Differences Between Garnishment and Levy

In debt collection, creditors are equipped with a variety of legal tools to recover outstanding debts. Two of the commonly employed methods are garnishment and levy, each with its own set of distinctive features and impacts on debtors.

At Ursulova Law Offices, we understand the challenges individuals face when navigating financial hardships in New York. As a bankruptcy attorney in Brighton Beach, we encounter many clients who are unfamiliar with the methods creditors use to collect debts, such as garnishing and levying.

In this article, you will have a clear understanding of these two collection tools, their application in New York, and their differences.

What Is a Garnishment?

Garnishment is a legal procedure where creditors can intercept a portion of a debtor’s income or funds held in bank accounts. This method is primarily used for recurring payments, allowing creditors to receive a continuous stream of repayment over time. It is a common practice for collecting various types of debts, including but not limited to, unpaid taxes, defaulted student loans, child support arrears, and other consumer debts.

What Is a Levy?

cropped view of senior woman pointing at papers near husband and document with debt collection lettering on table

On the other hand, a levy is a more direct and immediate approach to debt collection. This process involves the seizure of a debtor’s assets, which can be either tangible – such as real estate, vehicles, and personal belongings – or intangible, like rights to future payments or investments.

What Are the Key Differences Between a Garnishment and a Levy?

Some of the key differences between a garnishment and a levy could be categorized based on their target collection legal process, and timing of collection.

Target Collection

The primary and most significant difference between garnishment and levy lies in the types of assets they target.

Garnishment: Garnishment is focused on liquid assets, particularly impacting a debtor’s income, such as wages, as well as funds held in bank accounts. This method is often used to intercept a portion of a debtor’s ongoing income streams or financial reserves.

Levy: A levy encompasses a broader range of assets. It includes not only tangible properties like real estate, vehicles, and other personal possessions but also extends to intangible assets. These intangible assets can comprise rights to future payments, stock holdings, or other investment interests.

Legal Process

The legal mechanisms underlying garnishment and levy differ significantly.

Garnishment: Garnishment is a continual legal process, often involving multiple steps and ongoing court involvement. It requires regular deductions from a debtor’s income or bank accounts, typically through a court order that mandates these continuous withdrawals. This process is gradual and can extend over a considerable duration, depending on the size of the debt and the frequency of the deductions.

Levy: A levy is usually characterized as a singular, decisive legal action. Once a court judgment is in place, it allows for the immediate seizure of the debtor’s assets. These assets are then quickly liquidated, with the proceeds being used to satisfy the outstanding debt. The levy process is generally more abrupt and conclusive compared to the protracted nature of garnishment.

Timing of Collection

Timing and duration are also key differentiators between these two debt collection methods.

Garnishment: Garnishments are a longer-term strategy, designed to methodically collect the owed amount over a prolonged period. This approach is less disruptive to the debtor’s immediate financial situation but extends the period of financial obligation.

Levy: Levies offer a more rapid solution to debt recovery. The process of asset seizure and liquidation under a levy is typically swift, aiming to resolve the debt promptly. This immediacy can be advantageous for creditors seeking quick debt recovery but may pose a more immediate and substantial impact on the debtor’s financial state and asset holdings.

Understanding the differences between garnishment and levy is vital. As a trusted bankruptcy attorney in Brighton Beach, Ursulova Law Offices is committed to offering legal guidance in these matters. Call us to schedule a consultation, and let us assist you in charting a path to financial stability and peace of mind.