In New York, the law that governs property exempt from the satisfaction of money judgments is CPLR § 5205.
Below is a general list of what personal property is exempt from the reach of your creditors. These exemptions reflect public policy to provide for your reasonable living requirements regardless of the size or number of money judgment(s) entered against you. The law balances the interests of creditors seeking to collect on debts and the need to protect the basic needs and rights of judgment debtors.
This post is more concerned with exemptions outside of a bankruptcy context. While The Langel Firm tries to keep you out of bankruptcy, sometimes your debt is so crushing that you'll need a fresh start that bankruptcy could provide. The below is not entirely exhaustive; other statutes may provide additional exemptions. You should consult an attorney if you have a question about exempt property.
Knowledge of these exemptions is immediately useable in the context of bank restraints.
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Recent Improvements to New York Exemption Laws
- 90% of your income for personal services within the last 60 days is exempt;
- $3,000.00 protected if any direct deposits from identifiable exempt sources (i.e., social security, unemployment, pension; see below) were made within the last 45 days;
- Increased protections to child support, spousal support, alimony, or maintenance; and
- Increases in exemption amounts every three years to account for inflation and
- An increasing portion of the equity in your home is exempt.
See the below chart: Source: Current Dollar Amount of Payments Statutorily Exempt from Enforcement of Judgments
Source: Current Dollar Amount of Payments Statutorily Exempt from Enforcement of Judgments
Compared to other states' exemption laws, New York is pretty generous in protecting judgment debtor's assets. See our prior blog (New York Gets a "B" Grade from NCLC in its New Report on State Exemption Laws).
A general list of exemptions:
- Income (unless the court deems it unnecessary for reasonable living requirements);
- 90% of wages within the last 60 days;
- 90% of trust income, including annuities, custodial accounts, IRAs, and insurance contracts;
- 100% of Maintenance and child support payments awarded by the court;
- Pay and bounty for members of armed forces; and
- Security deposits for rent and utilities.
Statutory list of exemptions:
- social security, including retirement, survivors' and disability benefits;
- supplemental security income or child support payments;
- veterans administration benefits;
- public assistance;
- workers' compensation;
- unemployment insurance;
- public or private pensions;
- Covid-19 Stimulus Relief;
- railroad retirement, and
- black lung benefits.
Personal property exemptions:
- Stoves;
- religious texts;
- family books;
- domestic animals;
- most household goods;
- jewelry (up to $1,000);
- tools (up to $3,000);
- one vehicle (up to $4,000 in value; if disabled, up to $10,000) unless the debt is for a family obligation
- $1,000 cash if no homestead exemption claimed; trust property of which you are beneficiary (if created by someone else);
- Medical and dental accessions;
- Animals that assist with personal disability;
- Right to accelerate life insurance policy; and
- Certain college tuition savings trust fund monies.
If you're suffering a bank restraint, call us to ascertain your rights. Here's some information about how to combat it.
Case 1: Additional Deposits to Retirement Accounts Within 90 Days of Legal Claim Not Protected from Judgment Creditors
A judgment creditor sought turnover of funds in two retirement accounts (a Traditional IRA and 401(k)) to satisfy a $1.5 million judgment. The court held that deposits made after 90 days before the commencement of the underlying action were not exempt from creditors, regardless of the source of the deposits, unless they were rollovers from other protected accounts.
Key Legal Principles:
- Additional deposits to retirement accounts made after 90 days before the interposition of a claim are not exempt from judgment creditors under CPLR § 5205(c)(5)(i)
- The source of additional deposits is irrelevant for exemption purposes unless they are rollovers from other protected accounts
- Increases in account value, including interest and dividends, retain the same exempt or non-exempt status as their source deposits
Conclusion: When enforcing judgments against retirement accounts in New York, the critical date for determining whether deposits are protected is 90 days before the claim was filed. Deposits after this date are available to creditors, while earlier deposits remain protected.
Citation: Matter of Breslin Realty Dev. Corp. v Morgan Stanley, 48 Misc 3d 424 (Sup Ct, Nassau County 2015).
Understanding NY's 90-Day Retirement Account Protection Rule: Balancing Creditor Rights and Retirement Security
The Critical 90-Day Rule Under CPLR 5205(c)(5)
New York law provides robust protection for retirement accounts - but with a crucial limitation. Under CPLR 5205(c)(5), deposits made within 90 days before a legal claim are fair game for creditors. Here's why this matters and how it works.
The Statutory Framework
CPLR 5205(c) creates a comprehensive shield for retirement accounts:
- Protects IRAs, 401(k)s, and other qualified retirement plans
- Creates a "spendthrift trust" presumption
- Exempts funds from most creditor claims
But paragraph (5) introduces two vital exceptions:
- The 90-day lookback rule
- Voidable transactions under debtor-creditor law
Why the 90-Day Rule Exists: Three Key Purposes
1. Preventing Last-Minute Asset Shielding
- Stops debtors from dumping assets into protected accounts when litigation looms
- Creates a clear temporal boundary for courts to examine
- Mirrors bankruptcy law's preference period concept
2. Balancing Competing Interests
- Protects legitimate retirement savings
- Preserves creditor rights against tactical transfers
- Creates predictable rules for both sides
3. Promoting Transparency
- Encourages regular retirement contributions
- Discourages manipulation of exempt status
- Provides clear guidance for financial planning
Practical Impact for Debtors and Creditors
For Debtors:
- Regular retirement contributions remain protected
- Must plan contributions well before legal issues arise
- Cannot use retirement accounts for last-minute asset protection
For Creditors:
- Clear timeframe for examining transfers
- Automatic non-exempt status for recent deposits
- No need to prove fraudulent intent within 90-day window
The Broader Policy Picture
This rule reflects New York's attempt to balance two crucial policies:
- Protecting retirement security
- Preventing abuse of retirement account protections
Strategic Considerations
- Document timing of retirement contributions
- Maintain regular contribution patterns
- Consider implications for both bankruptcy and non-bankruptcy collection
Conclusion
The 90-day rule serves as a critical checkpoint in New York's retirement account protection scheme. It provides certainty while preventing abuse, creating a workable framework for both debtors and creditors.
Case 2: All IRAs Exempt from Money Judgments Under CPLR 5205(c) Regardless of Funding Source
The court addressed whether an ex-wife could execute a judgment for attorney's fees against her former husband's IRA. After the 1994 amendment to CPLR 5205(c)(2), the court held that all IRAs are exempt from money judgments, regardless of whether they were funded through rollovers from pension plans or established directly by the judgment debtor.
Key Legal Principles:
- CPLR 5205(c)(2)'s 1994 amendment created a blanket exemption for all IRAs from money judgments
- The exemption applies regardless of whether the IRA was created through rollovers or direct contributions
- The relevant date for applying the exemption is when execution is attempted, not when the IRA was created
Conclusion: The 1994 amendment to CPLR 5205(c) established comprehensive protection for all IRAs as retirement savings vehicles, marking a significant change from prior law that only protected rollover IRAs.
Citation: Pauk v Pauk, 232 AD2d 392 (2d Dept 1996).
