Stop Creditor Harassment

The moment a bankruptcy petition is filed, federal law stops collection activity in its tracks. The automatic stay under section 362 of the Bankruptcy Code prohibits virtually every form of debt collection — phone calls, letters, lawsuits, judgments, wage garnishments, bank levies, repossessions, foreclosure sales, and utility shutoffs. A creditor who knowingly violates the stay can be sanctioned and held liable for actual damages, punitive damages, and attorney's fees.

What the Automatic Stay Stops

• Collection calls and letters. Every contact attempt by a creditor or its agent must cease.
• Lawsuits. Pending collection lawsuits are stayed. New lawsuits cannot be filed.
• Default judgments. A creditor cannot take a default while the stay is in place.
• Wage garnishments. Garnishment orders stop. Money already garnished but not yet paid over to the creditor must be returned to the debtor.
• Bank levies and account freezes. Marshals cannot levy. Frozen funds must be released.
• Repossessions. Vehicles cannot be repossessed.
• Foreclosure sales. Sales are halted.
• Utility shutoffs. Utilities cannot terminate service for 20 days, then must continue service if the debtor provides adequate assurance of payment.
• Eviction proceedings. Most non-residential evictions and many residential evictions are stayed, with statutory carve-outs.

Wage Garnishment in New York

New York creditors with a judgment can garnish 10% of gross income or 25% of disposable income, whichever is less, with floor protections tied to the minimum wage. For a working-class New Yorker, that translates to several hundred dollars a paycheck, every paycheck, until the judgment is paid in full. We file fast when garnishment is the problem — in many cases we can file the petition and stop the next payroll cycle.

Bank Levies and Account Freezes

Once a creditor obtains a judgment, it can serve a restraining notice and an execution on the debtor's bank, freezing the account and ultimately taking funds. New York's Exempt Income Protection Act provides automatic protection for certain exempt funds (Social Security, public assistance, child support), but most working-age debtors with W-2 wages in the account face a complete freeze. The bankruptcy stay releases the freeze. Funds levied within 90 days of filing may be recoverable as a preference.

Collection Calls and the FDCPA

Apart from bankruptcy, federal and state law impose limits on collection conduct independent of any bankruptcy filing. The Fair Debt Collection Practices Act prohibits:

• Calls before 8:00 AM or after 9:00 PM in the debtor's time zone.
• Calls to the debtor at work after the debtor or employer has told the collector to stop.
• Calls to third parties about the debt, except for limited location-information purposes.
• Threats of arrest, criminal charges, or actions the collector does not actually intend to take.
• Misrepresentation of the amount, character, or legal status of the debt.
• Continued contact after the debtor has sent a written cease-and-desist demand.

Violations of the FDCPA expose the collector to statutory damages of up to $1,000 per consumer, actual damages, and attorney's fees. Some of our clients' best results come from FDCPA claims they did not know they had. We evaluate FDCPA exposure during every consultation.

Stay Violations

Creditors who continue collection activity after notice of a bankruptcy filing violate the automatic stay. Willful violations expose the creditor to actual damages (including emotional distress), attorney's fees, and in egregious cases punitive damages. We pursue stay-violation motions when the conduct warrants it.

When Bankruptcy Is the Right Answer for Harassment

Bankruptcy is the right tool when:

• You have a judgment and a garnishment is taking material money out of your paycheck.
• You have multiple creditors and addressing them one by one is not feasible.
• You have a judgment-proof argument in theory but cannot afford to defend each lawsuit individually.
• You are facing a bank levy on accounts that contain non-exempt funds.

When Non-Bankruptcy Strategies Fit Better

Bankruptcy is not always the answer. We have helped clients:

• Settle a single judgment for a fraction of its face value when bankruptcy was not yet the right fit.
• Vacate default judgments entered without proper service.
• Recover damages under the FDCPA from abusive collectors.
• Run out the statute of limitations on old debts no longer enforceable.

New York's Debt Collection Rules

New York imposes its own layer of debt collection regulation on top of the federal FDCPA. The two most important sources:

• 23 NYCRR Part 1 — the Department of Financial Services debt collection regulations, which impose validation, disclosure, and recordkeeping requirements on third-party collectors operating in New York and on debt buyers.
• NYC Administrative Code Title 20 — New York City requires debt collectors to be licensed by the Department of Consumer and Worker Protection, and imposes additional disclosure and verification obligations. Collection by an unlicensed agency in New York City is itself a violation.
• General Business Law §§ 600-602 — New York's state debt collection statute, with provisions covering frequency of contact, contact at the workplace, and threats of action the collector does not have the authority to take.

Many out-of-state collectors do not comply with the New York-specific rules. Identifying a non-compliant collector early often produces leverage to settle the underlying debt for a fraction of its face value.

Validation Rights

Under FDCPA § 1692g, a consumer who is contacted about a debt is entitled within five days of the initial communication to a written notice identifying the creditor, the amount of the debt, and the consumer's right to dispute it. If the consumer disputes the debt in writing within 30 days, the collector must cease collection until it provides verification — typically a statement from the original creditor and an account-level history of the debt. Many debt buyers cannot produce competent verification because they purchased the debt in bulk without the underlying documentation. A validation demand often ends the collection effort permanently.

Defending Default Judgments

A surprising number of New York consumers learn about the debt only when the bank account is frozen, by which point a default judgment has already been entered against them. The most common defenses:

• Lack of personal jurisdiction. CPLR 308 strictly governs service of process. Service by leaving papers with a doorman without subsequent mailing, "sewer service" (no service at all with a false affidavit of service), and similar failures support a motion to vacate.
• Statute of limitations. The limitations period for most contract claims in New York is six years under CPLR 213(2). For credit card debt sold to debt buyers, the limitations period continues to run after the sale; the buyer cannot reset the clock.
• Lack of standing. A debt buyer must prove the chain of title from the original creditor through each assignment. Gaps in the chain are common and dispositive.
• CPLR 5015 motion to vacate. A motion to vacate a default judgment must demonstrate both a reasonable excuse for the default and a meritorious defense. Defects in service routinely satisfy both prongs.

Restraining Notices and the Exempt Income Protection Act

A creditor with a New York judgment can serve a restraining notice on the debtor's bank under CPLR 5222, freezing twice the amount of the judgment in the account. New York's Exempt Income Protection Act (EIPA), codified at CPLR 5222-a, requires the bank to leave a statutory minimum on deposit and to provide the debtor with exemption-claim forms within two business days of the restraint. Common exempt funds — Social Security, SSI, Veterans Administration benefits, unemployment, workers' compensation, public assistance, child support, and pensions — can be released to the debtor on a properly served claim. Even when EIPA does not cover the full balance, prompt action can often release a meaningful portion within days.

If you are being garnished, levied, or sued, call 212-233-1233 immediately. The sooner we are involved, the more options we have.