By Elisa M. Perez, Esq.
Under new California Code of Civil Procedure section 704.220, effective September 1, 2020, bank levies will be automatically exempt in the amount of California’s minimum basic standard of adequate care (“MBSAC”) for a family of four, which is currently set at $1,724.00.
This is the monthly amount necessary to provide a family of four with basic needs as established by the California Department of Social Services. As this amount is subject to increase annually with inflation, it could be higher once the new law takes effect next year.
The new exemption on bank levies limits a community association’s ability to collect on a money judgment because the first $1,724.00 in a judgment debtor’s bank funds would be completely protected from the levy, and only amounts above that figure would be made available for payment on a judgment.
The $1,724.00 automatic exemption applies per person, and not per account, so judgment debtors that are joint owners of a bank account could be entitled to double the amount of the automatic exemption.
Given this new law, it is now more important than ever for a Board to ensure it has information on how much funds a judgment debtor has in the bank before attempting a bank levy. Depending on the circumstances, a Board may want to narrowly focus on the bank account itself and authorize a bank account investigation, or it may want to take a broader approach and obtain information through a debtor’s examination, where the judgment debtor is called into court to testify about his or her finances.
Whatever route a Board chooses to take, it should work with its legal counsel for assistance in determining whether a bank levy would now be worthwhile.