If a consumer or small business loses a lawsuit whether on default or on the merits, there are a few major judgment enforcement tools that a creditor has to attempt to enforce the judgment obtained. A judgment is just a piece of paper with which creditors can’t do much with unless they can find assets or property to enforce on. However, the judgment gives creditors the tools to try and find those assets and or property. The first tool that creditor use is a bank levy. In New York creditors are allowed to freeze double the judgment amount found in any bank account. Creditors generally send information subpoenas to banks and will then freeze funds found in that bank account causing an unpleasant situation for the debtor who finds some or all of their money frozen in their account or accounts. Generally, it is easier for creditors to find funds in large bank accounts such as Chase, Bank of America and Citibank as opposed to smaller more local banks that are more difficult to find like credit unions. Wage Garnishment is the 2nd enforcement tool that we encounter. A judgment creditor is allowed to garnish about 10% of a debtor’s wages every pay period. This amount places a difficult burden on consumers on top of the embarrassment that most face when their employer learns that their wages are to be garnished. To make matters worse, judgment interest accrues when a bank levy is obtained or while a wage garnishment continues causing the total amount of the debt to accrue further. This can cause an amount to grow considerably if the wages garnished are on a large debt. Finally, a real property lien can be placed on any real property found making it difficult to sell or refinance a property. The marshal who is usually the agent whom finds assets and or property is entitled to their 5% fee causing the debt to grow even further.
There are important procedural rules and exemptions to understand when attempting to resolve any of the above judgment enforcement activities. First, there is a list of certain exemptions that protect specific types of funds whether through a bank levy or wage garnishment. Social Security income and Social Security Disability are completely exempt funds that cannot be levied or garnished. Unemployment and worker’s compensations funds are equally exempt. There is a general exemption amount of just over $3,600 which means that a consumer cannot be left without less than that amount of money in their bank account when it is levied. A consumer must go into the bank when their account is levied and request the exemption amount be given to them. Another important exemption is that 90% of a consumer’s wages earned within the last 60 days are exempt from levy. This is a crucial exemption that too few people know about or use. A consumer or small business must also receive 20 days notice about a pending bank levy, wage garnishment or property lien. This way they have the ability to prevent these enforcement tactics or contact the creditor to try to resolve the debt via settlement.
The best way to prevent and or remove a bank levy, wage garnishment or property lien is by filing an Order to Show Cause to vacate the overall judgment obtained. A temporary restraining order in this motion immediately requests that all judgment enforcement activity be stayed which then gives the consumer the opportunity to re-open the case by removing the judgment and then submitting an answer to litigate the case on the merits. This is critical to file as quickly as a debtor learns of the judgment because often, levied funds can be released to the judgment creditor if held over a certain time period or if a judge grants the release to them.
Vacating Bank Levies and Wage Garnishment
