As a condition of obtaining a valid judgment in NY, creditors must provide debtors with notice of filing suit, and thereafter, debtors must be allowed an opportunity to be heard before the court may issue a judgment. After notice, argument, and decision, a court may sign an order establishing it's judgment of liability. For creditors, obtaining a judgment is merely the first step when attempting to collect unpaid debts. A subsequent bankruptcy filing nevertheless discharges most general unsecured debts in Chapter 7. Upon filing bankruptcy, the automatic stay prevents collection even after a judgment is entered.
A court judgement establishes a public record of liability in favor of a judgment creditor. However, a judgment of liability does little to ensure collection. The collection process, based upon NY judgement recovery laws, may not include execution upon any exempt assets owned by a debtor (except when secured by a valid lien) as determined by NY State exemption statues. All valid NY judgments bear interest from the date issued. NY Civil. Practice Law & Remedy Code, Section 5003. The interest rate shall be at 9% per year, except where otherwise indicated by provided by NY Civil. Practice Law & Remedy Code, Section 5004. However, Chapter 13 bankruptcy rules prevent accrual of interest at the NY State rate after filing, yet permit interest in bankruptcy according to federal rules.
Changes in New York State statutory law affect the administration of bankruptcy cases and determination of assets subject to forfeiture and dischargeability of debts. Notice the following recent changes in bankruptcy procedures:
Back to New York State Statutory Law information index.