A bill further restricting a creditor's right to collect overdue debt advanced out of a legislative committee March 21 by the narrowest of margins.

HB 5491 barely made it out of the Banking Committee, which sent it to the state House on a 10-9 vote.

CBIA's Louise DiCocco previously testified against the bill, which inhibits a judgment creditor from collecting an unpaid debt after a court order.

DiCocco said the bill "unduly burdens legitimate debt collection in Connecticut, and adds to the long list of state and federal exemptions that have been enacted over the years."

Under current state law, the first $1,000 of a judgment debtor's wages, if made by readily identifiable direct deposit within 60 days before the bank execution, are automatically exempt.

Hurts Small Businesses

Current statutes already protect many types of funds in a judgment debtor's bank account from execution.

These include the first $1,000 in the account, veterans' benefits, child support payments, Social Security benefits, Supplemental Security Income benefits, pension benefits, and unemployment compensation payments.

"This bill will hurt and impair small businesses who are attempting to collect on work performed for their customers," DiCocco said.

HB 5491 unduly burdens legitimate debt collection, and adds to the long list of state and federal exemptions that have been enacted over the years.
She noted that creditors must fulfill many prerequisites before obtaining a judgment. And once a creditor secures that judgment, the court enters an installment payment schedule.

As long as the debtor meets the payment schedule, no execution may be done. The debtor may even go to court to lower the payment.

The reality is that creditors only use bank executions and wage garnishments as final steps after a debtor has ignored a court order to make minimal weekly payments.

Last Resort

Creditors turn to bank executions as a last resort after a debtor has failed to pay money legitimately owed.

This hurts Connecticut consumers who repay their debt obligations.

But mostly it hurts small businesses looking to get paid for work performed.

These small businesses rely on bank executions to help them collect legitimate, long overdue debt.

CBIA will continue to monitor this bill.

The committee passed another bill that CBIA was monitoring, SB 193, but aspects that we opposed were removed from the language of the bill, which now awaits Senate action.

For more information, contact CBIA's Louise DICocco (203.589.6515) | @LouiseDiCocco