Debt Collection in New York

Considering that judgment collection and enforcement can be every bit as complex and challenging as the proceedings that gave rise to the judgment in the first instance, if not more, it should come as no surprise that effective judgment collection is fairly characterized as an art that necessitates a degree of mastery from practitioners.

When you go through a civil case, a verdict in favor of the plaintiff usually involves the payment of an award by the defendant to the plaintiff. This is true in legal disputes over personal injury, malpractice, and other types of unintentional/intentional torts. If the plaintiff is successful, they will be paid the amount decided by the court. While the court awards the amount, the defendant is to pay the plaintiff for whatever reason the lawsuit was filed.

Unfortunately, some defendants are not exactly willing to pay. If you recently filed a lawsuit that was decided in your favor, you likely did so because of some loss or injury done to you by the defendant. In that case, the award for being paid to you is not simply a benefit but a necessity for you to overcome whatever difficulty you have endured. In other words, you need that money to maintain financial security. Therefore, when a defendant delays or is unwilling to pay the judgment amount, it can make matters even more difficult for you even though you won the case.

Taking Legal Action Against a Judgment Debtor

After a judge or jury issues a judgment in a case, an official Notice of Judgment will be given to both the defending and complaining parties. This notice includes the amount to be paid to the plaintiff and information about collecting the award. Unfortunately, the court systems in the United States have no means of enforcing judgments or compelling defendants to pay themselves. Therefore, it is primarily up to the plaintiff to contact the defendant and collect the award. However, not every defendant will pay voluntarily, complicating matters for the plaintiff. Fortunately, legal actions must be taken to compel an unwilling defendant, also known as the judgment debtor, to pay what they owe. Under Article 52 of New York State’s Civil Practice Law and Rules (CPLR) to help you collect allowed to you. One such tool is the Restraining Notice.

What is a Restraining Notice?

Unique to New York, a Restraining Notice helps enforce money judgments by freezing the judgment debtor’s assets. It is served to judgment debtors and banks or other third parties in the custody of money or property in the judgment debtor’s name or in possession of funds or property in which the judgment debtor has an interest. While the Restraining Notice can be issued either by a Court Clerk or by a Social Services collection unit, New York attorneys (as officers of the court) can also sign a Restraining Notice that has the same force and effect as a court-issued injunction. Violating a Restraining Notice is punishable as contempt of court.

What is the Effect of a Restraining Notice?

A restraining notice prevents the sale, assignment, interference, or transfers with any of the Judgment Debtor’s property or property in which the Judgment Debtor has interest unless when directed by the sheriff or according to a court order. The restraining notice also applies to any third parties in the custody of property belonging to the judgment debtor or to people who owe the judgment debtor. Once served on the judgment debtor, the Restraining Notice will remain in effect until the amount owed is recovered. For third parties, the restraining notice will remain in effect for one year after the notice is served or until the judgment is satisfied – whichever comes first.

What is Exempted from a Restraining Notice?

Some state and federal laws prevent specific property or money from seizing to satisfy judgments or orders. Below are some (not all) of these statutory exemptions that are not affected by restraining notices:

  • Supplemental security income (SSI)
  • Social security
  • Public assistance (welfare)
  • Spousal support, maintenance (alimony) or child support
  • Unemployment benefits
  • Disability benefits
  • Workers’ compensation benefits
  • Public or private pensions
  • Veteran’s benefits
  • Ninety percent of your wages or salary earned in the last sixty days

Obtaining monetary compensation from judgment debtors is no easy task, as most people will instinctively do everything to protect their wealth. And before availing yourself of the Restraining Notice, it is advisable to know where the debtor’s assets are like only two Restraining Notices per year may be served on a financial institution without seeking Court approval. By seeking the help of professionals like us, you will avoid some of the common pitfalls, streamline the enforcement process and recover what is owed to you–at no cost to you