When considering what funds are exempt from judgment enforcement and the reach of judgment creditors, New York and the federal government draw a line between enforcing judgments against consumers and enforcing judgments against commercial entities.
COVID-19 stimulus payments were the latest addition to the list of assets exempt from execution by judgment creditors in New York. Benefits payable to companies were not exempt and, as of October 2021, may still be restrained by a judgment creditor enforcing a judgment in New York against a commercial debtor.
The New York Department of Financial Services recently increased the amount exempt from judgment enforcement on individual accounts to $3,000.00. The exemptions are meant to only apply to judgments against individuals however, the exemption has afforded commercial businesses some protection as well.
The following list of funds can not be taken from an individual judgment debtor’s bank account according to federal and state law:
- Social security
- Social security disability (SSD)
- Supplemental security income (SSI)
- Public assistance (welfare)
- Income earned while receiving SSI or public assistance
- Veterans benefits
- Unemployment insurance
- Payments from pensions and retirement accounts
- Disability benefits
- Income earned in the last 60 days (90% of which is exempt)
- Workers’ compensation benefits
- Child support
- Spousal support or maintenance (alimony)
- Railroad retirement
- Black lung benefits.
What If Funds Exempt From Judgment Enforcement Are Held?
The same provision of the New York Civil Practice Law and Rules which provides the list of exempt funds also provides a method of informing and challenging a restraint placed on the judgment debtors’ bank account for the judgment debtor and their attorney, if they have one.
If any of the funds restrained in the bank account fall into the 17 categories set forth above, the burden is on the individual account holder and/or the beneficiary of the account to take action and notify the judgment creditor’s attorney and the bank that the funds are exempt.
This is done by completing an “exemption” form within 20 days of the postmark of the envelope containing the notice. The bank has eight days to release the funds upon receipt of the exemption form, That is of course assuming the judgment creditor or their attorney does not object to the debtor’s exemption. Any objections to the debtor’s exemption must be made within 7 days. If there is a claim of exemption and then a timely objection by the judgment creditor or their attorney, motion practice ensues and a flurry of documentation back and forth
If you are looking to enforce a judgment or have an account released, contact us today for a consultation. We have the experience that pays.