The vast majority of our clients are facing income executions (wage garnishments) or frozen bank accounts. The reason is likely because they're easy to carry out and effective, especially in consumer-debt cases where volume is the name of the game.
But a powerful device often overlooked is the installment payment order governed by New York CPLR § 5226. This blog entry is part of our series to summarize for you every section of Article 52, Enforcement of Money Judgments.
I imagine the installment payment order being utilized more frequently in higher-value cases, divorce cases, and commercial cases. It's technically a "supplementary proceeding" and the debtor—not the garnishee—is served with a "motion" by traditional service, registered mail, or certified mail. As with all these blog entries, you are not to rely on this information as legal advice. You must carefully read the law yourselves and retain an attorney to protect your rights.
Below is a list of its pros and cons viewed from the eyes of a creditor:
Pros:
- It can reach multiple sources of income at once, including wages (even above 10%) and maintenance payments. But as referenced above, the debtor must be served with the motion—not the employer or maintenance payor;
- It has teeth in the form of a contempt penalty built into it per CPLR § 5251 (income execution does not);
- It monetizes and compels payment on the value of services performed "without adequate compensation" (usually when debtor seeks to avoid paying creditor using crafty compensation schemes);
- The court considers any source of income, including money given by children;
- Since the motion and eventual order is served on the debtor, it can reach wages from employers who would otherwise be unserviceable for an income execution, including federal employers and employers located outside of New York's jurisdiction;
- As referenced above, a motion brought for this order is an effective means to lift the 90% exemption for wages otherwise enjoyed by an income execution;
- It reaches "contingent" future income, which an income execution apparently does not.
Cons:
- It requires investigation to discover sources—or potential sources—of income or assets;
- It requires a "needs hearing" to ascertain the debtor's reasonable living expenses. The fairly low burden first rests with the creditor but then shifts to the debtor. Existing judgments and executions are considered into the court's analysis;
- The creditor has the initial burden of establishing the value of income and assets possessed by, or owed to, the debtor; and
- The creditor has seemingly less priority than other judgment creditors who've already served income executions (smart to first serve income execution, then file this motion).
If you have questions about installment payment orders relating to a judgment, contact an attorney for advice right away. It is important to understand your rights and obligations under the law before taking any action.