News from the Senate Majority
Alaska State Legislature

Wendy Lindskoog, Senate Majority Press Secretary
State Capitol
Juneau, AK 99801-1182
Phone: 907/465-4582
http://www.akrepublicans.org
Broadcast Actualities: 800/478-6540

Senate Approves Changes to Dividend Garnishment Law

Legislation Protects Interests of Alaska’s Responsible Consumers

For Immediate Release: March 19,1998 Contact: Mike Pauley, Assistant to Senator Loren Leman, at (907) 465-3841.

Juneau – The Senate today approved a bill that will reduce the ability of debtors to shield their Permanent Fund dividend checks from garnishment by private parties seeking to collect legitimate debts.

"Under current law, debtors who have been ordered by a court to pay money they owe are able to shield 45 percent of their dividend check from private parties who are trying to collect," stated Senator Loren Leman (R-Anchorage), Chairman of the Labor and Commerce Committee which sponsored Senate Bill 254. "This exemption is not fair because it applies only to private parties. State agencies are rightfully allowed to garnish 100 percent of a dividend check from persons who have defaulted on their student loans, or who are behind in their child support payments. Individuals and small businesses should have the same right."

As originally introduced, Senate Bill 254 eliminated the 45 percent PFD exemption. In committee, the exemption was restored but lowered from 45 percent to 20 percent. This change was made to address concerns of some legislators that 100 percent garnishment would create a disincentive to apply for the annual dividend. "In its current form, the bill will increase the percentage available to be garnished from 55 percent to 80 percent," noted Leman. "I believe it is a fair compromise between those who prefer keeping the exemption as it is, and those who favor eliminating it completely."

Senator Leman stated that SB 254 will protect Alaska’s consumers who are financially responsible: "When businesses are not able to collect money from debtors, the losses are recovered by passing the costs on to the rest of us. We all pay higher interest rates, higher security deposits on apartments, and higher monthly payments on cars – all to make up for the losses caused by a few irresponsible consumers who refuse to pay their bills."

Among other backers, SB 254 is supported by the Alaska State Chamber of Commerce, the Alaska Bankers Association, and the Alaska Credit Union League.

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= Loren Leman, 46 K