When a person finds himself in debt in New York state to a creditor, be it a secured or an unsecured creditor, then he runs the risk of being sued for damages in the amount of unpaid portion of the debt. In New York, creditors are allowed to garnish wages under certain circumstances. However, unemployment benefits are protected from garnishment by private creditors -- although not from the government.
Unemployment Benefits
When a person receives unemployment benefits, this means that he is receiving a weekly check from his state government that is intended to help him pay his bills until he can find another job. This money is meant to help the person stay afloat through tough times. If the person has another form of income, then in New York he is likely ineligible to receive benefits as he is making too much money.
Unsecured Creditors
Unsecured creditors are creditors who do not demand that the person to whom they are lending money offer up any form of collateral before receiving the loan. This loan is therefore referred to as an unsecured loan as the loan is not secured by another asset. By contrast, a secured creditor demands that the borrower put up a form of collateral that can be seized in the event of nonpayment.
Garnishment
When an individual is found liable for a debt by a civil court, then he will be instructed to pay the funds by a certain period of time. If he fails to meet the judge's orders, then the judge may place an order of garnishment on one or more of his income streams. However, under federal law, a judge cannot garnish unemployment benefits and turn them over to a private creditor.
Considerations
While private creditors do not have the option of garnishing unemployment benefits, the state and federal government does. If a person owes money to the New York State government -- say for taxes or child support payments -- then the government may be allowed to seize money from the unemployment benefit payments or siphon it out of the debtor's bank account after it has been deposited.
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