New York City Debt Collection Defense Attorney

New York Supreme Court Rules HRA Welfare Payments Not Garnishable: Creditor Must Wait until Judgment Debtor Endorses Welfare Payments to Pursue Enforcement Remedies

In a case decided in early February by the New York State Supreme Court in Queens County, the court held that a judgment creditor could not garnish HRA benefit checks that are ultimately received by the judgment debtor. In this case, Legal Servicing, LLC v. Mostafa, the New York City Human Resources Administration ("HRA") received an Execution with Notice to Garnishee that declared the HRA was indebted to the judgment debtor, Mostafa. The HRA determined that the purported funds to which the plaintiff referred were rent subsidy checks, which are issued on behalf of Public Assistance recipients. Here, defendant Mostafa owned real property and one of his tenants was a recipient of HRA public assistance welfare payments meant to subsidize housing costs. The HRA payments were disbursed directly to the defendant Mostafa on behalf of his tenant receiving HRA housing subsidy payments.

The HRA sought vacatur of the Restraining Notice on the ground that the judgment creditor is statutorily prohibited from attaching the shelter subsidy benefits to satisfy its judgment, pursuant to New York Social Services Law §137, which states:

"All moneys or orders granted to persons as public assistance or care pursuant to this chapter shall be inalienable by any assignment or transfer and shall be exempt from levy and execution under the laws of this state."

Furthermore, the section of the CPLR that governs restraining notices specifically states that state and federal law prevents "certain money or property from being taken to satisfy judgments," and that includes "public assistance (welfare)." According to the court, this exemption applies to the money itself that is granted to persons receiving public assistance.

Ultimately, the court found that in a case such as this, the rent subsidy is the property of the welfare recipient, even if the money is to be used as payment for rent to a landlord that is a judgment debtor. The court held that the money is issued for the benefit of the welfare recipient, and thus, belongs to him. Once the welfare check is issued and after the landlord receives and endorses the check, the HRA money then becomes the personal property of the landlord. At that time, the court stated that the judgment creditor may utilize any statutorily available enforcement remedy to collect on the judgment against the debtor.