By: Robert J. Nahoum
A debt collector with a New York state court judgment has a powerful tool at its disposal to enforce the judgment called a “restraining notice”. A restraining notice is a judgment enforcement device that restrains anyone holding property of the judgment debtor from releasing that property. The most common example of a restraining notice is where the judgment creditor serves a bank.
In New York, as in most states, there is a laundry list of property exempt from judgment enforcement and thus beyond the reach of debt collectors. Included in that list are assets that might otherwise be restrained in a bank account under a restraining notice including:
- Funds in your bank account if the balance is less than $2,625.00 and the account contains directly deposited exempt benefits;
- Funds in your bank account if the balance is less than $1,740.00;
- 90% of your wages if you take home more than $217.50 per week, or 75% of your disposable income, whichever is greater.
- All of your income if you take home $217.50 per week or less.
- Public Assistance;
- Supplemental Security Income;
- Social Security;
- Social Security Disability;
- Veterans benefits;
- Child Support;
- Spousal Maintenance;
- Workers Compensation;
- Unemployment Insurance;
So what happens if a debt collector freezes exempt income? Under the Exempt Income Protection Act (EIPA), when a bank account is frozen, the judgment debtor is supposed to receive a notice of the restraint and an exemption claim form, mailed by the bank. The form is designed to be a self-explanatory, self-help measure which lists types of exempt funds. If the judgment debtor has exempt funds in the account, he or she must notify the bank and the debt collector by completing the exemption claim form and mailing it back to the debt collector’s attorney and the bank.
If the debt collector disputes the claim of exemption, it must quickly make a motion to the court challenging the exemption.
The infamous debt buyer LVNV Funding lost one such case recently.
In this case, Judge Hector D. LaSalle of the Supreme Court Suffolk County ruled that
“the motion by the [LVNV Funding] for an order pursuant to CPLR §5222-a for an order denying the defendant’s claim of exemption and allowing plaintiffs restraining notice to remain in effect at Capital One, N.A. is considered under CPLR §§5222-a and 5240 and is hereby denied.
The plaintiff has failed to provide sufficient proof that it has timely filed this motion in compliance with §5222-a(d).
CPLR §5222-a(d) states, in relevant part ‘[a] judgment creditor may object to the claim of exemption by moving for an order pursuant to section fifty-two hundred forty of this article. The judgment creditor must serve the banking institution and the judgment debtor with its motion papers within eight days after the date postmarked on the envelope containing the executed exemption claim form or the date of personal delivery of the executed exemption claim form to the banking institution, and the provisions of paragraph one of subdivision (b) of rule twenty-one hundred three of this chapter shall not enlarge the judgment creditor’s time to move pursuant to this section.’”
In this case, sloppy debt collection work by LVNV Funding and its attorneys proved to be a win for the consumer.
If you need help settling or defending a debt collection law suit, stopping harassing debt collectors or suing a debt collector, contact us today to see what we can do for you. With office located in the Bronx, Brooklyn and Rockland County, the Law Offices of Robert J. Nahoum defends consumers in debt collection cases throughout the Tristate area including New Jersey.
The Law Offices of Robert J. Nahoum, P.C