If you live in New York and your wages are being garnished, bankruptcy may be able to help you keep your paychecks and stop wage garnishment.
Written by Kristin Turner, Harvard Law Grad.
Updated July 22, 2020
Wage garnishment is a tool that debt collectors use to try and get back money they are owed by taking money directly from your paycheck. If you are in debt, you may be able to use bankruptcy as a way to deal with wage garnishment in New York state.
Bankruptcy can be a helpful tool in dealing with wage garnishment, especially in New York state.
How wage garnishment works varies by state. The rules that decide how wage garnishment work are determined by individual states and the federal government. This article will explain how wage garnishment works in New York state.
What is Wage Garnishment?
Wage garnishment happens when a court issues an order requiring your employer to withhold a portion of your paycheck and to send it directly to a creditor that you owe. Generally, when your wages are garnished money is taken out of your paycheck automatically by your employer.
Wage garnishment works a lot like like taxes and social security where your employer will take out that money before you get your paycheck.
If you are employed, a creditor can try and garnish your wages in order to collect the money you owe them. In order for your wages to be garnished, a creditor has to file an “income execution form” and get it signed by the county clerk. You may be able to challenge this action depending on your specific circumstances.
In general, your paycheck continues to be garnished until the debt is paid off in full or otherwise resolved such as through bankruptcy. If you want to stop having your wages garnished then Chapter 7 bankruptcy might be a useful way to solve your problem.
Wage Garnishment in New York
How wage garnishment works in New York is decided by state and federal law. Generally speaking, New York provides more protection against wage garnishment than federal law does.
That means that you may have more protection from wage garnishment in New York than if you lived in another state.
The specifics on how wage garnishment works in New York depends on your individual circumstances. The kind of debt you have and your income both matter in determining how wage garnishment will work for you in New York.
People of certain income levels cannot have their wages garnished in New York.
However, in New York certain kinds of debt can lead to higher percentages being taken out of your paycheck.
When can Wages be Garnished in New York?
Depending on your income level, New York may not allow wage garnishment. When determining whether your wages can be garnished, New York looks at your gross and disposable income.
Your gross income is to total amount of money you earn. Your gross income is the total amount of money you earn before anything is taken out for things like taxes or social security.
Your disposable income is the amount of money you take home after taxes and social security deductions. Your disposable income is the money you actually take home from your paycheck.
If your disposable income is than $217.50 a week your wages cannot be garnished in New York.
If you have a higher income, up to 10% of your gross income or 25% of your disposable income could be susceptible to wage garnishment in New York. The lesser of the two amounts is the limit to what can be taken out of your paycheck.
The kind of income you have matters. Certain kinds of income are exempt from wage garnishment in New York. For instance, VA benefits and workers compensation benefits cannot be targeted by wage garnishments.
You should make sure to check to see if your income is exempt from wage garnishment.
However, the kind of debt you have matters. There are different rules for different kinds of debts you might have. You should check to see if the kind of debt you have qualifies for these rules.
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The Kind of Debt You Have Matters
In New York, certain kinds of debt can be garnished at different limits. Some kinds of debt can be garnished at higher percentages than normal.
There are also sometimes different rules dealing with different kinds of debt. For instance, depending on the type of debt you have bankruptcy might be able to help you deal with wage garnishment.
Child Support and Wage Garnishment in New York
New York state can use wage garnishment as a way to collect money owed for child support. Your employer can be ordered to take money out of your paycheck in order to pay this debt.
Money owed for child support can generally be garnished at a higher level than normal.
Additionally, New York follows the Uniform Interstate Family Support Act which requires employers to honor wage garnishment laws of other states. If you owe child support to someone outside of New York then state’s laws may determine how your wages can be garnished.
Tax Debt and Wage Garnishment in New York
New York state can use wage garnishment to collect unpaid taxes. New York will continue to garnish your wages until you pay your entire debt.
However, if you file for bankruptcy then New York state will stop garnishment as you go through the process. New York state might still send you statements about taxes you owe, but bankruptcy may be a useful tool dealing with the tax debt you have.
New York state provides a calculator that you can use to estimate how much of your wages could be garnished.
Student Loans and Wage Garnishment in New York
If you have unpaid student loan debt, New York may be able to garnish your wages. If you have defaulted on your student loans, New York can garnish up to 15% of your disposable income.
However, you may be able to contact your loan provider to make an alternate arrangements to avoid wage garnishment.
Dealing with Wage Garnishment in New York
One way to deal with wage garnishment in New York is to talk to try and work out an arrangement with who you owe money too. You may be able to negotiate with them to try and find another arrangement besides wage garnishment.
Bankruptcy is another way that you may be able to deal with wage garnishment. When you file for bankruptcy most kinds of wage garnishments will stop. This may give you the time to solve the rest of your debt problems.
There are many ways to file for bankruptcy including hiring an attorney or filing for bankruptcy yourself.
Even if you cannot afford an attorney, there are services that may help you deal with wage garnishment in New York.