Skinner Announces SB 1200, Helping Relieve Family Debt

March 2, 2022

State Sen. Nancy Skinner, D-Berkeley, today announced the introduction of SB 1200, which would reduce excessively high interest rates that California courts levy when issuing legal judgments on consumer and personal debt. It would also limit the amount of time that Californians can be burdened with long-term debt.

“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.”

Over the years, creditors and debt collectors have increasingly turned to the courts to obtain legal judgments against Californians for personal or consumer debt — like for unpaid credit cards, overdue medical bills, or outstanding traffic violations. The court-ordered interest on these legal judgments accrues at 10% per year, and that’s on top of high interest rates that have already been levied by the creditor.

In addition, debt collectors, who often buy and sell debt, can keep renewing judgments on unpaid debt long after the 10 years a legal judgment is supposed to retire. These renewals also allow the interest to continue to accrue at 10% per year, thereby creating insurmountable debt loads.

According to research, communities of color are disproportionately impacted by debt collection judgments and by wage garnishments and asset seizures. From 2012 to 2017, top debt collectors seized over $700 million from California residents through wage garnishments alone.

Under SB 1200, annual interest on unpaid consumer and personal debt under a legal judgement would be cut from 10% to 3%. The same interest-rate reduction would apply to legal judgments on unpaid debt obtained by governmental agencies. In addition, SB 1200 would establish restrictions on the renewal of legal judgments for unpaid debt after 10 years.

“We should not require our courts to add to the burden of financially strapped families; it’s time to rein it in,” Sen. Skinner added. “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. Nancy Skinner represents the 9th Senate District, is chair of the Senate Budget Committee and vice chair of the Legislative Women’s Caucus.