any property that the debtor has demonstrated would have been exempt by claim of exemption and that was levied upon within the six months preceding the date of the order on the claim of exemption. This paragraph does not limit a judges authority to order, for good cause, the return of any exempt property taken more than six months preceding the date of the order on the claim of exemption.
(4)If property is exempt without the need for a claim under this title or as a result of a claim of exemption, the court shall order the return of the exempt property from the levying officer, judgment creditor, or other person who is in possession of the property, to the judgment debtor. A levying officer shall return the exempt property within 20 business days of receipt of notice of the order. A judgment creditor shall return the exempt property within 10 business days of entry of the order.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
SEC. 2.Section 1.5 of this bill incorporates amendments to Section 703.580 of the Code of Civil Procedure proposed by both this bill and Assembly Bill 2837. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 703.580 of the Code of Civil Procedure, and (3) this bill is enacted after Assembly Bill 2837, in which case Section 1 of this bill shall not become operative.
(a)The claim of exemption and notice of opposition to the claim of exemption do not constitute the pleadings, subject to the power of the court to permit amendments in the interest of justice. an appearance pursuant to Section 1014. The power of the court over the exemption claimant is limited to determining the claim of exemption.
(b)At a hearing under this section, the exemption claimant has the burden of proof.
(c)The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. If not satisfied, the court shall order the hearing continued for the production of other evidence, oral or documentary.
(d)At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part. Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment. No findings are required in a proceeding under this section.
(e)The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.
(f)Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.
|
Date
|
Status
|
|---|---|
| Sep 12, 2024 | Chaptered by Secretary of State - Chapter 229, Statutes of 2024. |
| Sep 12, 2024 | Approved by the Governor. |
| Sep 6, 2024 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 28, 2024 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 62. Noes 15.). |
| Aug 28, 2024 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 30 pursuant to Assembly Rule 77. |
| Aug 28, 2024 | Assembly Rule 77 suspended. |
| Aug 27, 2024 | Read third time. Passed. Ordered to the Assembly. (Ayes 30. Noes 9.). |
| Aug 21, 2024 | Read second time. Ordered to third reading. |
| Aug 20, 2024 | Read third time and amended. Ordered to second reading. |
| Jun 13, 2024 | Read second time. Ordered to third reading. |
| Jun 12, 2024 | From committee: Do pass. (Ayes 9. Noes 2.) (June 11). |
| May 29, 2024 | Referred to Com. on JUD. |
| May 22, 2024 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 21, 2024 | Read third time. Passed. Ordered to the Senate. (Ayes 59. Noes 14. Page 5347.) |
| Apr 3, 2024 | Read second time. Ordered to third reading. |
| Apr 2, 2024 | From committee: Do pass. (Ayes 10. Noes 2.) (April 2). |
| Mar 18, 2024 | Referred to Com. on JUD. |
| Mar 1, 2024 | From printer. May be heard in committee March 31. |
| Feb 29, 2024 | Read first time. To print. |
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Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 28, 2024 | AB 3283 JUD. Concurrence in Senate Amendments By KALRA | Assembly Floor |
Passed |
|
| Aug 27, 2024 | Assembly 3rd Reading AB3283 JUD. (Kalra) By Limón | Senate Floor |
Passed |
|
| Jun 11, 2024 | Do pass | Senate Standing Committee on Judiciary |
Passed |
|
| May 21, 2024 | AB 3283 Judiciary Assembly Third Reading By KALRA | Assembly Floor |
Passed |
|
| Apr 2, 2024 | Do pass. | Assembly Standing Committee on Judiciary |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Berkeley Law School | * Support | Jun 11, 2024 |
| California League of United Latin American Citizens | ** Support | |
| California Low-Income Consumer Coalition | ** Support | |
| California Women's Law Center | ** Support | |
| East Bay Community Law Center | ** Support | |
| Housing and Economic Rights Advocates | ** Support | |
| Legal Aid Society of San Diego | ** Support | |
| Public Counsel | ** Support | |
| Senior Advocacy Network | ** Support | |
| western center on law & poverty | ** Support |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 3283
Author:(Committee on Judiciary)
As Amended Ver:August 20, 2024
Majority vote
SUMMARY
Seeks to help defendants by allowing them to stop wrongful debt collection while preserving their ability to challenge the underlying collection judgment.
- Establishes that appearance at a claim of exemption hearing does not constitute a general appearance, and provides that the power of the court over the exemption claimant is limited to determining the claim of exemption.
Senate Amendments
Add chaptering amendments to resolve conflicts with AB 2837.
COMMENTS
In a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement. (Pew, How Debt Collectors Are Transforming the Business of State Courts, May 6, 2020, available at How Debt Collectors Are Transforming the Business of State Courts | The Pew Charitable Trusts (pewtrusts.org).(https://www.pewtrusts.org/en/research-and-analysis/reports/2020/05/how-debt-collectors-are-transforming-the-business-of-state-courts) These defaults can occur where the named defendants in a collection case are not the actual debtors, either due to the Plaintiff's mistake or due to identity theft, or when the defendant was improperly served. This bill seeks to help these defendants by allowing them to stop wrongful debt collection while preserving their ability to challenge the underlying collection judgment.
Under existing law, defendants who defaulted through no fault of their own can make a special appearance to set aside the default under California Civil Code of Procedure Section 473.5, but that motion does not stop the execution of judgment from occurring while they pursue the set-aside motion. If they appear at a claim of exemption hearing, then jurisdiction is established for both the claim of exemption hearing and the underlying case. Once general jurisdiction is established, they can no longer make a special appearance to set aside the default in the underlying case on the basis of jurisdiction. These defendants are then confronted with an impossible dilemma: do they choose to pursue a motion to set aside (via a special appearance) and have collection start because they are not able to attend a claim of exemption hearing? Or do they attend the claim of exemption hearing and forfeit their challenge to personal jurisdiction based on improper service in the underlying case?
This bill provides a simple fix to this unfair scenario. It establishes that a claim of exemption, and any party's appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The debtor would thus be able to get an exemption from collection without compromising their ability to challenge the underlying judgment on the basis of jurisdiction. Thus, in a situation where the debtor defaulted in the underlying action because of improper service or mistaken identity, they would maintain the opportunity to challenge the court's jurisdiction, and potentially obtain relief from the debt collection judgment unfairly entered against them. In other words, this bill would enable improperly served defendants to "stop the bleeding" while they make a special appearance to try and set aside the default judgment.
Background. Every civil case, including those involving the collection of debt, require the plaintiff to identify and properly serve the correct defendant. When the right person is not served, or when service is conducted improperly, the court does not have jurisdiction to hear the case over that particular defendant.
At the end of a civil case, the final decision awarding money to the winning party is called the "judgment." There are two main ways a judgment creditor (the person who was victorious in the case and is owed money) can legally take property or money to pay a judgment: attachment and garnishment. The judgment creditor, however, cannot take certain property related to basic needs. This property is called "exempt" property. If exempt property is taken from a debtor to pay a judgment, the debtor must file a claim of exemption with the court to stop the collection.
Under existing law, when a debtor appears in court to file a claim exemption, it constitutes what is known as a general appearance. By making a general appearance, the debtor has effectively agreed to the court's jurisdiction for the claim of exemption and for the underlying debt collection case. Thus, once a debtor appears in court to claim an exemption from collection, they can no longer contest jurisdiction to set aside the judgment in the underlying case—even if they were improperly served, or were incorrectly identified as the debtor.
This bill establishes that a claim of exemption, and any party's appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The defendant would thus be able to get an exemption from collection such as wage garnishment while they pursue the often costly and lengthy process of getting an improper default judgment set aside.
According to the Author
AB 3283 restores the rights of claimants in debt collection cases who were never properly served. This bill is a common-sense measure that provides claimants with the ability to halt the execution of judgment while they challenge their underlying debt collection case. In many cases, individuals may not even be aware that there is a debt collection proceeding against them, resulting in unjust judgments being issued in their absence. They only become aware of the judgment in the event of levy or garnishment, and then only have a very short period of time to stop the collection, through a claim of exemption. By restoring the ability for claimants to challenge judgments and halt execution while they challenge jurisdiction in the underlying case, this bill promotes fairness, accountability, and access to justice for all.
Arguments in Support
A coalition of nonprofit legal organizations explain their support for the bill as follows:
This bill is narrowly tailored to restore the rights of only claimants who were never properly served. This allows the claimant to stop the execution of judgement through proper channels while they challenge the underlying case. It will not remove any claimant from properly established jurisdiction in the underlying case. Without this measure, impact claimants forfeit their right to proper service, or they must bear the burden of the execution of judgement while pursuing a costly and time consumer motion to set aside.
Arguments in Opposition
No opposition on file.
FISCAL COMMENTS
None.
VOTES:
ASM JUDICIARY: 10-2-0
YES: Kalra, Bauer-Kahan, Bryan, Connolly, Haney, Maienschein, McKinnor, Pacheco, Reyes, Waldron
NO: Dixon, Sanchez
ASSEMBLY FLOOR: 59-14-7
YES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO: Alanis, Chen, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta
ABS, ABST OR NV: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Mathis, Luz Rivas
SENATE FLOOR: 31-9-0
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, 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
UPDATED
VERSION: August 20, 2024
CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0004322
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3283 |
THIRD READING
Bill No: AB 3283
Author: Committee on Judiciary
Amended: 8/20/24 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE: 9-2, 6/11/24
AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Roth, Stern, Wahab
NOES: Wilk, Niello
ASSEMBLY FLOOR: 59-14, 5/21/24 - See last page for vote
SUBJECT: Enforcement of judgments: claims of exemption
SOURCE: Author
DIGEST:
This bill makes clear that a claim of exemption and a notice of opposition to that claim do not constitute an appearance and limits the power of the court over such a claimant to only determining the claim of exemption.
Senate Floor amendments of 8/20/24 address potential chaptering out issues.
ANALYSIS:
Existing law:
- Provides that the claim of exemption and notice of opposition to the claim of exemption constitute the pleadings. (Code Civ. Proc. § 703.580(a).)[1]
- Establishes that at the conclusion of a claim of exemption hearing, the court is required to determine whether or not the property is exempt in whole or in part. (§ 703.580(d).)
- Establishes that failure of the judgment debtor to make a timely claim of exemption constitutes a waiver of the exemption. (§ 703.030.)
- Establishes a defendant’s appearance in a civil action when they, among other things, answer, demur, file a notice of a motion to strike, or file a motion to transfer. (§ 1014.)
- Permits a defendant to file a motion to set aside a default judgment. (§ 473.5.)
- Provides that a general appearance by a party is equivalent to personal service of summons on such party. (§ 410.50(a).)
- Establishes that an appearance at a hearing at which ex parte relief is sought, or an appearance at a hearing for which an ex parte application for a provisional remedy is made, is not a general appearance and does not constitute a waiver of the right to make a motion, as provided. (§ 418.11.)
This bill:
- Provides that a claim of exemption and notice of opposition to that claim do not constitute an appearance.
- Limits the power of the court over such a claimant to determining the claim of exemption.
Background
Debtors who have had money judgments issued against them are able to seek claims of exemption to protect certain property or monies from being targeted by judgment creditors. One particular issue that has arisen is when a debtor is faced with a default judgment for a debt and seeks a claim of exemption, the appearance establishes jurisdiction over the debtor, jeopardizing their ability to make a special appearance to set aside the original default.
This bill directly addresses this issue by stating that a claim of exemption and a notice of opposition to that claim do not constitute an appearance. The bill further curbs the power of the court over such a claimant by limiting it to only determining the claim of exemption.
Comments
Restoring the rights of claimants. When someone fails to make payments on a debt, the person or company to whom the money is owed, the creditor, may seek a judgment from the courts for the amount of unpaid plus fees and interest. This judgment, by itself, is just a piece of paper. With a judgment in hand, however, the creditor can proceed with a number of different tools for collecting the money owed: placing a lien on real property, seizing personal property for sale, garnishing wages, or placing a levy on a debtor’s bank account.
Existing law provides judgment debtors a tool to shield themselves from onerous debt collection activity, claims of exemption. Pursuant to a prescribed process, the debtor can claim some portion of their property exempt from collection, thereby protecting it from, for example, levy or garnishment.
The concern motivating this bill is when the underlying debt judgment is the result of a default judgment. Under existing law, defendants who defaulted through no fault of their own can make a special appearance to set aside the default under Code of Civil Procedure, Section 473.5, but that motion does not stop the execution of judgment from occurring while they pursue the set-aside motion. If they appear at a claim of exemption hearing, then jurisdiction is established for both the claim of exemption hearing and the underlying case. Once general jurisdiction is established, they can no longer make a special appearance to set aside the default in the underlying case on the basis of jurisdiction. This presents a dire choice for debtors and undercuts the benefits of claims for exemption.
Writing in support, a coalition of legal services entities, including the East Bay Community Law Center, explains the dilemma:
A claim of exemption is a necessary hearing for people who need a reduction in the amount of money being levied or garnished as a result of a money judgement. In the event of a levy or garnishment, the person affected has a very short window of time to stop the withdrawal, the process by which is a claim of exemption. In some of the cases, people who are not the actual debtor, either through mistake or identity theft, are stuck in a position of giving up their due process right to jurisdiction or stopping the wrongful withdrawals.
Additionally, in a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement.[2] California’s Office of Court Research reported in 2012 that, of cases filed in small claims courts in three counties (San Francisco, Alameda, and Sacramento), debt collection cases represent 27% of all cases filed against Spanish speakers. By contrast, only 16% of cases filed against English speakers were debt collection cases. Spanish language speakers face substantially greater challenges in bringing their cases to court even apart from the language barrier.
This bill solves the problem by expressly stating that the claim of exemption and opposition do not constitute an appearance. This bill further limits the jurisdictional effect of filing for a claim of exemption by limiting the power of the court over the exemption claimant to determining the claim of exemption.
According to the author:
A claim of exemption is a necessary hearing for people who need a reduction in the amount of money being levied or garnished as a result of a money judgement. Under existing law, appearance at a claim of exemption hearing constitutes a general appearance and thereby deprives the debtor of the opportunity to challenge jurisdiction—on the basis of improper service or mistaken identity—in the underlying debt collection case.
AB 3283 restores the rights of claimants in debt collection cases who were never properly served. This bill is a common-sense measure that provides claimants with the ability to halt the execution of judgment while they challenge their underlying debt collection case. In many cases, individuals may not even be aware that there is a debt collection proceeding against them, resulting in unjust judgments being issued in their absence. They only become aware of the judgment in the event of levy or garnishment, and then only have a very short period of time to stop the collection, through a claim of exemption. By restoring the ability for claimants to challenge judgments and halt execution while they challenge jurisdiction in the underlying case, this bill promotes fairness, accountability, and access to justice for all.
This Committee on Judiciary bill is supported by various legal services groups, including the East Bay Community Law Center. No timely opposition was received.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 8/20/24)
California Low-Income Consumer Coalition
East Bay Community Law Center
Public Counsel
Senior Advocacy Network
Western Center on Law & Poverty
OPPOSITION: (Verified 8/20/24)
None received
ARGUMENTS IN SUPPORT: A coalition of legal services groups, including Public Counsel, write that this bill is narrowly tailored to restore the rights of only claimants who were never properly served. This allows the claimant to stop the execution of judgement through proper channels while they challenge the underlying case. It will not remove any claimant from properly established jurisdiction in the underlying case. Without this measure, impact claimants forfeit their right to proper service, or they must bear the burden of the execution of judgement while pursuing a costly and time [consuming] motion to set aside.
ASSEMBLY FLOOR: 59-14, 5/21/24
AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Alanis, Chen, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta
NO VOTE RECORDED: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Mathis, Luz Rivas
Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113
8/21/24 16:12:35
**** END ****
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated. ↑
How Debt Collectors Are Transforming the Business of State Courts (May 6, 2020) The Pew Charitable Trusts, https://www.pewtrusts.org/-/media/assets/2020/06/debt-collectors-to-consumers.pdf [as of May 30, 2024]. ↑
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3283 |
THIRD READING
Bill No: AB 3283
Author: Committee on Judiciary
Introduced: 2/29/24
Vote: 21
SENATE JUDICIARY COMMITTEE: 9-2, 6/11/24
AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Roth, Stern, Wahab
NOES: Wilk, Niello
ASSEMBLY FLOOR: 59-14, 5/21/24 - See last page for vote
SUBJECT: Enforcement of judgments: claims of exemption
SOURCE: Author
DIGEST:
This bill makes clear that a claim of exemption and a notice of opposition to that claim do not constitute an appearance and limits the power of the court over such a claimant to only determining the claim of exemption.
ANALYSIS:
Existing law:
- Provides that the claim of exemption and notice of opposition to the claim of exemption constitute the pleadings. (Code Civ. Proc. § 703.580(a).)[1]
- Establishes that at the conclusion of a claim of exemption hearing, the court is required to determine whether or not the property is exempt in whole or in part. (§ 703.580(d).)
- Establishes that failure of the judgment debtor to make a timely claim of exemption constitutes a waiver of the exemption. (§ 703.030.)
- Establishes a defendant’s appearance in a civil action when they, among other things, answer, demur, file a notice of a motion to strike, or file a motion to transfer. (§ 1014.)
- Permits a defendant to file a motion to set aside a default judgment. (§ 473.5.)
- Provides that a general appearance by a party is equivalent to personal service of summons on such party. (§ 410.50(a).)
- Establishes that an appearance at a hearing at which ex parte relief is sought, or an appearance at a hearing for which an ex parte application for a provisional remedy is made, is not a general appearance and does not constitute a waiver of the right to make a motion, as provided. (§ 418.11.)
This bill:
- Provides that a claim of exemption and notice of opposition to that claim do not constitute an appearance.
- Limits the power of the court over such a claimant to determining the claim of exemption.
Background
Debtors who have had money judgments issued against them are able to seek claims of exemption to protect certain property or monies from being targeted by judgment creditors.
One particular issue that has arisen is when a debtor is faced with a default judgment for a debt and seeks a claim of exemption, the appearance establishes jurisdiction over the debtor, jeopardizing their ability to make a special appearance to set aside the original default.
This bill directly addresses this issue by stating that a claim of exemption and a notice of opposition to that claim do not constitute an appearance. The bill further curbs the power of the court over such a claimant by limiting it to only determining the claim of exemption.
Comments
Restoring the rights of claimants. When someone fails to make payments on a debt, the person or company to whom the money is owed, the creditor, may seek a judgment from the courts for the amount of unpaid plus fees and interest. This judgment, by itself, is just a piece of paper. With a judgment in hand, however, the creditor can proceed with a number of different tools for collecting the money owed: placing a lien on real property, seizing personal property for sale, garnishing wages, or placing a levy on a debtor’s bank account.
Existing law provides judgment debtors a tool to shield themselves from onerous debt collection activity, claims of exemption. Pursuant to a prescribed process, the debtor can claim some portion of their property exempt from collection, thereby protecting it from, for example, levy or garnishment.
The concern motivating this bill is when the underlying debt judgment is the result of a default judgment. Under existing law, defendants who defaulted through no fault of their own can make a special appearance to set aside the default under Code of Civil Procedure, Section 473.5, but that motion does not stop the execution of judgment from occurring while they pursue the set-aside motion. If they appear at a claim of exemption hearing, then jurisdiction is established for both the claim of exemption hearing and the underlying case. Once general jurisdiction is established, they can no longer make a special appearance to set aside the default in the underlying case on the basis of jurisdiction. This presents a dire choice for debtors and undercuts the benefits of claims for exemption.
Writing in support, a coalition of legal services entities, including the East Bay Community Law Center, explains the dilemma:
A claim of exemption is a necessary hearing for people who need a reduction in the amount of money being levied or garnished as a result of a money judgement. In the event of a levy or garnishment, the person affected has a very short window of time to stop the withdrawal, the process by which is a claim of exemption. In some of the cases, people who are not the actual debtor, either through mistake or identity theft, are stuck in a position of giving up their due process right to jurisdiction or stopping the wrongful withdrawals.
Additionally, in a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement.[2] California’s Office of Court Research reported in 2012 that, of cases filed in small claims courts in three counties (San Francisco, Alameda, and Sacramento), debt collection cases represent 27% of all cases filed against Spanish speakers. By contrast, only 16% of cases filed against English speakers were debt collection cases. Spanish language speakers face substantially greater challenges in bringing their cases to court even apart from the language barrier.
This bill solves the problem by expressly stating that the claim of exemption and opposition do not constitute an appearance. This bill further limits the jurisdictional effect of filing for a claim of exemption by limiting the power of the court over the exemption claimant to determining the claim of exemption.
According to the author:
A claim of exemption is a necessary hearing for people who need a reduction in the amount of money being levied or garnished as a result of a money judgement. Under existing law, appearance at a claim of exemption hearing constitutes a general appearance and thereby deprives the debtor of the opportunity to challenge jurisdiction—on the basis of improper service or mistaken identity—in the underlying debt collection case.
AB 3283 restores the rights of claimants in debt collection cases who were never properly served. This bill is a common-sense measure that provides claimants with the ability to halt the execution of judgment while they challenge their underlying debt collection case. In many cases, individuals may not even be aware that there is a debt collection proceeding against them, resulting in unjust judgments being issued in their absence. They only become aware of the judgment in the event of levy or garnishment, and then only have a very short period of time to stop the collection, through a claim of exemption. By restoring the ability for claimants to challenge judgments and halt execution while they challenge jurisdiction in the underlying case, this bill promotes fairness, accountability, and access to justice for all.
This Committee on Judiciary bill is supported by various legal services groups, including the East Bay Community Law Center. No timely opposition was received.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 6/13/24)
California Low-Income Consumer Coalition
East Bay Community Law Center
Public Counsel
Senior Advocacy Network
Western Center on Law & Poverty
OPPOSITION: (Verified 6/13/24)
None received
ARGUMENTS IN SUPPORT: The coalition of legal services groups, including Public Counsel, write:
This bill is narrowly tailored to restore the rights of only claimants who were never properly served. This allows the claimant to stop the execution of judgement through proper channels while they challenge the underlying case. It will not remove any claimant from properly established jurisdiction in the underlying case. Without this measure, impact claimants forfeit their right to proper service, or they must bear the burden of the execution of judgement while pursuing a costly and time [consuming] motion to set aside.
ASSEMBLY FLOOR: 59-14, 5/21/24
AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Alanis, Chen, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta
NO VOTE RECORDED: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Mathis, Luz Rivas
Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113
6/13/24 15:13:30
**** END ****
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated. ↑
How Debt Collectors Are Transforming the Business of State Courts (May 6, 2020) The Pew Charitable Trusts, https://www.pewtrusts.org/-/media/assets/2020/06/debt-collectors-to-consumers.pdf [as of May 30, 2024]. ↑
Senator Thomas Umberg, Chair
2023-2024 Regular Session
Bill No: AB 3283 (Author:Committee on Judiciary)
Version: February 29, 2024
Hearing Date: June 11, 2024
Fiscal: No
Urgency: No
Consultant: CK
SUBJECT
Enforcement of judgments: claims of exemption
DIGEST
This bill makes clear that a claim of exemption and a notice of opposition to that claim do not constitute an appearance and limits the power of the court over such a claimant to only determining the claim of exemption.
EXECUTIVE SUMMARY
Debtors who have had money judgments issued against them are able to seek claims of exemption to protect certain property or monies from being targeted by judgment creditors.
One particular issue that has arisen is when a debtor is faced with a default judgment for a debt and seeks a claim of exemption, the appearance establishes jurisdiction over the debtor, jeopardizing their ability to make a special appearance to set aside the original default.
This bill directly addresses this issue by stating that a claim of exemption and a notice of opposition to that claim do not constitute an appearance. The bill further curbs the power of the court over such a claimant by limiting it to only determining the claim of exemption.
This Committee on Judiciary bill is supported by various legal services groups, including the East Bay Community Law Center. No timely opposition was received by the Committee.
PROPOSED CHANGES TO THE LAW
Existing law:
- Provides that the claim of exemption and notice of opposition to the claim of exemption constitute the pleadings. (Code Civ. Proc. § 703.580(a).)[1]
- Establishes that at the conclusion of a claim of exemption hearing, the court is required to determine whether or not the property is exempt in whole or in part. (§ 703.580(d).)
- Establishes that failure of the judgment debtor to make a timely claim of exemption constitutes a waiver of the exemption. (§ 703.030.)
- Establishes a defendant’s appearance in a civil action when they, among other things, answer, demur, file a notice of a motion to strike, or file a motion to transfer. (§ 1014.)
- Permits a defendant to file a motion to set aside a default judgment. (§ 473.5.)
- Provides that a general appearance by a party is equivalent to personal service of summons on such party. (§ 410.50(a).)
- Establishes that an appearance at a hearing at which ex parte relief is sought, or an appearance at a hearing for which an ex parte application for a provisional remedy is made, is not a general appearance and does not constitute a waiver of the right to make a motion, as provided. (§ 418.11.)
This bill:
- Provides that a claim of exemption and notice of opposition to that claim do not constitute an appearance.
- Limits the power of the court over such a claimant to determining the claim of exemption.
COMMENTS
- Restoring the rights of claimants
When someone fails to make payments on a debt, the person or company to whom the money is owed, the creditor, may seek a judgment from the courts for the amount of unpaid plus fees and interest. This judgment, by itself, is just a piece of paper. With a judgment in hand, however, the creditor can proceed with a number of different tools for collecting the money owed: placing a lien on real property, seizing personal property for sale, garnishing wages, or placing a levy on a debtor’s bank account.
Existing law provides judgment debtors a tool to shield themselves from onerous debt collection activity, claims of exemption. Pursuant to a prescribed process, the debtor can claim some portion of their property exempt from collection, thereby protecting it from, for example, levy or garnishment.
The concern motivating this bill is when the underlying debt judgment is the result of a default judgment. Under existing law, defendants who defaulted through no fault of their own can make a special appearance to set aside the default under Code of Civil Procedure Section 473.5, but that motion does not stop the execution of judgment from occurring while they pursue the set-aside motion. If they appear at a claim of exemption hearing, then jurisdiction is established for both the claim of exemption hearing and the underlying case. Once general jurisdiction is established, they can no longer make a special appearance to set aside the default in the underlying case on the basis of jurisdiction. This presents a dire choice for debtors and undercuts the benefits of claims for exemption.
Writing in support, a coalition of legal services entities, including the East Bay Community Law Center, explains the dilemma:
A claim of exemption is a necessary hearing for people who need a reduction in the amount of money being levied or garnished as a result of a money judgement. In the event of a levy or garnishment, the person affected has a very short window of time to stop the withdrawal, the process by which is a claim of exemption. In some of the cases, people who are not the actual debtor, either through mistake or identity theft, are stuck in a position of giving up their due process right to jurisdiction or stopping the wrongful withdrawals.
Additionally, in a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement.[2] California’s Office of Court Research reported in 2012 that, of cases filed in small claims courts in three counties (San Francisco, Alameda, and Sacramento), debt collection cases represent 27% of all cases filed against Spanish speakers. By contrast, only 16% of cases filed against English speakers were debt collection cases. Spanish language speakers face substantially greater challenges in bringing their cases to court even apart from the language barrier.
This bill solves the problem by expressly stating that the claim of exemption and opposition do not constitute an appearance. The bill further limits the jurisdictional effect of filing for a claim of exemption by limiting the power of the court over the exemption claimant to determining the claim of exemption.
- Stakeholder positions
According to the author:
A claim of exemption is a necessary hearing for people who need a reduction in the amount of money being levied or garnished as a result of a money judgement. Under existing law, appearance at a claim of exemption hearing constitutes a general appearance and thereby deprives the debtor of the opportunity to challenge jurisdiction—on the basis of improper service or mistaken identity—in the underlying debt collection case.
AB 3283 restores the rights of claimants in debt collection cases who were never properly served. This bill is a common-sense measure that provides claimants with the ability to halt the execution of judgment while they challenge their underlying debt collection case. In many cases, individuals may not even be aware that there is a debt collection proceeding against them, resulting in unjust judgments being issued in their absence. They only become aware of the judgment in the event of levy or garnishment, and then only have a very short period of time to stop the collection, through a claim of exemption. By restoring the ability for claimants to challenge judgments and halt execution while they challenge jurisdiction in the underlying case, this bill promotes fairness, accountability, and access to justice for all.
The coalition of legal services groups, including Public Counsel, write:
This bill is narrowly tailored to restore the rights of only claimants who were never properly served. This allows the claimant to stop the execution of judgement through proper channels while they challenge the underlying case. It will not remove any claimant from properly established jurisdiction in the underlying case. Without this measure, impact claimants forfeit their right to proper service, or they must bear the burden of the execution of judgement while pursuing a costly and time [consuming] motion to set aside.
SUPPORT
California Low-Income Consumer Coalition
East Bay Community Law Center
Public Counsel
Senior Advocacy Network
Western Center on Law & Poverty
OPPOSITION
None received
RELATED LEGISLATION
Pending Legislation: AB 2837 (Bauer-Kahan, 2024) places certain safeguards and timelines on bank levies, wage garnishment, and claims of exemption. Specifically, it requires a judgment creditor to take additional steps to verify a judgment debtor’s address and provide notice of enforcement to a judgment debtor, by requiring a court to order the return of exempt property that has been levied upon, and limiting the time period during which an earnings withholding order may be enforced and the frequency with which such an order may be sought. It requires a financial institution to protect from levy cumulatively exempt funds belonging to the debtor and held in multiple accounts. AB 2837 is currently in this Committee.
Prior Legislation:
SB 1477 (Wieckowski, Ch. 849, Stats. 2022) modified the formula for determining what portion of a judgment debtor’s wages can be garnished in order to satisfy a judgment for persons, so that the lesser of twenty percent of the person’s disposable earnings, or 40 percent by which the person’s weekly disposable earnings exceed 48 times the prevailing minimum hourly wage.
SB 616 (Wieckowski, Ch. 552, Stats. 2019) extended and clarified a deposit account holder’s timeline for filing a claim of exemption when a judgment creditor seeks to extract money from the account through a levy. It also establishes an automatic exemption from bank account levies, with specified exceptions, of no more than the minimum basic standard of adequate care for a family of four, as defined and annually adjusted.
SB 501 (Wieckowski, Ch. 800, Stats. 2015) reduced the maximum amount of a judgment debtor’s weekly disposable earnings subject to levy under an earnings withholding order to the lesser of twenty-five percent of the individual’s weekly disposable earnings or fifty percent of the amount by which the individual’s disposable earnings for the week exceed 40 times the state minimum hourly wage, or applicable local minimum hourly wage, if higher.
AB 1775 (Wieckowski, Ch. 474, Stats. 2012) codified in California law the definition under the federal Consumer Credit Protection Act for “disposable earnings” and the maximum amount of weekly wage garnishment of 25 percent of the individual’s disposable earnings. AB 1775 also capped the weekly wage garnishment amount at 40 times the state minimum hourly wage and provided certain multipliers to determine a maximum amount subject to levy for pay periods other than weekly.
PRIOR VOTES:
Assembly Floor (Ayes 59, Noes 14)
Assembly Judiciary Committee (Ayes 10, Noes 2)
**************
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated. ↑
How Debt Collectors Are Transforming the Business of State Courts (May 6, 2020) The Pew Charitable Trusts, https://www.pewtrusts.org/-/media/assets/2020/06/debt-collectors-to-consumers.pdf [as of May 30, 2024]. ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 3283
Author:(Committee on Judiciary)
As Introduced Ver:February 29, 2024
Majority vote
SUMMARY
Seeks to help defendants by allowing them to stop wrongful debt collection while preserving their ability to challenge the underlying collection judgment.
Major Provisions
Establishes that appearance at a claim of exemption hearing does not constitute a general appearance, and provides that the power of the court over the exemption claimant is limited to determining the claim of exemption.
COMMENTS
In a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement. (Pew, How Debt Collectors Are Transforming the Business of State Courts, May 6, 2020, available at How Debt Collectors Are Transforming the Business of State Courts | The Pew Charitable Trusts (pewtrusts.org).(https://www.pewtrusts.org/en/research-and-analysis/reports/2020/05/how-debt-collectors-are-transforming-the-business-of-state-courts) These defaults can occur where the named defendants in a collection case are not the actual debtors, either due to the Plaintiff's mistake or due to identity theft, or when the defendant was improperly served. This bill seeks to help these defendants by allowing them to stop wrongful debt collection while preserving their ability to challenge the underlying collection judgment.
Under existing law, defendants who defaulted through no fault of their own can make a special appearance to set aside the default under California Civil Code of Procedure Section 473.5, but that motion does not stop the execution of judgment from occurring while they pursue the set-aside motion. If they appear at a claim of exemption hearing, then jurisdiction is established for both the claim of exemption hearing and the underlying case. Once general jurisdiction is established, they can no longer make a special appearance to set aside the default in the underlying case on the basis of jurisdiction. These defendants are then confronted with an impossible dilemma: do they choose to pursue a motion to set aside (via a special appearance) and have collection start because they are not able to attend a claim of exemption hearing? Or do they attend the claim of exemption hearing and forfeit their challenge to personal jurisdiction based on improper service in the underlying case?
This bill provides a simple fix to this unfair scenario. It establishes that a claim of exemption, and any party's appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The debtor would thus be able to get an exemption from collection without compromising their ability to challenge the underlying judgment on the basis of jurisdiction. Thus, in a situation where the debtor defaulted in the underlying action because of improper service or mistaken identity, they would maintain the opportunity to challenge the court's jurisdiction, and potentially obtain relief from the debt collection judgment unfairly entered against them. In other words, this bill would enable improperly served defendants to "stop the bleeding" while they make a special appearance to try and set aside the default judgment.
Background. Every civil case, including those involving the collection of debt, require the plaintiff to identify and properly serve the correct defendant. When the right person is not served, or when service is conducted improperly, the court does not have jurisdiction to hear the case over that particular defendant.
At the end of a civil case, the final decision awarding money to the winning party is called the "judgment." There are two main ways a judgment creditor (the person who was victorious in the case and is owed money) can legally take property or money to pay a judgment: attachment and garnishment. The judgment creditor, however, cannot take certain property related to basic needs. This property is called "exempt" property. If exempt property is taken from a debtor to pay a judgment, the debtor must file a claim of exemption with the court to stop the collection.
Under existing law, when a debtor appears in court to file a claim exemption, it constitutes what is known as a general appearance. By making a general appearance, the debtor has effectively agreed to the court's jurisdiction for the claim of exemption and for the underlying debt collection case. Thus, once a debtor appears in court to claim an exemption from collection, they can no longer contest jurisdiction to set aside the judgment in the underlying case—even if they were improperly served, or were incorrectly identified as the debtor.
This bill establishes that a claim of exemption, and any party's appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The defendant would thus be able to get an exemption from collection such as wage garnishment while they pursue the often costly and lengthy process of getting an improper default judgment set aside.
According to the Author
AB 3283 restores the rights of claimants in debt collection cases who were never properly served. This bill is a common-sense measure that provides claimants with the ability to halt the execution of judgment while they challenge their underlying debt collection case. In many cases, individuals may not even be aware that there is a debt collection proceeding against them, resulting in unjust judgments being issued in their absence. They only become aware of the judgment in the event of levy or garnishment, and then only have a very short period of time to stop the collection, through a claim of exemption. By restoring the ability for claimants to challenge judgments and halt execution while they challenge jurisdiction in the underlying case, this bill promotes fairness, accountability, and access to justice for all.
Arguments in Support
A coalition of nonprofit legal organizations explain their support for the bill as follows:
This bill is narrowly tailored to restore the rights of only claimants who were never properly served. This allows the claimant to stop the execution of judgement through proper channels while they challenge the underlying case. It will not remove any claimant from properly established jurisdiction in the underlying case. Without this measure, impact claimants forfeit their right to proper service, or they must bear the burden of the execution of judgement while pursuing a costly and time consumer motion to set aside.
Arguments in Opposition
No opposition on file.
FISCAL COMMENTS
None
VOTES
ASM JUDICIARY: 10-2-0
YES: Kalra, Bauer-Kahan, Bryan, Connolly, Haney, Maienschein, McKinnor, Pacheco, Reyes, Waldron
NO: Dixon, Sanchez
UPDATED
VERSION: February 29, 2024
CONSULTANT: Shiran Zohar / JUD. / (916) 319-2334 FN: 0002684
Date of Hearing: April 2, 2024
ASSEMBLY COMMITTEE ON JUDICIARY
Ash Kalra, Chair
ABPCA Bill Id:AB 3283
Author:(Committee on Judiciary) – As Introduced Ver:February 29, 2024
SUBJECT: Enforcement of judgments: claims of exemption
KEY ISSUE: SHOULD AN APPEARANCE AT A CLAIM OF EXEMPTION HEARING be limited to determining the claim of exemption, AND THUS ENABLE A DEBTOR TO CHALLENGE JURISDICTION IN THEIR UNDERLYING DEBT CASE IF THEY WERE mistakenly named or IMPROPERLY SERVED?
SYNOPSIS
In a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement. These defaults can occur where the named defendants in a collection case are not the actual debtors, either due to the Plaintiff’s mistake or due to identity theft, or where they were not properly served and did not receive notice.
This bill seeks to help these defendants by allowing them to stop wrongful debt collection while preserving their ability to challenge the underlying collection judgment. This narrowly tailored measure establishes that a claim of exemption, and any party’s appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The debtor would thus be able to get an exemption from collection without compromising their ability to set aside the default judgment on the basis of jurisdiction. Thus, in a situation where the debtor defaulted in the underlying action because of improper service or mistaken identity, they would maintain the opportunity to challenge the court’s jurisdiction, and potentially obtain relief from the debt collection judgment unfairly entered against them.
This measure is supported by a broad coalition of consumer protection groups and legal aid organizations, including the East Bay Community Law Center, the California Law-Income Consumer Coalition, Public Counsel and the Legal Aid Society of San Diego. There is no known opposition.
SUMMARY: Establishes that appearance at a claim of exemption hearing does not constitute a general appearance, and provides that the power of the court over the exemption claimant is limited to determining the claim of exemption.
EXISTING LAW:
- Establishes that the claim of exemption and notice of opposition to the claim of exemption constitute the pleadings. (Code of Civil Procedure Section 703.580 (a). All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.)
- Establishes that at the conclusion of a claim of exemption hearing, the court is required to determine whether or not the property is exempt in whole or in part. (Section 703.580 (b).)
- Provides that a judgment debtor may claim that all or any portion of the money or property is exempt from enforcement of a money judgment. (Section 708.450 (a).)
- Establishes that failure of the judgment debtor to make a claim of exemption constitutes a waiver of the exemption. (Ibid.)
- Establishes a defendant’s appearance in a civil action when they, among other things, answer, demur, file a notice of a motion to strike, or file a motion to transfer. (Section 1014.)
- Permits a defendant to file a motion to set aside a default judgment. (Section 473.5.)
- Establishes that a general appearance by a party is equivalent to personal service of summons on such party. (Section 410.50 (a).)
- Establishes that an appearance at a hearing at which ex parte relief is sought, or an appearance at a hearing for which an ex parte application for a provisional remedy is made, is not a general appearance and does not constitute a waiver of the right to make a motion, as provided. (Section 418.10.)
FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.
COMMENTS: In a nationwide examination of debt collection cases over the last decade, data shows that a whopping 70% of cases resulted in default judgement. (Pew, How Debt Collectors Are Transforming the Business of State Courts, May 6, 2020, available at How Debt Collectors Are Transforming the Business of State Courts | The Pew Charitable Trusts (pewtrusts.org).) These defaults can occur where the named defendants in a collection case are not the actual debtors, either due to the Plaintiff’s mistake or due to identity theft, or when the defendant was improperly served. AB 3283 seeks to help these defendants by allowing them to stop wrongful debt collection while preserving their ability to challenge the underlying collection judgment.
Under existing law, defendants who defaulted through no fault of their own can make a special appearance to set aside the default under California Civil Code of Procedure Section 473.5, but that motion does not stop the execution of judgment from occurring while they pursue the set-aside motion. If they appear at a claim of exemption hearing, then jurisdiction is established for both the claim of exemption hearing and the underlying case. Once general jurisdiction is established, they can no longer make a special appearance to set aside the default in the underlying case on the basis of jurisdiction. These defendants are then confronted with an impossible dilemma: do they choose to pursue a motion to set aside (via a special appearance) and have collection start because they are not able to attend a claim of exemption hearing? Or do they attend the claim of exemption hearing and forfeit their challenge to personal jurisdiction based on improper service in the underlying case?
This bill provides a simple fix to this unfair scenario. It establishes that a claim of exemption, and any party’s appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The debtor would thus be able to get an exemption from collection without compromising their ability to challenge the underlying judgment on the basis of jurisdiction. Thus, in a situation where the debtor defaulted in the underlying action because of improper service or mistaken identity, they would maintain the opportunity to challenge the court’s jurisdiction, and potentially obtain relief from the debt collection judgment unfairly entered against them. In other words, this bill would enable improperly served defendants to “stop the bleeding” while they make a special appearance to try and set aside the default judgment.
According to the Chair of the Judiciary Committee, author of this bill:
AB 3283 restores the rights of claimants in debt collection cases who were never properly served. This bill is a common-sense measure that provides claimants with the ability to halt the execution of judgment while they challenge their underlying debt collection case. In many cases, individuals may not even be aware that there is a debt collection proceeding against them, resulting in unjust judgments being issued in their absence. They only become aware of the judgment in the event of levy or garnishment, and then only have a very short period of time to stop the collection, through a claim of exemption. By restoring the ability for claimants to challenge judgments and halt execution while they challenge jurisdiction in the underlying case, this bill promotes fairness, accountability, and access to justice for all.
Background. Every civil case, including those involving the collection of debt, require the plaintiff to identify and properly serve the correct defendant. When the right person is not served, or when service is conducted improperly, the court does not have jurisdiction to hear the case over that particular defendant.
At the end of a civil case, the final decision awarding money to the winning party is called the “judgment.” There are two main ways a judgment creditor (the person who was victorious in the case and is owed money) can legally take property or money to pay a judgment: attachment and garnishment. The judgment creditor, however, cannot take certain property related to basic needs. This property is called “exempt” property. If exempt property is taken from a debtor to pay a judgment, the debtor must file a claim of exemption with the court to stop the collection.
Under existing law, when a debtor appears in court to file a claim exemption, it constitutes what is known as a general appearance. By making a general appearance, the debtor has effectively agreed to the court’s jurisdiction for the claim of exemption and for the underlying debt collection case. Thus, once a debtor appears in court to claim an exemption from collection, they can no longer contest jurisdiction to set aside the judgment in the underlying case—even if they were improperly served, or were incorrectly identified as the debtor.
This bill establishes that a claim of exemption, and any party’s appearance at the claim of exemption hearing, gives the court jurisdiction limited to determining that claim only. The defendant would thus be able to get an exemption from collection such as wage garnishment while they pursue the often costly and lengthy process of getting an improper default judgment set aside.
ARGUMENTS IN SUPPORT: A coalition of nonprofit legal organizations explain their support for the bill as follows:
This bill is narrowly tailored to restore the rights of only claimants who were never properly served. This allows the claimant to stop the execution of judgement through proper channels while they challenge the underlying case. It will not remove any claimant from properly established jurisdiction in the underlying case. Without this measure, impact claimants forfeit their right to proper service, or they must bear the burden of the execution of judgement while pursuing a costly and time consumer motion to set aside.
REGISTERED SUPPORT / OPPOSITION:
Support
California League of United Latin American Citizens (LULAC)
California Low-income Consumer Coalition
California Women's Law Center
East Bay Community Law Center
Housing and Economic Rights Advocates (HERA)
Legal Aid Society of San Diego
Public Counsel
Senior Advocacy Network
Western Center on Law & Poverty
Opposition
None on file
Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334
Discussed in Hearing
55SEC
Assembly Floor
2MIN
Senate Floor
2MIN
Senate Standing Committee on Environmental Quality
5MIN
Senate Standing Committee on Judiciary
3MIN
Assembly Floor
6MIN
Assembly Standing Committee on Judiciary
Bill Author
Bill Co-Author(s):