Wage Garnishment in New York
What if my income is being garnished due to a New York judgment but I don’t live there? Can I vacate the judgment? Are the debt collectors liable for this?
What happens if you live outside the state of New York and your wages are garnished pursuant to a judgment obtained in New York without notice to you? This could happen if you’ve been sued at an old or incorrect address in New York and suffered a default judgment. Then a New York marshal serves your employer – who has a New York office – with an income execution. Not familiar with jurisdictional law, your employer honors the income execution and your wages are garnished each pay period.
This situation happens all the time. It seems constitutionally unfair because it is. Luckily for you, this lack of “due process" is strong grounds to “vacate" (overturn) the judgment and seek dismissal of the case. Also, the Fair Debt Collection Practices Act appears to provide recourse for you to get damages (attorneys’ fees, costs, distress) all associated with the unfair garnishment.
The FDCPA (15 U.S.C. § 1692i) requires that a debt collector's legal action on a debt against a consumer be brought:
... only in the judicial district or similar legal entity--
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of the action.
At least one case has determined that the garnishment of wages (or income execution) is a “legal action" on a debt. In Fox v. Citicorp Credit Services Inc, 15 F. 3d 1507 (9th Cir. 1994), a debt collector implemented a wage garnishment in a different county than where the consumer lived.
The court was asked to determine whether the garnishment was a “legal action" under the Fair Debt Collection Practices Act and, if so, did the debt collector violate it.
The court inFoxdecided that, “the plain meaning of the term "legal action" encompasses all judicial proceedings, including those in enforcement of a previously-adjudicated right." Because "debt" includes obligations reduced to judgment, any judicial proceeding relating to such a judgment constitutes a "legal action on a debt."
TheFoxcourt ruled that the debt collector violated the FDCPA for garnishing wages in a distant forum. It found that Section 1692i extends to garnishment proceedings. The court could not find any indication that the FDCPA excluded garnishments, or any executions on a judgment, from Section 1692i’s requirements.
The debtor employer’s presence in New York does not change the invalidity of the income execution or, in my opinion, the potential liability of the debt collector who implemented the inconvenient income execution. New York case law holds that service of an income execution upon a New York employer is ineffective because of the failure to first serve the judgment debtor.
If you are suffering a wage garnishment premised on a New York lawsuit in which you were not properly notified, take action now! You need to resolve the judgment first before taking action against the debt collector. And courts limit the length of time you may challenge a default judgment.