Effective January 1, 2009, NY offers much greater protection to consumers when a plaintiff who has already gotten a judgment tries to restrain (or seize) the consumer's accounts.
The big change is that up to a certain amount, we all now have some amount of exempt income, regardless of its source.
The point of all of this is to make sure that where consumers get their accounts restrained, they still have enough left to get through their regular bills (rent, power, etc.). For all NY consumers, if you have $1,716 or less in any account, that account cannot be restrained. Believe it or not, the banks lobbied for this change in the statutes because some abusive law firms were creating a lot of work for the banks by not following the proper procedures (surprise, surprise).
This is codified in several places in NY's CPLR, which is basically our civil procedure rules. Mainly in Article 52, specifically 5222 and 5240.
When a plaintiff executes a judgment, and begins the bank account restraining process, certain amounts are "exempt" from the restraint. Exemptions include things like Social Security income, veterans benefits, unemployment, child support, and in NY, "income earned in the last 60 days (90% of which is exempt)". Now, all consumers are protected up to $1,716, and some up to $2,500.
Under the old system, once an account was restrained, it was up to the defendant/consumer to show that some of the monies were exempt by documentation, etc.
The change in the statute now requires (basically) the bank to make a determination if the accounts in question have "reasonably identifiable exempt funds." They will do that by taking a look at your deposits for the last 45 days.
IF the bank finds that the account DOES NOT contain exempt funds, then the cut off is $1,716. If there is that amount or lower, then the restraint is VOID, and all funds will remain available. If there's a larger amount, then $1,716 remains available, and the rest is restrained.
IF the bank finds that the account DOES contain exempt funds, then the cut off is $2,500. If there is that amount or lower, themn the restriant is VOID, and all funds will remain available. If there's a larger amount, then $2,500 remains available, and teh rest is restrained.
IF there's enough money in an account that some portion of the account has been restrained, whether there are exempt funds or not, then your bank must send forms to you within 2 days.
IF you don't return the forms, the restraint remains in force, and the funds are seized.
IF you return the forms, there are certain things the plaintiff/creditor must do, and deadlines.
After 8 days of no action, the bank will release your account.
They have 8 days to object to the forms, and it goes to court and it gets decided within 21 days.
If you show that all funds are exempt, then they have 7 days to release the account.
There's also a formula they use if the account has exempt and non-exempt funds (co-mingled).
For most of us, we won't know the behind the scene machinations because we don't have enough money in our accounts to get restrained in the first place under this new construct. But where an account does get restrained, we'll see the paperwork pretty quickly, and the great thing is that we will still have access to some of the money in the account.
By the time someone gets a judgment against us, we're pretty well down Denial Road, but keep your eyes open for this paperwork especially if you have some exempt income!!
Message Edited by jesslyn on 06-02-2009 06:21 PM
