California Attorney General Clarifies Application of Exemption Statutes
January 6, 2014
At the request of the California Bankers Association, the California Department of Child Support Services (DCSS) asked the California attorney general’s office to issue an opinion to clarify whether banks should “stack” statutory exemptions when responding to DCSS garnishment orders. Both the Family Code and the Code of Civil Procedure require banks to exempt specified amounts from garnishment orders so that the obligor/accountholder is able to preserve funds for basic necessities.
Accountholders have an interest in benefiting from multiple exemptions while creditors would rather limit the amount of exempt funds. As neither statute refers to the other, it is in the interest of banks to secure legal clarity. The request from the DCSS for an opinion was made in 2011 and the attorney general just issued its opinion in December 2013. In it, the attorney general reasoned that the purposes of the exemption statutes are overlapping, and the state interest in securing child support funds from non-custodial parents is compelling. Therefore, both interests are served if banks applied the applicable statute that yields the largest exemption, rather than stack the exemptions.
See CBA’s Regulatory Compliance Bulletin for more information.