Bank Account Frozen by a Creditor in New York — Do This Now

Why Was Your Bank Account Frozen?

In New York, a creditor who has obtained a money judgment against you can serve a restraining notice on your bank. Upon receipt of the restraining notice, your bank is legally required to freeze funds in your account up to the amount of the judgment. The bank does this without warning — you typically discover it when a transaction is declined or you try to withdraw money.

What to Do Immediately

1. Call your bank and confirm what happened and which account is affected
2. Ask the bank for a copy of the restraining notice — it will identify the creditor and the judgment amount
3. Check whether your funds are exempt (see below)
4. File an exemption claim immediately if your income is exempt
5. Contact the creditor's attorney to negotiate if the funds are not exempt

Protected (Exempt) Funds

New York law protects certain funds from being restrained even after a judgment. If your account contains only exempt funds, you can file an exemption claim to have the money released. Exempt funds include: Social Security benefits, SSI, disability payments, unemployment insurance, veterans benefits, workers compensation, child support received, and public assistance. The bank must also automatically protect $3,600 in exempt funds regardless of their source — this is called the basic exemption.

How to Claim Your Exemption

If your funds are exempt, you must act quickly. File a written objection with the court that issued the judgment. Include documentation showing the source of your funds — bank statements showing the deposits, award letters for benefits, etc. The court will schedule a hearing to determine whether the funds should be released.

How to Prevent This From Happening Again

The only way to permanently stop a creditor from freezing your account is to pay the judgment, negotiate a settlement, or file for bankruptcy. If you have not yet had a judgment entered against you but have been served with a lawsuit, file your answer immediately — use our free tool at EasyLegalFiling.com.