As one of the most consumer-focused states in the country, California has a long-standing reputation for going out of its way to protect its residents from a wide range of predatory practices from dozens of different industries.
One of the most recent additions to that history is a new law that was established to limit the amount that a debt collector can withdraw from a California resident’s bank account, no matter how much is owed in a judgment.
When combined with the other laws that are already in place, this makes California one of the toughest places for commercial debt collectors to operate, and that is particularly true for debt collectors who make a habit of breaking the rules.
The New $1,724 Law
This new law states that it is illegal for anyone collecting on a judgment to help themselves to whatever a consumer might have in their bank accounts. The law requires debt collectors to leave the consumers with a minimum of $1,724 combined across their bank accounts.
The number itself comes from the Department of Social Services, which states that a family of four here in California needs at least that much to survive and pay their bills each month.
In theory, this added protection will help prevent residents who are falling behind on their bills from spiraling deeper into debt. However, it also makes the process of collecting judgments that much more difficult.
The Existing 25% Law
Keep in mind that this new law will work hand-in-hand with the existing law that restricts debt collectors from garnishing more than 25% of a California resident’s paycheck.
This law is also an attempt to prevent consumers from feeling overwhelmed by the amount of debt servicing that is being taken out of their pockets each and every pay period.
Why Debt Collectors Should Embrace These Laws
While these restrictions are definitely going to make life a little more difficult for commercial debt collectors, it is also reasonable to argue that those collectors should embrace the laws and play along with them.
The type of long-term stability that these laws are attempting to facilitate will actually make those consumers more reliable when it comes to paying off their delinquent obligations. And as long as a consumer is continuously paying down their debts, everyone is winning in the long run.
The alternative of giving debt collectors unlimited access to a consumer’s assets is more likely to lead that consumer down the hopeless road towards bankruptcy, and everyone ends up a loser at the end of that road.
Based on the fact that most reputable debt collection agencies are more interested in working with consumers towards a resolution, these new laws should actually be a solid starting point towards improving relations between those consumers and the people attempting to collect from them.
And in a world where consumers and debt collectors are working together, everyone can end up a winner at the end of the day.