8 Points a Creditor Can Seize and 4 They Cannot
New York Ruling

A judgment converts a funder from a creditor with arguments into a creditor with tools. The tools reach far, and they stop at lines the statutes drew long before any MCA existed.

What follows maps eight points of reach and four limits under New York law, with the federal lines that cut across them. The reach described here is post judgment machinery throughout, which is itself the first limit worth understanding.

Collateral Named in the Security Agreement

After default the secured party may take possession of the collateral its agreement describes, through a court or without one where no breach of the peace occurs, and may require the debtor to assemble the goods at a convenient place. These powers come from the secured party repossession statute, and they extend to described collateral and no further.

A financing statement alone proves neither the debt amount nor its enforceability. Counsel reviews and assesses every description before conceding any machine on the floor answers to it.

Proceeds of That Collateral

Sell the collateral and the lien follows the money. A security interest continues after disposition unless the secured party authorized the sale free and clear, and it attaches to identifiable proceeds under the proceeds rule. Buyers protect themselves with written authorization obtained before payment.

Bank Balances After Judgment

The operating account stands first in line and under the most procedure. A restraining notice served on the bank freezes balances to the judgment amount, forbidding transfer except on direction of the sheriff or order of the court. The freeze is procedure. It collects nothing by itself.

Banks process these packets through departments closed to the merchant. Where the creditor skips the exemption paper, the restraint is void.

Later Arriving Debts and Property

The restraint looks forward as well as backward. Property and debts coming into the garnishee hands after service fall under the notice for one year, with future deposits warned in the same notice. A levy by execution runs ninety days, except for what reached the sheriff or entered a turnover proceeding. Counsel calendars both expirations, because some creditors collect past them against debtors who ignore the calendar, a frequency no public record measures.

Earnings Through Income Execution

An income execution served through the sheriff takes installments of not more than ten percent, within a weekly floor of thirty times the applicable minimum wage and a ceiling of twenty five percent of disposable earnings or the excess above that floor, whichever is less. Support deductions under other orders shrink the slice further. The formula is extremely mechanical, which helps debtors who do the math.

The sheriff serves the debtor first, giving twenty days to pay before levying the payor, and either side may move at any time to modify the execution. Few debtors know the second half of that sentence. The statute states both the arithmetic and the exits, which differ across tools in ways collectors blur, and counsel ensures the papers assert the exemptions first.

Debts Owed to the Debtor by Third Parties

Money others owe the merchant can be redirected at the source. The sheriff levies on debts owed to the debtor by serving execution on the garnishee, and the garnishee pays the sheriff on maturity. The levy is not collection. It is redirection.

The levy answers to debts owed at the time of service, whatever the collection bar suggests about filings. A creditor that names the wrong property answers in damages to the true owner, an extremely expensive clerical error.

Property in Third Hands by Court Order

Property the debtor holds is reached by motion with notice. Where a third party holds it, or received it as transferee, the creditor brings a special proceeding under the turnover order procedure and shows superior rights. The debtor and adverse claimants may intervene. Nothing here is automatic.

Real Property by Docketed Lien

Land sits still, which makes it patient collateral. A docketed money judgment liens the debtor real property in the county for ten years after filing of the judgment roll. The lien attaches without seizure or sale. Counsel searches and reviews the county docket before advising that a parcel is clear.

Pension Benefits at the Plan

Retirement money enjoys the strongest wall here. Federal law bars assignment or alienation of pension benefits under plan terms, outside narrow exceptions such as qualifying domestic orders. Once benefits are paid out and commingled, tracing rules decide what survives, and those rules present state specific questions for counsel.

Federal Refunds Through Offset

A private funder cannot intercept a federal tax refund through the offset channel, because that channel collects agency debt only. Refunds deposited to a restrained account present a separate question, answered by exemption and tracing rules rather than by the offset statute.

Amounts Beneath the Statutory Floors

Two thousand five hundred dollars of exempt payments by direct deposit from the last forty five days stays out of reach, as does the wage linked floor at two hundred forty times the minimum. Ninety percent of earnings from the last sixty days stands exempt. These shields protect natural persons; business accounts hold thinner shelter.

Often we see the claim forms filed on the last day, which the statute permits but counsel discourages. Every shield above activates through paper filed on time, and early filing ensures the postmark tells the story.

Everything Else Without a Judgment

Months after funding, the question is what the statutes permit, not what the contract promised. The deepest limit is the simplest one, though creditors drafting demand letters prefer it forgotten, in order to keep negotiation one sided. Without a judgment or a perfected interest in specific collateral, the funder holds arguments rather than remedies.

Resist the urge to answer a restraint with panic or with silence, since any explanation to the bank, even casually, creates a record. The moves a merchant makes, or does not make, decide how much of this map counsel can use. Delancey Street, a settlement company and not a law firm, opens negotiation through a confidential settlement review at no charge, while independent counsel guards and defends the exemptions. Simply gather the agreement, the notices, and recent statements before the first call.

Judgments look permanent on entry. The statutes treat them as a second proceeding, bounded at every step, and every boundary is a place where counsel can stand.