What is a Levy?
The verb "to levy" means "to take or seize property in execution of a judgment." Used in a sentence: "The judgment creditor may levy on the debtor's assets."
A levy is the final stage of a collection proceeding where a sheriff, marshal, or "Support Collection Unit" (in family or matrimonial matters) seizes your property to collect on a judgment obtained by your creditor.
Collection law relating to the enforcement of money judgments employs plenty of legalese. This post summarizes New York statutory law (CPLR § 5232) as it relates to personal property only.
New York specifies two methods to levy on personal property: 1) levy by service of execution and 2) levy by seizure.
1. Levy By Service of Execution (for property that isn't "capable of delivery" like your future wages or bank funds)
A designated sheriff, marshal or support collection unit will serve a copy of the execution in the same manner as a summons. Service must be made to the debtor or person who has custody of the property ("garnishee"). The levy will only be effective if the debtor or obligor (someone who has custody of the item), at the time of service:
- owes the debt,
- is in possession or custody of the item part of the debt, and
- knows it is part of the debt.
An example would be an automobile in the custody of a debtor personally or someone using the automobile.
Properties not capable of delivery (such as a house or piece of land) are also subject to levy. The person served with the execution must transfer the property, pay the sheriff or support the collection agency regarding all debts upon maturity and execute any document necessary to effect the transfer or payment. The levy only applies to the specified property.
Here is a summary of the common "Income Execution" that acts to levy against your wages. You may have received a Notice of Garnishment from a Marshal (i.e., Marshal Bienstock, Daly, Moses, or Biegel) or Sheriff threatening a wage garnishment.
Waiting period. Until the transfer or payment is made, or 90 days has expired, whichever comes first, the debtor or garnishee (person holding the property) cannot sell, assign, transfer or dispose of the asset to anyone other than the sheriff or support collection unit without a court order. If, after 90 days, the debtor or garnishee has not turned over the targeted property, the levy generally becomes void unless the creditor starts one of the following proceedings: 1) a proceeding under section 5225 (Payment or delivery of property of judgment debtor) and/or 2) 5227 (Payment of debts owed to judgment debtor). These proceedings are known as "perfecting the levy."
Note that judgment creditors and support collection units can be held liable for any damages sustained to the property pursuant to a wrongful levy.
2. Levy By Seizure
For personal property capable of delivery, a sheriff, marshal, or support collection unit can take the property into custody without interfering with the lawful possession of pledgees and lessees. The property owner or person in custody of the property must be served the execution in the same manner described above. The law enforcement officer then has 60 days to sell the property.
Notice to judgment debtor or obligor. For both, If a notice has not been served on the judgment debtor or obligor* with a year, then the sheriff or support collection unit must send a copy of the notice to the debtor within four (4) days – either by personal delivery or first class mail. The notice must contain the name and address of the judgment creditor or the judgment creditor's attorney or the support collection unit.
*An obligor is an individual (other than a judgment debtor) who is generally obligated to make a payment pursuant to a court order of competent jurisdiction that is in "default" of that order.
3. Required Notices
A notice sent by mail must be sent to the debtor's residence. However, if returned as undeliverable or that address is unknown, then the notice should be sent to the debtor's place of employment, marked "personal and confidential," and not reveal from whom the notice was sent.
4. Payments
If direct deposit or electronic payments were made to the judgment debtor's account during the forty-five (45) day period preceding the date the execution notice was served on the garnishee banking institution, then it will not execute, levy, attach, garnish or otherwise restrain or encumber two thousand five hundred dollars ($2,500) in the judgment debtor's account.
An execution will generally not apply to an amount equal to or less than the greater of
- two hundred forty (240) times the federal minimum hourly wage prescribed in the Fair Labor Standards Act of 1938 or
- two hundred forty (250) times the state minimum hourly wage.
This amount must be equal to seventeen hundred forty dollars ($1,740) and rises in tandem with the minimum wage.
Nothing in this subsection must be construed to:
- limit a banking institution's right or obligation to restrain, remove or execute upon such funds from the judgment debtor's account if required
- enforce a child support, spousal support, alimony or maintenance obligation or by a court order
- alter the exempt status of funds that are protected from execution, levy, attachment, garnishment, or other legal process
- affect the right of a judgment debtor to claim such exemption
5. Fees
Banks who cannot lawfully garnish or execute a judgment debtor's account cannot charge a fee – regardless of any terms of agreement, or schedule of fees, or other contract between the judgment debtor and the banking institution.
Sheriffs or support collection units making levies against a debtor's account must serve the banking institution with the exemption notice and two exemption claim forms.
The notice and forms must be served simultaneously with the execution, and all procedures stated must be followed. The banking institution must not transfer the funds in the account to the sheriff or support collection unit for at least twenty-seven (27) days. If, after thirty (30) days, the banking institution has not received an exemption claim form from the judgment debtor or a court order directing otherwise, it may thereafter transfer the funds to the sheriff or support collection unit.
Note: Fee provisions do not apply when the state of New York, or any of its agencies or municipal corporations, is the judgment creditor or if the debt enforcement is for:
- child support
- spousal support
- maintenance
- alimony
This is true if in those instances the execution contains a legend above the caption which, in sixteen (16) bold type states:
The judgment creditor is the state of New York, or any of its agencies or municipal corporations, AND/OR the debt enforced is for child support, spousal support, maintenance or alimony.
Levies on personal property must be very specific and are generally narrowly construed by courts. If you find yourself in a situation regarding a levy, contact an experienced attorney to make certain that you don't give up more than is required.
Conclusion: Empowering Yourself in the Face of Levies
Understanding levies and the intricacies of New York's collection law is the first step in safeguarding your assets and rights. But knowledge alone isn't enough. Here are some actionable tips to empower you further:
Stay Informed: Always read any legal documents or notices you receive thoroughly. If there's something you don't understand, seek clarification immediately.
Act Promptly: If you receive a notice about a potential levy, don't delay. The sooner you address the issue, the more options you'll likely have available to you.
Document Everything: Keep a record of all correspondence, payments, and any other interactions related to the debt. This can be crucial if there's a dispute later on.
Know Your Exemptions: New York law provides certain exemptions that can protect your assets from levies. Familiarize yourself with these or consult with an attorney to understand what might apply to your situation.
Seek Legal Counsel: If you're facing a levy, it's wise to consult with an attorney who specializes in consumer law or debt collection. They can provide guidance tailored to your specific situation, ensuring that your rights are upheld.
Negotiate When Possible: Before things escalate to a levy, consider reaching out to the creditor to negotiate a payment plan or settlement. They might be willing to work with you, especially if they believe the alternative is getting nothing.
Stay Calm and Composed: Facing a levy can be stressful, but panicking won't help. Approach the situation methodically, armed with knowledge and the right support.
