New York Debt Relief: Three Years, Ten Percent, and a Protected Bank Account
New York quietly became one of the hardest states to collect old consumer debt in: a 3 year limit that no payment can revive, a garnishment cap of 10 percent of gross pay, and bank protections that work without you filing anything.
This page is for informational purposes only and does not constitute legal or financial advice. State laws change frequently. Consult a qualified attorney or financial professional for advice specific to your situation.
In 2022 New York cut the statute of limitations on consumer credit debt in half, to 3 years, and added a sentence collectors hate: once the period expires, no payment, affirmation, or activity on the debt revives it. The clock here only runs one way.
to sue on consumer credit debt in New York
CPLR 214-i, added by the Consumer Credit Fairness Act. Most other contract claims still carry 6 years, and expired consumer debt cannot be revived by a partial payment.
What the Consumer Credit Fairness Act changed
- The limit
Consumer credit lawsuits must be filed within 3 years, down from 6. The borrowing statute can shorten it further when the claim accrued out of state.
- No revival
Once expired, the period cannot be restarted by a payment, a written or oral affirmation, or any other activity on the debt. The trick of soliciting a small good faith payment does not work here.
- Real notice
In consumer credit suits, the court clerk mails the defendant an additional notice in English and Spanish, and no default judgment can be entered until 20 days after that mailing, or at all if it comes back undeliverable. Sewer service stopped being profitable.
- Proof up front
Creditors must attach the underlying contract and itemized account details to the complaint, which debt buyers with thin files often cannot do.
Garnishment: the 10 percent rule
New York collects judgments from wages through an income execution under CPLR 5231, and it is stricter than the federal formula: the cap is 10 percent of gross income, and the withholding also cannot exceed 25 percent of disposable earnings or touch pay until weekly disposable earnings clear 30 times the greater of the federal or state minimum wage.
At the 2026 minimum wages that floor computes to $510 a week in New York City, Long Island, and Westchester, and $480 in the rest of the state. Where a support order is already deducting, the ordinary creditor's share shrinks further.
The bank account protections work by themselves
Under the Exempt Income Protection Act, a restraining notice simply does not apply to a baseline amount in your account, computed as 240 times the greater of the federal or state minimum hourly wage, which works out to $4,080 in the downstate wage region and $3,840 elsewhere at 2026 rates. Banks must leave that money usable, no exemption claim required.
Accounts that received direct deposited Social Security, SSI, veterans benefits, pensions, or public assistance in the prior 45 days carry a separate protected tier, $3,425 as of April 2024, adjusted every three years. Exempt benefits above the automatic numbers stay exempt but may take a claim to free.
Who can even do this work here
New York effectively bans for profit debt settlement: budget planning may only be performed by not for profit corporations licensed under Banking Law article 12-C. New York City separately requires debt collection agencies to hold a city license, and state financial regulators impose disclosure and substantiation duties on collectors and debt buyers statewide.
For a New Yorker weighing options, that narrows the field: nonprofit credit counseling and debt management operate normally here, while out of state settlement pitches deserve extra scrutiny.
New York debt questions
What is the statute of limitations on credit card debt in New York?
3 years under CPLR 214-i, added by the Consumer Credit Fairness Act effective April 2022. Once it expires, the law states that no payment, affirmation, or other activity on the debt revives or extends the period.
How much can be garnished from wages in New York?
An income execution is capped at 10 percent of gross income, and cannot exceed 25 percent of disposable earnings or reach pay below 30 times the greater of the federal or state minimum wage, about $510 per week downstate and $480 upstate at 2026 rates.
Can a debt collector freeze my whole bank account in New York?
No. A restraining notice does not apply to a baseline amount, 240 times the minimum wage, roughly $4,080 downstate and $3,840 upstate at 2026 rates, and accounts with recently direct deposited government benefits carry a separately protected $3,425. These protections are automatic.
Does making a payment restart the clock on old debt in New York?
Not for consumer credit debt. The Consumer Credit Fairness Act expressly provides that once the 3 year period expires, payment or affirmation does not revive it. For older non consumer credit debts, disclosure rules require collectors to warn you before accepting payment.
Are debt settlement companies legal in New York?
For profit debt settlement is effectively unavailable: budget planning services may only be provided by not for profit corporations licensed under Banking Law article 12-C. Nonprofit credit counseling and debt management plans operate normally.
Sources and further reading: CPLR 214-i (3 year consumer credit limit), CPLR 5231 (income executions), CPLR 5222 (bank restraints and exemptions), DFS: exemption amounts and debt collection guidance, CPLR 306-d (clerk's additional notice). Rates and rules change; confirm current figures with the official sources above before you rely on them.
Debt Relief in Other States
More states coming soon.