Keeping people with debt in their jobs and in their homes – Orange County Register

In Anaheim, Roberta stared at the ATM screen: how could all her money be gone? How was she going to pay for rent, food, or diapers? That money was all she had.

Almost two years after she and her children escaped her abusive spouse, Roberta discovered her bank account had been emptied. A debt collector had sued her for a debt she did not owe, and had sent all of the notices to her abuser’s home. Because Roberta did not receive those notices and so did not appear in court, the debt collector won its lawsuit and levied all $1,200 in her account. Roberta suddenly found herself in the terrifying position of providing for her three children with no money for food, gas, or childcare. When she went to the Sheriff’s Office to file a claim of exemption, she did not even have $10 for parking. With help from a legal aid office, a judge eventually determined that Roberta did not owe the debt in the first place. But it still took months to get her money back. In the meantime, she went into debt to pay rent and was forced to rely on public assistance. All for a debt she never owed.

Debt collection hits families hard. With at least one in three American households – 100 million people – carrying a debt “in collections,” the impact on families, including in Orange County, is profound. But when debt collectors have unlimited access to our bank accounts, we have even more cause for concern.

We think there ought to be a law against it.

Although the law currently caps wage garnishment at 25 percent of a debtor’s income (leaving 75 percent for essentials like groceries and rent), creditors can seize 100 percent of the funds held in a bank account. A debtor like Roberta can seek to recover the funds, but that can take months to work its way through the courts. Even if the funds are eventually returned, what is she supposed to live on in the meantime? A family may suffer irreparable harm through eviction, car repossession, lost jobs, and lack of access to food and medicine.

A bill now pending in the state Assembly, Senate Bill 298, aims to prevent these harms by automatically protecting enough money for the necessities of life. By passing this bill, California would join 16 other states in saying that just because a debt may be owed, parents won’t find themselves suddenly without the resources to feed, house, transport, and care for their children.

Diana, one of our legal aid clients from Santa Ana, experienced the devastation that bank levies can wreak on the…

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