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Bank Account Restraint Minimum Balance Is Increasing in New York - But By How Much?

It's tax refund season: Over the next two months countless New Yorkers will be filing tax returns and claiming tax refunds.

It's also bank account restraint reason: A judgment creditor cannot serve more than two bank account restraints per year (NY CPLR 5222(c).

So judgment debtors in New York are most likely to receive a restraining notice served on their bank in February or early March by judgment creditors hoping to snag a big tax refund deposit. But New York law protects a minimum balance in a bank account from restraint, and that minimum amount just went up, effective December 31, 2016.

Background: When people say their bank account has been "frozen" by a creditor, what they mean is that a judgment creditor (a creditor who has a court order or "judgment" that a defendant owes them money) has served a "restraining notice" on the defendant's bank. A Restraining notice restrains (freezes) the account.

If an account is restrained, the money remains in the bank account, but the debtor cannot withdraw it. The judgment creditor needs to take a separate step to actually seize, or "execute", the restrained money in the account.

2009 Revision: The New York law on bank account restraints and executions was substantially revised in 2009, as I previously blogged. I recommend reviewing that blog if you are subject to a bank account restraint.

The original 2009 statute stated that the account had to have a minimum amount in it before it could be restrained. If the account balance is below this minimum, the restraint is void (that's the word used in the statute: "void"). If the balance is above the minimum, the restraint applies only to funds beyond the minimum.

The idea was that the judgment debtor should retain funds needed for basic expenses, like rent and food. This minimum is described in New York's Civil Procedure Law and Rules (CPLR) section 5222(i). That subsection says:

"A restraining notice issued pursuant to this section shall not apply to an amount equal to or less than the greater of 240 times the federal minimum hourly wage prescribed in the Fair Labor Standards Act of 1938 or 240 times the state minimum hourly wage prescribed in section 652 of the labor law as in effect at the time the earnings are payable (as published on the websites of the United States department of labor and the state department of labor)"

So the minimum amount in your account which is not subject to restraint is 240 times the federal or state minimum wage, whichever is higher. When this provision went into effect January 1, 2009, the NYS minimum wage was $7.15 p/h. The United States minimum wage last increased to $7.25 June 24, 2009.

Minimum Amount Rises with the Minimum Wage: CPLR 5222(i), effective January 1, 2009, stated that the mimimum amount "shall be equal to $1,716 [240 times $7.15] on the effective date of this subdivision, and shall rise to $1,740 [240 times $7.25] on July 24, 2009, and shall rise thereafter in tandem with the minimum wage."

Therefore, as the minimum wage rises, the minimum amount in a bank account, below which funds cannot be restrained or executed upon, also rises.

Minimum Amount Raised 2013-2015: The New York State minimum wage was raised three times between 2013 and 2015, up to $9.00 p/h. The CPLR5222(i) minimum balance rose to $2,160 (240 times $9.00) December 31, 2015.

2016 Minimum Wage Increase: New York has risen the minimum wage again, effective December 31, 2016, but for the first time the minimum wage is not uniform throughout New York State . It varies depending on where the employee works and the size of the workplace, according the the Department of Labor website.

So the current 2016 minimum wage varies from $11.00 p/h for a New York City employee working for an employer with more than ten employees to $9.70 for employees working outside of New York City, Long Island or Westchester County.

How does this splintered minimum wage increase effect the bank account restraint minimum balance? CPLR(i) simply states that the minimum is "240 times the state minimum hourly wage prescribed in section 652 of the labor law" Nothing in the 2016 statute increasing the minimum wage referenced its impact on bank accout restraints or executions (if you want to read it, the actual text of the statute increasing the New York State minimum wage is contained in Part K of the very long 2016 budget bill, S. 6406C.)

State-wide  Minimum Balance: Without question the minimum balance that must be in a bank account before any funds are restrained is $2,328, no matter where the judgment debtor lives or how many employees the debtor's employer has. That figure is 240 times $9.70, the lowest minimum wage listed in Labor Law Section 652 for 2016.

For judgment debtors living in my area -- Western New York -- it is very unlikely that they would be employed in Metro New York, so $2,328 is almost certainly the appropriate minimum balance amount.

Higher in Metro NY? I think an argument could be made that for a judgment debtor working in New York City for an employer with more than 10 employees, the CPLR 5222(i) minimum in 2016 would be $2,640 (240 times $11.00). But how would a bank in the Metro New York area that receives a restraining notice know which of four different minimum wage amounts applies to its customer? If the balance in the customer's account is under $2,328 it doesn't matter. But if the balance is higher than that, it will make a very big difference.

Future increases: The minimum amount that is exempt from restraint or execution will continue to rise every year for the next four years. Effective December 31 each year, that minimum everywhere in New York will be:

12/31/2017: $2,496 (240 x $10.40)
12/31/2018: $2,664 (240 x $11.10)
12/31/2019: $2,832 (240 x $11.80)
12/31/2020: $3,000 (240 x $12.50)

Alternative minimum for automatic deposit of exempt funds: As an interesting aside, there is a separate minimum amount if a bank account has exempt funds automatically deposited (for example, social security). In that case, the first $2,750 in that account cannot be restrained or executed on. This is the provision of NY CPLR 5205(l).

That amount is adjusted not according to the change in the minimum wage but rather by inflation. When enacted in 2009 this minimum amount was $2,500. CPLR 5205(l)(3) states that this amount is to be adjusted for inflation every three years. The last adjustment took place April 1, 2015, and the CPLR 5205(l) minimum for accounts with automatic deposit of exempt funds was increased to $2,750. The next adjustment will take place April 1, 2018.

As the minimum wage is increasing faster than inflation, it is entirely possible the minimum balance of CPLR 5222(i) will be higher than the CPLR 5205(l) minimum in 2019 or 2020.

As a Lawyer: Bank account restraining notices are complicated, and many times the banks that receive them do not know about changes to the law and the current minimum amounts exempt from restraints. If you receive a notice that your bank account has been restrained, I would recommend that you contact an attorney immediately.

As described in my 2009 blog on this subject, linked above at the beginning of this blog, you will receive a notice that you have 20 days to file a claim that money in your account is exempt, which it might well be. If most of the money in your bank account is from wages, social security, or other exempt funds, you may well have a lawful exemption claim. If you have received a large tax refund that has been restrained, it is possible that you may need to file a bankruptcy to release the restraint.

Contact Peter Scribner: If you live in the Greater Rochester area (Monroe County and the surrounding counties), you may contact me by phone or email - see my website at  for the phone number or to send me an email. I provide free phone consultations for people in Western New York who have received restraining notices or are considering filing for bankruptcy.

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Peter R. Scribner, Esq.
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