Like all states, New York places limits on what creditors can do to try to collect money from you and how long they're able to do it. They can't take any action against you, such as garnishment or property liens, without successfully suing you in court first and getting a judgment against you. After a creditor has a judgment, the law dictates how it can use it.
The State of New York provides limits on how much interest can be charged after a creditor receives a judgment. The legal limit for interest on debt in the state is generally 16 percent, but after a judgment, this drops to 9 percent. Interest rates begin accruing as of the date of the judgment.
Statutes of Limitation
Judgments in New York state are not open-ended. Creditors have a limited amount of time to use them to collect from debtors. The deadline is six years for contracts and open accounts. After a judgment has been levied, the creditor has 20 years to collect. This applies to both domestic and foreign judgments. State law also allows creditors to renew liens on property for 10 years at the end of the 20-year period.
The state of New York allows creditors to garnish the wages of debtors who have had a judgment levied against them, but there are limits on the amount that a creditor can take. State law caps the garnishment amounts at 10 percent of a debtor's wages. The first $127.50 earned in a week is exempt from garnishment. To begin a garnishment, the creditor must first deliver a subpoena to the debtor. The subpoena requests all relevant financial information. The subpoena must be accompanied with the questions the creditor wants answered, along with a pre-stamped and addressed return envelope. Answers made by the debtor must be done under oath. The debtor must answer the subpoena within seven days, or he'll be held in contempt of court.
Liens and Seizure
New York law only allows liens to be made against the personal property of the debtor. Creditors may not personally seize the assets of a debtor. They must go through court channels. The actual seizure of property must be handled by a county sheriff or other appointed officer of the court.
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