STAND. COM. REP. NO. 2752

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 3195
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Judiciary, to which was referred S.B. No.
3195 entitled: 

     "A BILL FOR AN ACT RELATING TO GARNISHMENT,"

begs leave to report as follows:

     The purpose of this bill is to amend the garnishment law to
specify that rental income is to be included under the definition
of "wages" and is not to be characterized as a debt.

     Your Committee received testimony in favor of this measure
from an attorney and numerous individuals.  Testimony in
opposition to the measure was received from Maui Collection
Service, Inc.; Credit Associates of Maui, Ltd.; Hawaii Providers
Network, Inc.; and the President of the Hawaiian Collectors
Association.

     Your Committee finds that a judgment creditor, by obtaining
a judgment against a debtor and procuring a garnishment of rental
income, is permitted to attach one hundred per cent of the rental
income as a debt, but is restricted to a percentage of the
debtor's personal income as specified by statute.  As a result,
in many situations, persons who rely on rental income to pay
their mortgages on personal residences are often unable to pay
those mortgages and are forced into foreclosure.


 
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     Your Committee finds, however, that it is the mortgage
lender's expectation that the rental income will be used by the
borrower to pay the mortgage.  This is preferable to foreclosure
from the lender's perspective, since foreclosing on the
borrower's real property is considered a remedy of last resort.
Foreclosures on personal residences also further weaken Hawaii's
struggling economy.

     Your Committee agrees with the intent of this bill, and
finds that characterizing rental income as personal income or
wages will help to reduce the number of foreclosures on personal
residences in these situations by retaining the home as an asset
and giving the borrower the chance to keep the mortgage loan from
going into default.

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
3195 and recommends that it pass Second Reading and be placed on
the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,



                                   ______________________________
                                   AVERY B. CHUMBLEY, Co-Chair



                                   ______________________________
                                   MATTHEW M. MATSUNAGA, Co-Chair

 
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