When you owe money to any creditor, the creditor has a right to go to court and obtain a judgment. Once they do, you may be dealing with a writ of garnishment for your wages, personal property or your bank account. In New York, the maximum amount that may be garnished from your wages is 10% of your income. However, this may not stop a creditor from seizing your bank account.
How creditors obtain a writ
Before a writ can be obtained, creditors must go to court and sue the debtor. If a judgment is awarded by the court, the creditor has the opportunity to hold that judgment for up to 20 years. However, the creditor must file a suit to obtain a judgment within six years of the time the creditor has stopped making payments on their debt per New York’s Statute of Limitations.
Limitations when a writ is obtained
There are numerous federal rules that apply to a creditors ability to garnish wages including income limitations and the type of income. These federal rules may be strengthened at a state level but they may not be weakened. New York provides specific guidelines on income and types of income that may be garnished under a writ.
- Pensions – New York does not allow creditors to remove funds from a pension plan to satisfy a judgment. However, there may be instances when you are withdrawing these funds they may be garnished
- Insurance and annuity – Income from insurance or annuities may not be subjected to any type of garnishment in the State of New York
- Social security – Federal law prohibits any type of garnishing of these federal benefits
Income limits for garnishment
While federal statutes provide a maximum garnishment amount, the limits in New York are even more stringent. Creditors may only garnish 10 percent of wages or 25 percent of disposable income. These limitations are not applicable to child support payments, alimony payments and in some cases, to tax payments.
Bank accounts and writ of garnishment
When a bank receives a notification that a creditor has received a writ of garnishment, they must freeze the assets in your bank account. There is a high probability that the funds in your bank account will also be seized. To lift this type of garnishment, you will have to go to court and request the writ be lifted. Banks must obey a writ since they are court ordered garnishments and they can face severe penalties for not complying with the order.
There are many rules in place that creditors must follow before they obtain a judgment and writ of garnishment. While these court orders can seize portions of your income and balances in your bank account, you must be notified the judgment was awarded. If you are uncertain that the rules were followed by a creditor with a writ of garnishment, it is imperative you contact an attorney for assistance.