Wage Garnishment Facts
How Do I Stop a Wage Garnishment in NY?
When you’re dealing with an overwhelming debt load, you can be put in the position where you have to decide between paying the rent and covering your credit card arrears. If this sounds like your situation, you’re not alone: the pandemic has forced thousands of New Yorkers to ignore their credit cards, medical bills, and other debt and focus on covering the essentials.
The problem is that when creditors go unpaid, most states, including New York, allow them to collect the debt by garnishing your wages. The New York Attorney General has confirmed that income like stimulus checks and other economic impact payments issued under the CARES Act cannot be garnished, but otherwise there has been no impediment preventing creditors with a judgment from collecting on it. For months, the closure of the New York state courts prevented new judgments from being obtained, but since they reopened, this protection has disappeared.
In this blog, we’ll explain how the process works, how much a creditor can legally garnish, and how bankruptcy can make it stop.
How much can be taken for garnishment of wages in NY?
It depends on your income, its source, and/or and how much of it is disposable. In other words, how much you have left over after paying all necessary and reasonable expenses.
In New York, your disposable income totals less than $240 per week, your wages cannot be garnished. State and federal law also exempts specific types of income from garnishment, including most government benefits, pensions, retirement funds, child support, and spousal support.
If your disposable income from a nonexempt source is between $240 and $290, the creditor may garnish 10% of your gross income or whatever you earn over $240, whichever is less. Those who have a disposable income of over $290 per week can lose the lesser of 10% of their gross income or 25% of their disposable income. If your wages are being garnished for spousal maintenance or child support, the creditor can claim up to 25% of your disposable income.
The wage garnishment process begins when your creditor initiates a debt collection lawsuit. If they succeed, they can seek an order allowing them to garnish your wages. Once they receive it, the creditor sends the income execution notice to a New York City Marshal, who must serve a copy on you within 20 days. You then have 20 days to resolve the matter with your creditor before the marshal serves a copy on your employer, who then remits a percentage of your gross earnings.
How long can a judgment be collected in NY?
Once a creditor receives a money judgment against you, New York law gives them up to 20 years to collect it. If a real property lien arises from the judgment, it is only viable for 10 years unless the creditor renews it for another 10 years.
Can creditors take your home in NY?
If they receive a judgment against you, a creditor may be able to place a lien on your home. This doesn’t mean that they will immediately evict you and force a sale of the property: a lien is a claim, so if you refinance or sell the home, you will be required to pay the judgment out of the proceeds. If the judgment amount is greater than the amount of equity in the property, you may not be able to sell or refinance until you pay it.
Does NY allow more than 1 garnishment at a time?
Yes, multiple garnishments are allowed in New York. However, the total amount that can be garnished is the lesser of the following:
- 10% of your gross wages
- 25% of your disposable income
For example, if your credit card issuer is garnishing 10% of your disposable income to pay a defaulted debt and a healthcare provider wants to garnish your wages to collect an unpaid medical bill, your employer can only take up to 15% of your disposable income for this second debt.
Will bankruptcy stop wage garnishment?
You can technically try to vacate the judgment against you or ask the court to at least modify the garnishment, but both are time-consuming, complicated, and expensive processes. If a wage garnishment order is harming you financially, the best option may be filing for bankruptcy.
When you file for bankruptcy in New York, the automatic stay prohibits most creditors from initiating or continuing debt collection efforts, including wage garnishments. There are some cases when the stay won’t stop a garnishment: in particular, if you file Chapter 7 and the debt is for a domestic support obligation like spousal or child support. The good news is that a Chapter 13 filing can stop collections for these types of debts and give you the chance to repay arrears over three to five years.
After your bankruptcy case is filed, it can take over a week for your creditors to receive notification. If you don’t want to lose any more of your income to a wage garnishment, your attorney can notify both the creditor and your employer and provide your case number, court location, and filing date. By law, the garnishment must stop once the creditor learns about it: letting it proceed after that point is a violation of the automatic stay.
Are your wages being garnished?
If you are losing income because your debt became impossible to manage, let Gershburg Law, P.C. help you obtain the relief you need. We will meet with you, listen to your story, and recommend the bankruptcy chapter that makes the most sense for you. When honest, hard-working people become overwhelmed by debt, we’re here to help. Call 866-554-4638 or contact us online.