Most people learn a judgment was entered against them when a debit card is declined or a paycheck comes up short. By that point the creditor already has enforcement tools, and the useful question is which of them can be limited, released or undone.
What you need to know
- A judgment is a court determination that money is owed. It unlocks enforcement: restraining bank accounts, garnishing wages by income execution, and creating liens against real property.
- New York’s Exempt Income Protection Act requires that a baseline amount be left accessible in a restrained account. The figure is indexed and must be confirmed as of the date of the restraint.
- Funds directly deposited from Social Security, SSI, veterans benefits, public assistance, unemployment, workers compensation, pensions and child support receive special protection, and a bank that identifies such deposits generally must limit the restraint.
- Wage garnishment in New York runs through an income execution served on the employer. It is capped both as a share of disposable earnings and by a floor tied to the minimum wage — the exact figures change and must be checked.
- A docketed judgment can become a lien on real property, which typically surfaces at a refinance or a closing.
- Exemptions are not automatic in every case. Claiming them often requires filing a form within a short window, and default judgments can sometimes be challenged where service was defective.
How a creditor gets from a bill to a judgment
A creditor sues by filing a summons and complaint and serving the defendant. The time to respond depends on how service was made, so the deadline has to be read from the papers themselves rather than assumed. If no answer is filed, the creditor can seek a default judgment, and the defenses that might have existed — the wrong amount, the wrong plaintiff, a time-barred debt, mistaken identity — go unheard.
Default judgments are common in consumer collection cases, and a meaningful share of them follow service that never actually reached the defendant. Where papers were left at an old address or with someone who was not authorized to accept them, there may be grounds to move to vacate. That is fact-specific and time-sensitive, and it is worth raising early.
Restrained bank accounts
Once a judgment exists, a creditor can serve a restraining notice on a bank. The bank freezes what it holds up to roughly twice the judgment amount, and the account holder usually finds out when a transaction fails.
New York limits this. Under the Exempt Income Protection Act, a bank generally must leave a baseline amount accessible so a household is not left with nothing. That baseline is periodically adjusted, and the applicable number must be confirmed at the time — this article does not state it because it changes.
The stronger protection attaches to the source of the money. Where benefits such as Social Security, SSI, veterans benefits, unemployment, workers compensation, public assistance, a pension or child support are deposited directly into the account, the bank is generally required to review recent account activity and limit the restraint accordingly. The protection works far better when the deposits are electronic and identifiable, and far worse when benefit funds are cashed and redeposited or mingled with other money.
Keep exempt funds separate. The practical difference between a protected account and a frozen one is usually traceability. Benefits deposited directly into an account that holds nothing else are much easier to protect than the same benefits moved into a joint household account that also receives wages, transfers and cash deposits.
What to do when an account is restrained
- Get the restraining notice and the exemption forms from the bank — the bank is generally required to send a notice and claim forms to the account holder
- Identify the source of every deposit for the recent period and gather the award letters or benefit statements
- Complete and return the exemption claim form within the time stated on it, keeping proof of mailing
- Ask the bank in writing to identify the restraining creditor and its attorney
- Confirm whether the underlying judgment was entered on default and, if so, whether service was proper
- Move any future benefit deposits into an account that receives nothing else
Joint accounts complicate this. A co-owner who owes nothing may still find funds restrained, and separating whose money is whose usually requires documentation rather than an explanation.
Wage garnishment: the income execution
New York does not garnish wages by simply notifying an employer. The creditor delivers an income execution, first directed to the debtor with an opportunity to pay voluntarily, and then, if that fails, served on the employer. The employer withholds and remits.
Two limits apply at once. The withholding is capped as a percentage of disposable earnings — what remains after legally required deductions — and it is also capped by a floor tied to the minimum wage, so that earnings below a certain level are not reachable at all. Both the percentage and the minimum wage figure are set by law and adjusted over time, so the current numbers have to be confirmed rather than taken from an article.
Priority also matters. A support order generally takes precedence, and where multiple income executions exist, only one ordinary creditor is typically satisfied at a time. Independent contractors are treated differently from employees, and the collection route against them is not the same.
An employer cannot fire you for one garnishment. Federal law protects an employee from discharge because earnings have been garnished for a single indebtedness. That protection has limits when multiple garnishments are involved, and it does not resolve the underlying debt — but the fear of losing a job should not by itself drive the decision.
Judgment liens on real property
When a money judgment is docketed with the county clerk, it generally becomes a lien on real property the debtor owns in that county, and it can attach to property acquired later while the judgment remains enforceable. Nothing happens visibly at first. The lien surfaces when the owner tries to sell or refinance and the title search returns it.
At that point the closing cannot proceed until the lien is satisfied or released, which is why old judgments frequently get resolved at the closing table on unfavorable terms. Identifying them early — well before a listing — usually produces a better negotiation. This is one of the recurring issues discussed on the real estate page.
Judgments also have a duration and can be renewed, and enforcement rights are subject to their own time limits. Whether a particular old judgment is still enforceable is a question worth checking rather than assuming in either direction.
Where bankruptcy changes the picture
Filing a bankruptcy case generally triggers an automatic stay that pauses most collection activity, including account restraints and income executions, while the case is open. Depending on the facts, certain transfers made shortly before filing may be recoverable, and in some circumstances a judgment lien that impairs an exemption can be addressed within the case.
Whether Chapter 7 or Chapter 13 fits depends on income, assets, and whether there is a home with arrears to cure. New York filers also choose between the state and federal exemption schemes, and that choice can change what is protected. These questions are covered on the bankruptcy and debt relief page.
Bankruptcy is not the only answer. Some judgments can be vacated, some are unenforceable on their face, and some creditors will negotiate a release. The right step depends on how the judgment was obtained, what the household owns, and what else is outstanding.
Do not ignore new papers
After a judgment, a creditor can also serve an information subpoena and restraining notice demanding financial information. Ignoring it can lead to further motion practice. Responding accurately, with counsel reviewing what is required, is generally the better course.
The Law Offices of Christine Thea Rubinstein & Associates P.C. offers a free and confidential initial phone consultation to review judgments, restraints and income executions anywhere in Suffolk or Nassau County. Call 1-800-488-6734 or reach the firm through the contact page. General questions are also answered on the FAQ page.
Frequently asked questions
My Social Security is in the frozen account. Can I get it released?
Often yes. Where benefits are deposited electronically and are identifiable in the recent account history, the bank is generally required to limit the restraint. Where the funds were mingled with other deposits, the exemption still exists but has to be proven with award letters and statements. Act quickly, because the claim form has a short return window.
How much of my paycheck can be taken?
New York caps it as a share of disposable earnings and also protects earnings below a floor tied to the minimum wage, so lower-income workers may not be reachable at all. Both figures are adjusted over time and should be confirmed against the current rules rather than an older summary.
Can they take my car or the furniture in my house?
Personal property exemptions protect a defined set of items and a limited value in a vehicle, and the amounts are periodically adjusted. As a practical matter, seizing household goods is rare because it is expensive and yields little. Bank accounts and wages are the usual targets.
I never received the lawsuit. Is there anything I can do?
Possibly. A default judgment may be challenged where service was defective and there is a potentially meritorious defense, but the request must be made promptly and supported by facts, not just a recollection. Bring the judgment paperwork, any mail received, and the address history to a consultation.
Does paying the judgment remove it from my credit report?
Paying it results in a satisfaction that should be filed with the court, which is what clears the lien against real property. How and whether it appears on a credit report is governed by separate reporting rules. No one should promise that satisfying a judgment repairs a credit profile.