Aside from judgments from family court, New York currently allows all judgment creditors the same opportunities to enforce their judgments. The remedies available differ based on whether the judgment is entered against a natural person, an individual, or a corporation.
The nature of the debt alleged in the underlying action and the industry or profession of the judgment creditor has never been relevant to the ability and enforcement of a money judgment.
That is until now.
Recently, the New York Senate approved Senate Bill S6522A, introduced in May 2021, which provides an exception to some of New York’s judgment enforcement tools. The exceptions sought would apply to money judgments obtained by most medical providers. And, if signed into law by Governor Kathy Hochul, the bill would substantially limit the ability of medical providers to enforce judgments obtained against New York debtors and further limit debt collection of medical judgments in NY.
S6522A will limit the ability of a judgment arising from medical debt (and brought by a hospital licensed under article 28 and healthcare professionals authorized under title 8 of the education law) from liening and/or enforcing a money judgment against the primary residence of a judgment debtor and prohibit the use of wage garnishments and income executions in the state.
Lien on Property
Unlike a mechanics lien or other type of lien, a lien on real property as a result of debt collection generally occurs in one of two ways.
If suing in a lower court, the judgment creditor or their agent must actively take steps to record the judgment with the county clerk of the county in which the suit was brought and then again from the county clerk of the same county to the county clerk in any counties where the debtors own real property. New York does not offer a statewide lien as a result of filing a case somewhere in the state.
A lien on real property is automatically created in the county where the case is filed if you sue in Supreme Court. If your debtor owns a brownstone in Brooklyn and you sue in Supreme Kings, you will automatically have a lien on the real property located in Kings county (Brooklyn).
One of the problems with the bill as written is that a lien is automatically created as provided for in the second scenario above. We assume the bill will need to be adjusted or litigation will ensue on the implementation and interpretation of the bill.
Income Execution
New York Civil Practice Law and Rules section 5231 provides for income executions as a vehicle to collect judgments. Except for family court judgments and the like, creditors can only restrain up to 10% of the debtor’s income. Medical providers would lose this remedy to collect.
If you are wondering if you will be affected as a medical provider, you can search the definition as it relates to hospitals organized by the Public Health Law and healthcare professionals authorized under Title 8 of the education law.
If you are a provider covered by the exception, should it be signed into law, you will need to know how to collect your claims.
For now, you can demand payment for any debt that is within three years and has been extended by payment, and accrue legal interest at 2% per annum. If needed, you can sue and enter judgment against your consumer client (as long as they are not active military personnel).
To satisfy a judgment, you can restrain a bank account belonging to a consumer on the condition that the account has more than the statutory minimum. You can also restrain a brokerage account as long as it is not a retirement account.
You can restrain monies that would be owed to the judgment debtor from another such as unclaimed funds and more.
The idea is to bring the judgment debtor to the table to have the debt voluntarily repaid, if possible. If you have a debt collection matter you need assistance with, contact Frank, Frank, Goldstein and Nager. We have the experience that pays.
