How a money judgment is enforced and what you can do. This slideshow provides general information and does not provide legal advice, which you can only get from an attorney.

1. Money Judgments
How a money judgment is enforced and what
you can do.

2.  A judgment is a piece of paper issued
by the Court stating that the creditor (or
other plaintiff) has won the lawsuit and
is entitled to a certain amount of money
What is a
money
judgment?
 Once the creditor has a judgment
against you for a certain amount of
money, the creditor can employ a host
of methods to collect the money that are
unavailable without a judgment
 The judgment must be “entered” -- that
is, filed with the court clerk
 Filing usually happens a day or two
after the judge issues the judgment
 After the judgment is filed, the court or
the creditor’s attorney should send you
a copy
A creditor gets a
judgment when it
wins a lawsuit
against you.

3. Your creditor will get a
judgment against you in any
of the following situations:
How Did It
Happen?
 You don’t respond to the
summons by mailing the
creditor’s attorney an “answer”
 You don’t respond to motion
papers that you receive in the
mail by sending a written
response and showing up in
court
 You do show up in court but
you lose your case
A creditor can win their
case and be awarded:




Money you owe
Interest on the debt
Court Costs
Attorney Fees

4. A Creditor can:
 Take money from
your pay
 Freeze your bank
account
 Demand personal
belongings
 Get money when
you sell your home
How do
they get the
money?
There are four ways
a judgment can be
collected:
1.
2.
3.
4.
Garnishment
Bank Accounts
Personal Property
Your Home

5. Garnishment
 This means that money will be taken out of your
paycheck to pay back the judgment amount
 You will get a notice stating that an “income execution”
will be served on your employer unless you start
paying the judgment amount in installments to the
Sheriff
 Your income may normally be garnished at 10% of
your gross (pre-tax) income

6. Limitations of Garnishment
 Your weekly income after tax cannot be reduced
below 30 times the minimum wage (currently $217.50
weekly)
 The “income execution” notice will also explain that
you have the right to challenge the income execution

7. Disposable Income
This is the amount of money you take home in your pay
after deductions are made for taxes, Social Security and
unemployment insurance.
Gross Income
Is the amount of money you make before any of the
above deductions are taken.
Garnishment is based on your Disposable Income.
Social Security and other benefits are exempt from
collection and cannot be garnished.

8. How Much Can Be Taken Per Week?
Disposable Income
< $217.50 per Week
Disposable Income
> $217.50 < $290
Disposable Income
> $290
All of your earned income is
exempt from debt
collection. Your wages CANNOT
be garnished.
The creditor may garnish the
LESSER of:
The creditor may garnish the
LESSER of:
Whatever you earn above
$217.50 per week;
10% of your gross income;
- OR 10% of your gross income.
The amount you earn above
$217.50 is usually less than 10%
of your gross income.
- OR 25% of your disposable income.
10% of your gross income is
usually less than 25% of your
disposable income.

9. Multiple Garnishments
 You can be garnished for a private debt even if you are
already being garnished for child and/or spousal support,
but only up to 25% of your disposable income
 You can be garnished for multiple private debts



generally, the first creditor takes the maximum amount
possible
the second creditor must wait until you finish paying the
first creditor
only then can the second creditor garnish your wages

10. How Does Garnishment
Work?
 All wage garnishments for private debts begin with a
debt collection lawsuit
 The creditor uses a judgment against you in order to
garnish your wages
 The creditor will send the wage garnishment notice to
the Sheriff or Marshal

This notice is called an "income execution"

11. Executing the Garnishment

The Sheriff or Marshal must serve you with a copy of the income execution within
20 days

Once you are served with the income execution, you have 20 days to call the
Sheriff/Marshal to arrange a voluntary payment plan

If you do not contact the Sheriff or Marshal within 20 days, they will serve the
income execution on your employer

Your employer will begin sending 10% of your gross earnings to the
Sheriff or Marshal

The Sheriff/Marshal must send you a periodic accounting stating:
1.
how much you have paid
2.
how those payments have been applied, and
3.
how much you have left to pay

12. How to Stop Garnishment
 Going to Court to have the default Judgment vacated can:
 stop the garnishment
 remove/prevent the judgment from showing on your
credit report
 allow you to file a claim to be repaid money already
garnished
 You must have valid grounds to have the judgment
vacated
 If you do not wish to go to court, then you can always
contact the Sherriff/Marshal or your judgment creditor in
order to make voluntary payment arrangements

13. Employer Response to
Garnishment
 Your employer cannot fire you the first time
you are garnished
 Your employer may be able to fire you if you
have a second garnishment

14. If You Can’t Afford It
 You have the right to go to court and ask the court to modify the
amount of your garnishment
 go to the court with a copy of the income execution and tell the
clerk that you want to file an "order to show cause" to modify the
wage garnishment
 be prepared to explain to the court why the current garnishment
amount is too high
 bring proof of your income, rent, bills, and monthly expenses in
order to prove to the judge that you should be garnished at a
lower rate
 be prepared to show that the current rate of garnishment prevents
you from paying for necessities, like rent, food, utilities, or
necessary medical care

15. Restraining Notice and Levy
The attorney for the judgment creditor may serve a
restraining notice on you or other persons. The purpose
of a restraining notice is to prevent you or any person
from selling or transferring any property that the creditor
may seize in order to satisfy the judgment.

16. Your Bank Account
 Neither the bank nor the creditor is required to give notice before
freezing your bank account



the creditor must notify you if it has filed a lawsuit against you
the creditor must notify you if it has won a judgment against you
you have not received proper notice under the law if your first
notice of a court case is a frozen bank account
 The bank will send you a letter notifying you once the account is frozen



the letter will contain information to help you declare exempt funds
and allow you to demand an immediate release on your funds
you may need to contact the creditor’s attorney to demand a
release
you may want to go to Court to vacate the default judgment

17. What Your Bank Does
If your bank is served with a restraining notice, it will put a freeze on
your account for double the amount of the judgment plus fees.
 Certain income deposited into the account, such as public
assistance and social security income or other benefits, and 90%
of your earned income from a job, is exempt from being used to
execute a judgment
 If you do not claim an exemption, the attorney may serve through
the Sheriff (or Marshal) a “levy” commanding the bank to transfer
the restrained funds to the attorney to be applied to the judgment

18. If You Receive a Restraining
Notice
 Your bank must send you the Exemption Notice and Exemption
Claim Form within two (2) business days of freezing your account
 Do not ignore it
 If you believe that the judgment creditor may seize or has already
seized any exempt funds immediately contact the judgment
creditor’s attorney with proof that the funds are exempt

19. Exemption Claim Form
When serving a restraining notice or levy on your bank, the
creditor’s attorney is required to provide the bank a copy of an
“exemption claim form” that the bank must forward to you so
that you may assert a claim that your bank account contains
exempt funds
 You will receive this notice after the account is frozen
You must complete the Form and mail it to your bank and
the creditor’s attorney within 15 days to prevent the
creditor from taking your money.

21. If Your Account Contains
Exempt Funds

If your account contains exempt funds, such as public benefits or
retirement payments or money earned from a job within the last 60 days,
you should fill the form out and return it promptly to the bank and attorney
claiming the exemption

This may result in release of the funds, or the attorney may ask the court
to hold a hearing to decide whether the funds are exempt from collection
Example of Exempt Funds
 Social Security
 Supplemental Security Income
(SSI)
 Veterans Benefits
 Disability
 Workers Compensation
 Unemployment Insurance
 Public Assistance
 Railroad Retirement Benefits
 Black Lung Benefits

22. When Your Bank Account is
Frozen

You can put money into your account but there is a limit as to how much you
can withdraw from it



money you deposit may be frozen and then unavailable to you
you may want to stop depositing money into the account after it is frozen
The account may show a negative balance because the creditor will generally
put a hold on it for twice the amount of the judgment against you



you do not actually owe all of this money to the judgment or creditor
the amount you owe is the amount of the judgment
Your account is frozen as means to pressure you to pay the creditor

23. Limits on Frozen Accounts
 Your bank account cannot be frozen if the balance is
less than:
$2,625 - for cases filed after January 1, 2012 -$2,500 - for cases filed before January 1, 2012
 exemption only applies if there are direct
deposited benefits such as social security in
the account
 Accounts containing less than $1,740 cannot be
frozen

24. Exempt Income Protection
Act of 2008
Complete and return the
Exemption Claim Forms
Some money held in bank accounts is
protected to ensure that consumers have
sufficient funds available to meet their
basic needs, such as rent, food, and
medicine.

25. Proving Exempt Income

Notify the attorney that all the funds in your bank account are exempt from debt
collection


demand an immediate release of your account
If the attorney asks you to fax or mail proof of your exempt income



you can send up to three months of bank statements as proof
redact (black out or remove) information from your bank statements to protect
your privacy
the attorney only needs to see deposits, not things you paid out

Do not be surprised if the attorney delays taking action, makes excuses or stalls on
releasing your funds

Even if your funds are exempt, you should still go to Court to vacate the default
judgment if possible

26. Direct Deposits
If you get direct deposit of the exempt funds already
referenced in this presentation, your bank must leave
at least $2,500 in the account.
Manual Deposit
If your exempt funds are not directly deposited into your
account, your bank may not be aware that you have exempt
funds in the account and might freeze funds you have over
$1,740.

27. Joint Accounts
 Joint bank accounts can be frozen even if there is a
judgment against only one of the account holders
 If the account contains only exempt income you should
work with the bank and contact the attorney to obtain
release of the exempt funds
 Examples of protected income in a joint account would
be:
 a parent's pension
 your child's Supplemental Security Income (SSI)

28. Judgment Against Someone Else

The best way to unfreeze your money, is to have the holder who has the judgment file
with the Court to vacate it

If vacating the judgment is not possible, you can go to Court to obtain release of your
account under Banking Law 678:

in order for your entire account to be released, you must prove that you added the
other person to your account for convenience only

you must prove that you did not intend to give the joint account holder the right to
own half of the money in the account

you can show that the joint account is for your convenience only by demonstrating
that you are the only person who used the account

show that the other person did not have an ATM card or withdrawal privileges

provide other information to show that the account actually belongs to you alone

ask your bank to write a letter stating that the joint account was for purposes of
convenience only

29. Recovering Half of the Account
If you cannot prove that the joint account is for convenience
only, then you can recover half of the money in the account.
 under Banking Law 675, the judgment creditor cannot
have more than half the money in the account unless it
proves that the money belongs to the other person, and
not to you
 the law presumes that half the money in the account
belongs to you and half belongs to the other person

30. Taking Your Money
A creditor or debt collector can serve a levy through the Sherriff to obtain
funds from your account.
 There is no set time limit


some judgment creditors try to seize funds right away, and others
never actually take funds at all
most judgment creditors will wait at least a few weeks before
attempting to levy your bank account
 You can often get your money back if you go to Court


file to vacate the default judgment
in the filing, you can ask the court to order the creditor or debt
collector to return your funds

31. 25 Days Notice
 A levy can't happen "right away"
or on less than 25-days notice.
 The bank must wait 25 days for
the return of the Exemption Claim
Forms.

32. Exceptions to the Exempt
Income Protection Act
Certain types of creditors may be able to freeze your
bank account even if the account contains exempt
funds.
Examples:


student loan debts
child support arrears

33. Garnishment and Your Bank
Account
 It is generally not possible for a creditor to garnish your
pay and freeze your bank account at the same time
 If you are already being garnished at the maximum
amount, the rest of your wages should be exempt from
debt collection, even if they are deposited into your
bank account

34. IMPORTANT!!!
90% of income earned within the last 60
days is exempt from debt collection.
If you have a frozen bank account, and all
the money in the account is from recent
paychecks, odds are it is all exempt from
debt collection.

35. The Best Protection
 The best way to protect your exempt benefits is to sign
up for direct deposit and keep your bank balance
below $2,500
 The best way to protect your earned income is to keep
your bank balance below $1,740

36. Retirement Funds
Retirement funds are exempt from debt collection. These would
include:

public and private pensions

retirement savings accounts:
 401(k)
 403(b)
 IRAs
 All of the principal and 90% of the payments from a
private trust

37. Being “Judgment-Proof”
If your income consists only of exempt funds and you have no assets, you could
be considered "judgment proof."

Being “judgment proof” means that your creditors cannot collect money
from you -- even if they have a judgment -- because all of your income
and property is exempt
It is important to understand that a court can still enter a judgment against
you, even if you are considered "judgment proof."

You will not have to pay the judgment so long as your income remains
exempt from collection

If your situation changes (for example, if you return to paid employment
or win the lottery) you will have to pay the judgment from your nonexempt funds

38. Seizure of Personal Property
A judgment creditor may use the Sheriff to seize personal property
from you that is not exempt.
Exempt property generally includes:





household goods
one television
one radio
personal items like your wedding ring or a watch,
one car provided your equity in the car is less than $4,000
If you can show that a computer or a car are indispensable to your
work, they may be exempt as “tools of the trade.”

39. Seizure of Personal
Property Limitations
Your car can be seized only if your equity in it is greater than
$4,000.
 If you still owe money on the car, it is probably
completely exempt from debt collection
 For example, if your car is worth $10,000 but you still
owe $8,000, your car would be completely exempt from
debt collection
 Cars that have been equipped for use by people with
disabilities are exempt up to $10,000

40. Non-Exempt Personal Property
It is rare for a debt collector to actually seize personal property.
Personal Property that a creditor might consider seizing would
be:




expensive jewelry
valuable paintings
high-end furnishings
luxury goods
Low-income individuals and the average consumer generally
do not own items vulnerable to seizure, thus this is often an
empty threat.
Items must be worthy of fetching a good price at auction before
a creditor will consider this.

41. Lien on Your Home
The filing of a judgment with the clerk in the county where
the real property is located automatically places a lien on
your home for 10 years. If you refinance or sell your home
you must satisfy the lien by paying off the debt.

42. Enforcing Judgments in
Different States
Sometimes a creditor obtains a judgment against you in a
state where you do not live. This can happen if you have
moved since the debt was incurred, if you signed a contract in
another state, or if the contract specified another state for
suing to enforce the contract and you were not able to get the
location changed. Or, you may own property or have assets
outside the state where the judgment was obtained. The
creditor can go into court in the state where you now live or
have assets and register the original out-of-state judgment.
This means the creditor now has the right to use all the
judgment remedies available in the state where you now live or
have assets (the second state).

43. IMPORTANT
A creditor who places a judgment lien on your property
can only do so according to the rules for judgment liens in
your state. It’s not unusual for creditors to make mistakes,
which may make the lien unenforceable. You might have a
defense against a creditor’s attempt to execute on a lien
because it is too old or because it was not properly
handled. You would be able to fight a lien that was placed
inappropriately or too long ago. Consult with an attorney.

44. Tax Refunds
Tax refunds are not exempt from debt
collection.

45. The Best Resolution
Protecting your exempt income and avoiding garnishment
of your wages may help you keep your money out of a
creditor’s hands but your best bet is to have the default
judgment vacated.

46. Need Help with a
Money Judgment?
Call the CLARO Hotline: (716)828-8432
Thank You!
This concludes the slideshow Money Judgments.
Visit CLARO online at http://clarobuffalo.org/