Removing Barriers Blog

California League Defeats Bankruptcy Expansion
Posted September 01, 2016 by CUNA Advocacy

The California Credit Union League recently secured a legislative victory after defeating a bill, S 308, that would have greatly expanded bankruptcy limits and altered bankruptcy rules in California. The exemption amounts debtors could shield from creditors through bankruptcy would have substantially increased, thus leaving fellow credit union members to absorb the losses. Another key part of the proposal would have removed a requirement to reinvest funds exempted from creditors known as “homestead exempt” funds.

After the bill’s author rebuffed attempts to compromise, the league organized district meetings, phone calls, and letters from around the state, successfully making the case that such a wholesale revamping of bankruptcy laws in California was unjustified.

According to the league, in 2015, credit unions across California lost more than $77 million in bankruptcy charge-offs. This number would have risen exponentially had SB 308 been adopted.