New York Lien, Account Levy, Repossession, Foreclosure & Payday Loans at a Glance
If you owe debt and reside in New York, it’s important to understand your rights and liabilities. It is even more important if a creditor threatens to file a lawsuit against you.
A lender, collection agent or law firm that owns a collection account is a creditor. New York law gives creditors several means of collecting delinquent debt from you.
Before a creditor may use these legal tools in New York, the creditor must go to court to receive a judgment against you. See the Bills.com resources Served Summons & Complaint and How to Answer a Summons & Complaint to learn more about this process.
A court will hold a hearing after a creditor files a lawsuit. A hearing may result in a judgment awarded to the creditor. A judgment is a court’s declaration the creditor has the legal right to demand:
The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which tool a judgment-creditor may use depends on the circumstances and New York law. We discuss each of these remedies below. In New York, most collections-related laws are found in New York Civil Practice Law (CVP) Articles 50, 51, 52, 53, and 54. We cite the relevant sections below.
New York Wage Garnishment
The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.
In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.
New York’s wage garnishment rules are found in Article 52 5231. New York exempts 90% of earnings, except the first $154.50 per week, which is wholly exempt. In other words, 10% of a judgment-debtor’s wages may be garnished (CVP § 5231). Municipal and state employees may be garnished.
New York Account Levy
A levy means the creditor has the right to take whatever money is found in your bank or credit union account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. In some states levy is called attachment or account garnishment. The names may vary but the concept is the same.
Under New York’s Exempt Income Protection Act of 2008 (EIPA), your bank may never take or freeze the first $1,740 in your bank or credit union account to pay a judgment (CVP § 5232).
If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.
New York Lien
A lien is an encumbrance — a claim — on a property. For example, if you own a home, a creditor with a judgment has the right to place a lien on your home. This means if you the owner sells or refinance the home, your will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent you from selling or refinancing until you pay the judgment.
New York allows a lien for a money judgment. Under CVP § 5201 through 5203 a judgment lien in New York will remain attached to the debtor’s property for 10 years, even if the property changes hands.
Mechanics and contractors (and similar laborers and professionals) have the right to place a lien on real property (§§2607, 8010(1); Lien Law, §§19, 20).
A judgment-creditor lienholder on a residence may not foreclose generally.
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
New York Replevin
Replevin laws allow a creditor to seize your personal property under some circumstances. Replevin is not not common because the laws are complicated, but learn New York's replevin laws if you own valuable personal property, such as rare artwork or antiques.
Five New York statutes cover replevin. One concerns the recovery of goods from a private party (UCC § 2-716). A second concerns leases (UCC § 2-A-521). A third and fourth concern financial instruments (UCC §8-503 and §8-510) and the fifth concerns repossession on Indian reservations (New York Indian Law § 54).
New York Statutes of Limitations
Each state has its own statute of limitation laws. As of July 1, 2015, it is illegal for a creditor to file a lawsuit in a New York court where the statute of limitations has expired. Here are the New York statute of limitations relating to consumer debt:
|Written and spoken contracts*||6||CVP Article 2 §213|
|Residential rent overcharge||4||CVP Article 2 §213-a); sale of goods (UCC Article Part 7 2-725|
|Non-payment of money collected on execution||4||CVP Article 2 §214-c|
|Judgment: domestic or foreign||20**||CVP Article 2 §211(b)|
*Includes credit card debt
** 10-year renewable lien
The passing of a statute of limitations may give you a defense to a lawsuit. Follow the link just mentioned to learn more about statute of limitations in general. If you reside in a state other than New York, see the Bills.com list of statutes of limitations state by state.
New York's 2015 Rules For Consumer Lawsuits
As of July 1, 2015, New York courts requires creditors who are filing a lawsuit against a consumer to:
- Submit affidavits containing detailed proof in support of default judgment applications
- Default applications must contain:
- The debtor's original credit agreement
- A detailed accounting of each stop in the debt's chain of ownership
- Documentation that identifies the target of the default judgment as the correct debtor
- File an affirmation the statute of limitations has not expired
- Verify the efforts made to notify the debtor of the impending default action
According to New York's courts the new rules will reduce cases where abusive and aggressive collectors seek default judgments against consumers in court based on incomplete or erroneous documents, which result in default judgments.
New York Foreclosure
New York lenders use judicial and nonjudicial means to foreclose on homeowners who do not repay their home loans as agreed. Judicial foreclosures are more common in New York, and take up to 15 months to complete, which is among the longest in the nation.
A lender is not required to send a New York homeowner a notice of its plans to start a foreclosure, which is in contrast to most other states. The lender is required to give a homeowner notice of the foreclosure once it is filed with the court, which is like any other legal action. The homeowner is required to appear in court to respond, or risk a summary judgment if he or she does not. Once filed, the time to a court ruling on a foreclosure is 7 to 9 months. If the court decides in favor of the lender, the lender must notify the homeowner of the sale, which is usually an auction at the county courthouse. The sale usually occurs 4 months after the court rules on the foreclosure. See New York Real Property Actions and Proceedings Article 13 to learn more.
New York Payday Loan Collection
Payday loans are illegal in New York. In New York, a debt collector cannot collect or attempt to collect on a payday loan. In February 2013, the governor of New York directed the New York State Department of Financial Services to inform debt collectors that any attempt to collect payday loans in New York is illegal. “Studies clearly show that payday loans are not a solution for people with low incomes, but rather a high cost debt trap. That’s why they are illegal in New York, and the State will continue to protect consumers from these misleading loans,” Governor Andrew Cuomo said in a press release.
File a complaint with the Dept. of Financial Services if a you are a New York resident and a collection agent attempts to collect a payday loan from you.
New York Repossession Rules
Upon default, a New York lender may repossess secured goods without going to court. The lender may, without removing the goods, render such goods unusable (using a wheel boot, for example). The lender does not have to give any notice before taking the goods. After repossessing a vehicle, the lender or repo agent must notify the borrower and DMV by first-class mail or in person within 24 hours. There are special New York rules for auctioning vehicles (Vehicle and Traffic (VAT) Article 17 §425).
Consult with a New York attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in New York. If you have low or no income, contact the New York Legal Aid Society. Contact the state’s Division of Consumer Protection or New York City’s Department of Consumer Affairs to learn more about your rights or file a complaint about a lender or collection agent who violates your rights.