What is exempt income?
According to New York State and federal laws, certain income cannot be taken by creditors. This is called “exempt income.”
You can choose to use exempt income to pay your debts, but a creditor cannot take exempt income out of your bank account.
What kind of income is exempt?
Exempt income includes
Social Security, SSD, or SSI
Veterans Administration benefits
Pensions (public and private)
IRAs and other retirement accounts
Child Support and Alimony
Other government benefits
90% of wages or salary earned in the last 60 days
Wages or salary less than $330 per week after taxes
If all of the money you have in your bank account is from government benefits or income types above, a debt collector cannot take any money out of your account.
Exception: Only SSI and Public Assistance are exempt from the following debts: child support, student loans and tax arrears.
What if I don't receive any public benefits?
If you live on Long Island and your account has less than $2,640 in it, debt collectors cannot take money out of your account or freeze your account.
What if my account has some exempt income and some other types of income?
If you live on Long Island and your account has exempt government benefits and other income (such as wages), debt collectors cannot freeze or take any money out of your account if there is less than $2,850. Read more about wage garnishment protections in this resource from Nassau Suffolk Law Services.
What can I do to protect my exempt income from debt collectors?
Step 1. Send a letter to the debt collector to tell them you have only exempt income.
If a debt collector is asking you to pay a debt that you cannot or do not want to pay, you should send a letter telling the debt collector that your income is exempt from debt collection and asking the debt collector to stop contacting you.
Here is a sample letter to send to a debt collector.
Step 2. Send a letter to your bank to tell them your account has only exempt income.
Here is a sample letter to send to the bank.
Step 3. Do not ignore any court papers.
If you are being sued for a debt and you only have exempt income, you should still show up for your court date and explain that your income is from government benefits.
You may also be able to receive free legal help. We have a Consumer Debt Legal Assistance Project that may be able to help you.
What can I do if my government benefits or other exempt income is withdrawn from my bank account by a debt collector?
If funds are being withdrawn from your bank account, that probably means someone sued your for a debt and a judgment was made against you in court.
However, your government benefits and other exempt income cannot be withdrawn from your bank account even if a judgment was made against you in court.
Contact your bank and the debt collector or the debt collector’s attorney.
Remember, the debt collector may be a collection agency and not the original person you owed money to or borrowed money from.
I want to file a complaint about a debt collector or a bank.
You can file a complaint by calling the NY Department of Financial Services (NY DFS) at 1-800- 342-3736.
You can also file a complaint online on the NY DFS website.
What about debts I owe to the government?
If you owe a debt to the government, such as a tax bill, student loan, or overpayment of government benefits, the rules about exempt income are different.
The government may be able to take your tax refund or your government benefits to pay a debt you owe them without suing you. This is called an offset.
For tax debts call the Touro Tax Debt Clinic in Suffolk at 631-761-7080 or the Hofstra Tax Clinic in Nassau at 516-463-5934.
For public student loans contact the Consumer Financial Protection Bureau or the National Consumer Law Center. For private student loans call Nassau Suffolk Law Services in Suffolk at 631-232-2400 or in Nassau at 516-292-8100.