California Senate Bill SB1099

California 2021-2022 Regular Session

• Introduced: 2/16/22
• Refer: 2/23/22
• Refer: 3/24/22
• Report Pass: 4/6/22
• Refer: 4/7/22
• Report Pass: 4/25/22
• Refer: 4/26/22
• Report Pass: 5/19/22
• Engrossed: 5/24/22
• Refer: 6/2/22
• Refer: 6/15/22
• Refer: 6/23/22
• Report Pass: 6/28/22
• Enrolled: 8/24/22
• Chaptered: 9/28/22
• Passed: 9/28/22

Caption

Bankruptcy: debtors.

Impact

The bill modifies existing statutes to clarify that contractual language that treats bankruptcy filing as a default is void and unenforceable. This significantly impacts sellers of motor vehicles by limiting their ability to repossess vehicles based on the buyer's bankruptcy status. The bill also enhances protections for debtors in bankruptcy proceedings by ensuring that certain property exemptions are upheld. Notably, it raises the motor vehicle exemption amount to $7,500, which helps keep more assets safe during bankruptcy.

Summary

Senate Bill No. 1099, introduced by Senator Wieckowski, aims to amend various sections of California's laws concerning bankruptcy and debt obligations. The legislation specifically addresses provisions in contractual agreements related to motor vehicle sales, stating that neither the act of filing for bankruptcy nor the status as a debtor can be deemed as a default under such contracts. This change is intended to protect buyers from having their contracts accelerated or vehicles repossessed due to their bankruptcy status, providing a safeguard for individuals in financial distress.

Sentiment

The general sentiment surrounding SB 1099 has been positive, especially among consumer advocacy groups and financial reform advocates. Supporters argue that this legislation is a necessary step in providing relief to individuals struggling with debt, allowing them to maintain access to essential transportation without the fear of losing their vehicles during bankruptcy proceedings. However, some car dealerships and lenders may express concern about potential losses from restricted repossession rights.

Contention

Notable points of contention involve the implications for sellers and lenders. Critics of the bill may argue that it reduces their ability to secure loans effectively, as the risk of losing collateral (the vehicle) in the event of debtor bankruptcy increases. There are concerns about how such changes may affect loan underwriting practices and overall credit availability for consumers. Furthermore, the interplay with another bill, SB 956, also introduced in the same session, adds complexity to the legislative landscape, requiring careful consideration of how these two pieces of legislation will operate together.