Wage garnishment regulations in New York exempt several forms of income from seizure by a private creditor, including most funds from retirement accounts. These regulations do not usually apply to public creditors like tax agencies and child support obligations. A retired debtor in New York must make appropriate arrangements to pay creditors that have the power to take the money away or risk losing a larger portion of income.
Wage Garnishment Process
A private creditor of a debtor in New York must obtain a court judgment to garnish any portion of a debtor's finances. Private debts include credit cards, medical bills, personal bank loans and private student loans. A creditor must sue a debtor in civil court to obtain a judgment and begin garnishing the debtor's wages. According to BCS Alliance, New York law exempts up to 90 percent of disposable income from wage garnishment. A debtor may pursue the lesser of 10 percent or 25 percent of a debtor's disposable income depending on the debtor's income level.
Exempt Garnishment Income
Income obtained through a private or public pension plan is exempt from wage garnishment in New York, according to the Neighborhood Economic Development Advocacy Project. This can effectively make a debtor ineligible to any wage garnishment actions by a private creditor if the only income a debtor has is through his retirement fund. The court will reject a private creditor's garnishment lawsuit as long as the debtor can show his pension plan is the sole source of his income.
Bank Account Seizures
A private creditor may attempt to freeze your bank account and gain access to the funds to secure payment for a debt. A debtor's finances remain exempt even in a bank account as long as the funds come from an exempt source including a public or private pension plan. A debtor may have to appear in court and show the funds available in her account include exempt funds, which makes the account ineligible for garnishment. This is the case even if only a portion of the funds present in the account are from a protected private or public pension.
Taxes and Child Support
A public creditor may pursue a debtor's pension plan and other forms of retirement to pay back taxes, make child support payments and court-mandated spousal support. Some government agencies, including the Internal Revenue Service, do not need a court order to garnish earnings from a retirement account while in pursuit of a debt. These agencies may also seize tax refunds and other forms of public aid including Social Security retirement benefits to pay public forms of debt.
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