A bill has been introduced in the California legislature that would significantly lower the amount of judgment interest that can be assessed on unpaid consumer and personal debt while also restricting the renewal of judgments.
A copy of the bill, SB 1200, which was introduced by state Sen. Nancy Skinner can be accessed by clicking here.
The bill would lower the interest rate on unpaid judgments to 3%, from 10% currently, while also placing restrictions on creditors renewing judgments prior to their 10-year expiration.
“We should not require our courts to add to the burden of financially strapped families; it’s time to rein it in,” Sen. Skinner said, according to a published report. “There’s no reason for Californians to be subjected to unreasonably high interest rates that can more than double or triple what they originally owed.”
Sen. Skinner’s objective with the bill is to help “struggling” families by helping reduce the amount they owe while also working to reduce the amount of time they owe it. Debt collectors allegedly “seized” $700 million from California residents through wage garnishments between 2012 and 2017, according to a published report. “For years, state law has required courts to charge exorbitant interest rates on legal judgments, exacerbating the debt owed by California families,” Sen. Skinner said. “SB 1200 will help relieve financially struggling families by slashing high interest rates on legal judgments and limiting the amount of time families are forced to struggle under mounting debt.”
A number of state legislatures across the country have seen bills introduced attempting to reduce or limit the interest rate that can be charged on unpaid judgments. The New York legislature enacted a bill earlier this year that reduced the judgment interest rate to 2%. In Illinois, the interest rate was dropped to 5% from 9% in 2019
