Money That Can’t Be Taken to Collect a Debt

Some money can’t be taken by a creditor for the payment of debts.


Income and Benefits That Can’t be Taken to Pay Money Judgments

Under New York State and Federal law, some kinds of income and benefits can’t be taken by a creditor and is protected from debt collection. Here is a list of money that is protected by the law:

  • Supplemental Security Income (SSI)
  • Social Security
  • Public Assistance (welfare)
  • Spousal Support, maintenance (alimony) Ordered by a Court
  • Child Support Ordered by a Court
  • Unemployment Benefits
  • Disability Benefits
  • Workers Compensation Benefits
  • Veterans Benefits (VA)
  • Railroad Retirement Benefits
  • Black Lung Benefits
  • Public and Private Pensions
  • Retirement Savings like a 401(k) and Individual Retirement Accounts (IRA)
  • Private Trust fund principal and 90% of any payments
  • 90% of your salary earned in the last 60 days


Salary That Can’t be Taken To Pay Money Judgments

A creditor may take part of the debtor’s paycheck to collect a judgment. This is called garnishment. But, salary can’t be garnished if after taxes, it is less than 30 times minimum wage. For example, if minimum wage is $13.00 an hour, if the debtor earns $390 per week or less after taxes, all of the money is exempt from garnishment. If the debtor earns more than $390, then 25% of the salary after taxes can be garnished. Only one creditor can garnish a debtor’s salary at a time, no matter how many debts are owed.

The rules are different when child support and spousal maintenance are owed. As much as 60% of the debtor’s salary can be garnished.


What To Do If Exempt Income Is Taken

You must contact the bank and/or your employer if protected money is taken from you. If this fails, then you will have to come to court and ask the court to stop the collection of the protected money by filling out papers called an order to show cause.

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