Senate committee hears bill widening turnover receivers’ powers; consumer advocates warn of harm

Senator Central Parker laid out Senate Bill 3009 to the Committee on Jurisprudence, explaining a committee substitute that would require appointment of receivers after six months of unpaid judgments and allow receivers to seize nonexempt property discovered in enforcement efforts. Public witnesses and resource witnesses split sharply on the impacts.

The question at the heart of the hearing was a change to subsection f (identified in testimony as 31.002 subsection f) that opponents said narrows longstanding protections for exempt cash — notably recently deposited wages — and makes turnover receivers’ powers closer to garnishment. ‘‘The changes to subsection f ... look like small changes but they're actually quite consequential,’’ testified Anne Vadore, a witness who said she was speaking in opposition. She described instances where families and students lost access to funds after receivers were appointed.

Supporters of the bill, including Craig Nowak identifying himself as speaking on behalf of the Texas Creditors Bar Association, said the committee substitute restores a consistent enforcement tool and prevents what they described as attempts to avoid valid judgments. ‘‘We are in favor of this bill,’’ Nowak told the committee, saying the bill harmonizes enforcement and reduces inefficient garnishment procedures.

Private- and legal-aid attorneys who opposed the change urged the committee to preserve the 1989 statutory protection that they said prevented turnover receivers from taking proceeds that represent exempt assets such as current wages and certain benefits. Amy Clark, a private and former legal-aid attorney, said the receivership process and garnishment process were deliberately different and that collapsing the two ‘‘just globs them all into one,’’ risking larger consumer harms.

Opponents gave concrete examples: a low-income woman whose bank account was frozen with roughly $300 in it and a student whose financial aid was taken because a judgment included her account. Witnesses also said receivers charge fees (testimony cited a 25% charge in some proceedings) and that making the proposed change retroactive would expose older judgments to new enforcement powers.

Committee members questioned legal history and case law cited by witnesses, including the 1989 legislative change motivated by Cain v. Cain and more recent appellate decisions that advocates said support wage exemptions. The Texas Judicial Council and others were referenced as having proposed alternative, narrower reforms to protect low-income households while improving enforcement consistency.

Public testimony on SB 3009 was closed after the panel heard both sides; the bill remained pending. No committee vote on passage was recorded during the hearing.