If you owe money, a debt collector can sometimes freeze your bank account. A freeze means you cannot access your money. The debt collector will then try to take that money to pay your debt. But the law protects certain types of income from being frozen or taken.
Exempt income is money that debt collectors cannot take. "Exempt" means protected.
New York State and federal laws protect you in two ways:
- Debt collectors cannot go after public benefits or other exempt income.
- Debt collectors cannot touch the last $3,425 to $3,960 in your bank account (the exact amount depends on where you live in New York State).
What is exempt income?
Exempt income is the income that cannot be taken by debt collectors or creditors (people or companies you owe money to).
You can choose to use exempt income to pay your debts if you want to. But a debt collector cannot take exempt income out of your bank account.
What kinds of income are exempt?
These types of income are exempt:
- Social Security, SSD, or SSI
- Public Assistance (also called welfare)
- Veterans Administration benefits
- Pensions (public and private)
- Payments from retirement accounts, such as 401(k)s or individual retirement accounts (IRAs)
- Child Support, Spousal Support (money from a former spouse), and Alimony (money paid to a former spouse)
- Unemployment Insurance
- Workers Compensation (money you get if you were hurt at work)
- Other government benefits
- 90% of wages or salary earned in the last 60 days
- Wages or salary less than $495 per week after taxes (as of January 1, 2025)
If all the money in your bank account is from government benefits or the income types listed above, a debt collector cannot take any money out of your account.
Important exception: the government can take SSI and Public Assistance to pay these debts:
- Child support
- Spousal support
- Student loans
- Unpaid taxes (known as tax arrears)
What if I don't get any public benefits?
Your bank account is still protected up to a certain amount.
If you live in New York City, Long Island, or Westchester and your account has less than $3,960 in it (as of January 1, 2025), debt collectors cannot take money out of your account or freeze your account.
If you live anywhere else in New York State and your account has less than $3,720 in it (as of January 1, 2025), 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 in New York State 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 $3,425 in it (as of April 1, 2024).
Any exempt income above the $3,425 amount is not automatically protected from debt collection. You must take action to protect it.
How can I 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 them a letter. Tell the debt collector that your income is exempt from debt collection. Ask 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.
If your account has more money than the automatically protected amount, your bank can freeze the money that is over that amount. Send a letter to your bank to tell them that your account has exempt funds that should not be frozen.
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. Explain that your income is from government benefits.
You may also be able to get free legal help. Use LawHelpNY’s Legal Directory and select “Money and Taxes” and “debt” collection to find free legal services.
What can I do if my government benefits or other exempt income is taken from my bank account by a debt collector?
If money is being taken from your bank account, that probably means a debt collector sued you for a debt. A judgment (a court decision) was made against you in court.
The debt collector may be a collection agency. They may not be the original person you owed money to or borrowed money from.
If your government benefits and other exempt income is being taken from your bank account, you should:
- Contact your bank and the debt collector or the debt collector's attorney (lawyer).
- Check if there is a judgment against you. Visit NYCourtHelp to learn more.
- If there is a judgment against you, you may be able to change it by asking the court to Vacate the default judgment (cancel the court decision).
I want to file a complaint about a debt collector or a bank
You can file a complaint with the NY Department of Financial Services (NY DFS): Call 1-800-342-3736 or file a complaint online.
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 public student loans, visit the Consumer Financial Protection Bureau or the National Consumer Law Center.
For private student loans and consumer debt generally, visit the LawHelpNY Legal Directory, and select “Money and Taxes” and “debt” collection to find free legal services.
What kinds of income can be taken out of my bank account?
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.
In the FAQ below, click to expand the boxes to find answers to each question.
Last Reviewed: February 6, 2026