Last week, California Governor Newsom signed into law AB 539, which makes significant amendments to the California Financing Law (CFL), and SB 616, which creates a new exemption from levy for deposit account funds.
The Governor signed AB 539 on October 10. Most importantly, the CFL amendments limit the rate of interest that may be imposed on loans of $2,500 – $10,000 to 36% plus the federal funds rate (which is currently hovering around 2%) per annum. These loans previously had no express interest rate limitation (although, some high interest loans have been attacked for price unconscionability.) The amendments are effective January 1, 2020.
The Governor signed SB 616 on October 7. The law adds a new section to California’s Code of Civil Procedure that exempts from levy without a claim by the debtor funds in a deposit account in an amount that has been determined by the state’s Department of Social Services to be the “minimum basic standard of adequate care for a family of four for Region 1” as adjusted annually. That amount for 2019 is $1729. The exemption does not apply to money levied on to satisfy certain obligations such as wages owed or child or spousal support. The new exemption is effective September 1, 2020.