Navigating New York’s Wage Garnishment Laws

One of the most effective and feared ways for creditors to collect an unpaid debt is to garnish an individual’s wages. But before most creditors can garnish your wages, they have to get a court judgment and order. Even if a creditor gets a court order that authorizes them to garnish your wages, laws limit how much a creditor can take from your paycheck. These limits depend on the source of the income and the type of debt being collected. 

Some wage garnishment laws exist at the federal level, but many are state laws. In this article, we’ll explain how wage garnishment laws work in New York state.

Wage Garnishment in New York 

Before most wage garnishments can occur in New York, a creditor must file a lawsuit and get a court order. The creditor or entity that starts the debt collection suit can be almost anyone, including:

• Credit card companies

• Auto loan companies

• A government agency

• Your spouse

• A business partner

• A company

• A bank

• A debt collector or debt buyer

• Almost any type of consumer debt lender

If the creditor convinces the court that they’re entitled to collect on a debt, the court will grant them a money judgment. At this point, they become a judgment creditor. The person who lost the case is called the judgment debtor. If the judgment debtor doesn’t pay their entire debt at this time, the judgment creditor can file for an income execution. 

An income execution is a court order that requires a judgment debtor to either pay back the debt or be subject to wage garnishment. Wage garnishment occurs when the judgment creditor goes to an individual’s employer and has the employer withhold a certain amount of money from the individual’s paycheck. 

This withheld money is then sent to the judgment creditor with each paycheck, whether the employee gets paid weekly, every two weeks, or monthly. The withholding will take place until one of three conditions is met:

• The debt is paid in full;

• The individual’s employment with that particular employer ends; or

• The wage garnishment order gets vacated by the court.

In New York, most money judgments against consumers are default judgments. If no one shows up to oppose a debt collection lawsuit, creditors can more easily get a court to issue a wage garnishment order. Luckily for New York consumers, state law regulates how New York wage garnishments occur. 

New York limits how much money a judgment creditor can take from your wages to pay back a debt. These limits typically depend on the type of debt. But only employee wages are legally protected. New York’s wage garnishments laws don’t apply to independent contractors or freelancers (more on that below).

Wage Garnishments That Don’t Need a Court Judgment 

Most entities need to get a court order for a wage garnishment. But there are exceptions. Your wages can be garnished without a court order for:

• Delinquent child support: The court order authorizing child support payments will include an automatic income withholding order. If there are other wage garnishment claims, the child support garnishment gets paid first.

• Delinquent alimony or spousal support: The initial court order granting the spousal support will often have an income withholding order attached.

• Back taxes or government fines: If there are unpaid income taxes (state or federal), property taxes, or fines, the applicable government entity can garnish wages without first getting a court order.

• Defaulted federal student loans: The U.S. Department of Education or an entity acting on its behalf can get an administrative garnishment without first obtaining a court order if you default on your student loans.

Maximum New York Garnishment Amounts 

Assuming a creditor can legally garnish your wages, there are limits to how much they can take from each paycheck. These limits depend on the type of debt and your income. Generally speaking, New York’s wage garnishment limits are the same as the federal limits. Some types of income can’t be garnished.

Garnishment Limits for Private Debt 

Private debt is debt that’s owned by private entities rather than the state, federal, or local government. Examples of private debts include:

• Bank loans

• Credit cards

• Medical bills

• Private student loans

In New York, creditors trying to collect these types of debts through wage garnishment are limited to either:

• 10% of the individual’s gross income, or

• 25% of the individual’s disposable income, but only if what’s left in the paycheck is more than 30 times the local minimum wage.

Gross income is your wages before any deductions are taken out. Disposable income is what’s left in your paycheck after legally required deductions have been taken out. These types of deductions can include Social Security, taxes, unemployment insurance, and union dues. If a deduction is voluntary, it’s not factored into your disposable income. 

The applicable minimum wage is the minimum wage in the municipality where the individual works (assuming the municipality has one), unless the state or federal wage is higher. The current minimum wage in New York state is $13.20, which is considerably higher than the federal minimum wage of $7.25. New York City’s minimum wage is even higher at $15/hour.

So if you work in New York City, where the minimum wage is currently $15/hour, then your wages can only be garnished if your disposable income is more than $450 per week. If it’s not, then your wages can’t be garnished. The lower New York state or federal minimum wage wouldn’t apply in this situation because the individual is subject to the New York City minimum wage.

Also, when more than one garnishment is in effect, the total amount garnished can’t exceed 10% of the individual’s gross income or 25% of their disposable income, whichever is less.

Garnishment Limits for Non-Private Debts 

Non-private debts are debts you owe to the state, local, or federal government. But they can also include debts you owe to a private party (like an ex-spouse) that are administered by the government. The following are common examples of non-private debts subject to wage garnishment in New York:

• Child support

• Alimony/spousal support

• Back taxes

• Federal student loans

If a person is current on their spousal or child support, the wage garnishment limits are the same as if a creditor is collecting a private debt. But if someone is past due with their support payments, federal law allows up to 60% of their disposable income to be garnished. 

If the individual is supporting another spouse or child, then the wage garnishment limit is 50% of their disposable income. If the individual isn’t supporting another spouse or child, then the limit is 60%. Either child or spousal support payment wage garnishment limits can further increase by 5% (to 55% or 65%) if the support payments are more than 12 weeks past due.

A person who has defaulted on their federal student loans can have up to 15% of their disposable income garnished by the U.S. Department of Education. But this amount can’t exceed 30 times the applicable minimum wage.

Wage garnishment limits for back taxes are a bit more complex, as they revolve around the person’s income and how many dependents they have.

Bankruptcy and IRS Debts 

Special garnishment limits apply in certain situations. Two common ones include bankruptcy (which is often filed to stop certain types of wage garnishments) and when the IRS is collecting back taxes.

During a Chapter 7 or Chapter 13 bankruptcy proceeding, the filer may have up to 90% of their disposable earnings garnished. Luckily, this usually doesn’t happen. That’s because the filer has to agree to it as a part of a Chapter 13 repayment plan (and they normally don’t). Or such a large wage garnishment amount would result in financial hardship on the individual and the court won’t allow it. It often helps to have legal assistance to deal with these situations.

Wage garnishment limits with the IRS are similar to bankruptcy garnishment limits in that they can be pretty high. But in reality, wage garnishment amounts tend to be lower than what’s legally possible. For instance, the IRS can garnish up to 70% of the taxpayer’s wages. The precise amount depends on complex calculations. But when the IRS makes this calculation, it takes the taxpayer's financial hardship into consideration. The wage garnishment amount won’t be so much that the taxpayer can’t afford to pay for their basic living needs like food and shelter.

New York State Wage Garnishment Exemptions 

Besides limiting how much can be garnished, there are rules that protect certain types of income and benefits from garnishment. Sometimes it’s practically impossible for a judgment creditor to recover anything from the individual through wage garnishment because of where they get their income. 

Here are some examples of income and benefits that are exempt from wage garnishment in New York:

• Received child and/or spousal support payments

• Social Security payments

• Disability and unemployment benefits

• Various forms of public assistance

• Veterans benefits

• Pension payments

• Workers’ compensation benefits

• Supplemental Security Income

• Black lung benefits

• Retirement savings accounts, such as a 401(k) or IRA

• 90% of your paycheck from the last 60 days

If a creditor tries to use income execution or wage garnishment to recover any of these exempted benefits or income, you can fill out an exemption claim form to stop the garnishment. You can usually find this form at the county clerk’s office from the court that issued the income execution or wage garnishment order. 

You may also be able to get a copy of the exemption claim form from your local bar association. This is the professional organization for attorneys in a geographical area, such as a county, city, or state. If the bar association doesn’t have a copy of the claim form, they can probably find an attorney who can help find it.

Job Loss Due to Wage Garnishment 

Under federal and state law, an employer can’t fire you or refuse to promote you because your wages are being garnished as an employee. But this protection only applies if there’s one wage garnishment. If an employer receives notice that they need to add a second wage garnishment, this protection stops. 

Wage Garnishment and Independent Contractors 

When most people talk about wage garnishment, they’re talking about deducting money out of someone’s regular paycheck. In the majority of situations, this is a person who completes a W-2 tax form. But many people don’t earn a living as a W-2 wage earner. Instead, they work as a freelancer or independent contractor. 

Depending on how they’re paid, an independent contractor or freelancer won’t have earnings that can be garnished by a creditor. But in the rare situation where a creditor can garnish the wages of an independent contractor or freelancer, the wage garnishment limit and exemption protections won’t apply.

So how do judgment creditors recover unpaid debts from freelancers and independent contractors? One option is to use a non-earnings form of garnishment. This allows them to go after the individual’s property that doesn’t include their wages. This could include placing a levy on a bank account or car.

Let’s Summarize…

One way creditors recover debts from consumers is by getting a court order that authorizes the creditor to garnish the consumer’s wages. A wage garnishment is a deduction the employer takes out of the employee’s check before the employee gets paid. The deducted money is then forwarded to the creditor. 

Even though most wage garnishments occur with a court order, some wage garnishments can take place without a court order. There are also limits on how much money can be garnished from each paycheck. Then there are exemptions that make certain types of income off-limits from wage garnishment. 

If you think your wages are about to be garnished or that they’re being garnished improperly, it’s a good idea to consider getting in touch with a consumer debt or bankruptcy attorney.