New York State Banking Laws Regarding Credit Card Judgments
- Often creditors will initiate legal action against a debtor because they are nearing the statute of limitations beyond which they cannot legally enforce the debt. However, if the statute of limitations has expired and a debtor acknowledges the debt the statute of limitations is reset in New York. In New York there is a six-year statute of limitations for collection of credit card debt. After that time the statute of limitation is a defense for debtors.
- A default judgment occurs when one party to a civil suit fails to appear in court. Parties are notified that they are a party to a lawsuit through a procedure known as service of process. The intent behind rules of service of process is to ensure that parties are given fair warning that they are a party to a law suit. In most cases service of process is done by personal delivery, delivery to a person of suitable age and discretion, or delivery to an agent. If those means do not succeed a copy of the summons and complaint may be fixed to the door as well as sent by first class mail. In addition, other methods approved by the court are possible methods of service process.
- When a creditor obtains a judgment, it becomes a secured creditor. Two ways creditors can enforce their judgment are through liens and wage garnishment. In New York up to 10 percent of wage income can be garnished to satisfy a judgment. Liens are created differently depending on whether they deal with real property or personal property.
- Another way judgment holders can seek to enforce their judgment is by freezing bank accounts. When a bank account is frozen the account holder cannot access his funds.
- The New York Legislature has passed a new banking law regarding judgments, which took affect in January 2009. The regulation deals with the freezing of bank accounts. Bank accounts that contain less than $2,500 and that receive direct deposits of subsistence funds cannot be frozen. Veteran's benefits, Social Security, public assistance, workers compensation and unemployment insurance among other types of deposits are considered subsistence income. Bank accounts, which do not receive direct deposits of subsistence income and contain less than $1,740, cannot be frozen.
