Income Execution: Whether an MCA Judgment Reaches a Guarantor Paycheck in New York

Whether an MCA judgment reaches a paycheck depends on whose name the judgment bears. A company judgment and a guarantor judgment travel different roads to different destinations.

1. Confirm the Judgment Names the Individual

The first question is identity, not arithmetic. Simply compare the name on the judgment with the person named in the income execution. Retain the guaranty and the court record behind the creditor claim.

A demand about company debt establishes no element of personal liability by itself. New York CPLR 5231, the income execution statute, requires the execution to identify the payer, the amount and frequency of payment, and the installments sought. Those details should match the actual income arrangement, not the creditor memory of it. Every figure the creditor asserts against the paycheck must survive the statutory limits. A creditor pursues the guarantor in order to reach earnings the company judgment cannot touch.

Provide counsel with pay statements and the complete execution. A figure remembered from the last deposit cannot support the calculation. Payroll clerks who have processed these papers before will ask for the execution before quoting any percentage.

2. Earnings, Disposable Earnings, and the Ten Percent Rule

The statute defines its terms before imposing its math. Earnings means compensation paid or payable for personal services, whether called wages, salary, commission, bonus, or otherwise, and includes periodic pension and retirement payments. Disposable earnings means what remains after amounts required by law to be withheld. Voluntary deductions for dues or insurance do not enter that definition, though the payroll stub does not always separate them cleanly.

An income execution may issue for installments of not more than ten percent of money the debtor is receiving or will receive, delivered to the sheriff of the county where the debtor resides or where a nonresident debtor is employed, and the ten percent figure operates as a ceiling rather than a direction, since the floors and caps below may reduce the withholding to a fraction of that ceiling or to nothing at all. That surprises most debtors.

A business draw or distribution (which the optimistic owner will insist is just a paycheck by another name) should not be assumed to receive wage treatment without analysis. The statute speaks of compensation for personal services. Counsel determines what that phrase covers in the actual arrangement. Whether a given draw counts as earnings is a question the documents answer, not the label the business uses.

3. The Floors and Caps Applied Together

Three limits govern one paycheck. For any week, nothing may be withheld unless disposable earnings exceed thirty times the greater of the federal or state minimum hourly wage. Withholding may not exceed twenty five percent of disposable earnings, or the amount above that floor, whichever is less.

Where support or maintenance deductions already burden the earnings, the income execution reaches only the amount by which twenty five percent of disposable earnings exceeds those deductions. The federal cap in 15 USC 1673, the federal garnishment limit, mirrors the twenty five percent and thirty times federal wage formula. Those calculations require the wage rates in effect when the earnings are payable, not a remembered dollar figure from an old search result.

The whole of income execution is arithmetic fenced by procedure. Apply the limits together, in the order the statute states them, and compute and recompute when earnings vary. Seldom does the first calculation survive contact with variable earnings.

4. Service on the Debtor Comes First

The sheriff serves the debtor before troubling the employer. Within twenty days after delivery of the execution, the sheriff serves a copy on the judgment debtor in the manner of a summons or by certified mail with an additional copy by regular mail. Service on the debtor is the rule. Service on the employer is the consequence.

If the debtor fails to pay installments for twenty days, or if the sheriff cannot serve the debtor within twenty days, the sheriff levies by serving the execution on the payer, endorsed to show satisfaction from paid installments. That sequence supplies no universal grace period running from the day the employee first hears of the matter. Resist the urge to ignore the first service and wait for the employer to call.

Service on the employer functions the way a second lock functions on a door the debtor was asked to open voluntarily: the first lock was courtesy, and the second is not. If salary or wage employment ends by resignation or dismissal after service, the levy becomes ineffective unless the debtor is reinstated or reemployed within ninety days. What the debtor earns, or ceases to earn, after service changes what the levy can take.

5. Keep the Payroll Record

Keep statements from more than one pay period where earnings vary. Payroll departments answer the sheriff before answering the employee. A calculation built on an unusually large payment should not be assumed to govern every later period.

Retain the execution, the pay statements, and the sheriff accounting together.

6. Settlement and the Paycheck

Delancey Street offers a free confidential initial review where an MCA judgment threatens a guarantor paycheck. The company provides debt settlement services and coordinates legal matters with independent counsel. It is not a law firm.

Ask the adviser to ensure any proposal names the guarantor and the judgment rather than addressing only the original business account. Counsel should ensure challenges to the execution and questions of personal liability stay inside the legal engagement. The federal courts Chapter 11 overview describes a process distinct from private settlement, and a business filing should not be assumed to shelter every guarantor. A collector remark about pausing the execution, even casually made, binds nothing until it appears in the written terms.

Withholding ends by modification, by satisfaction, or by whatever terms the accepted arrangement sets out, and the ledger decides which event arrived first. At any time, the debtor may move to modify the execution, and counsel should review and prepare that application where the numbers fail. An extremely careful accounting at the end prevents an extremely bitter dispute about credit.