Frozen Bank Accounts

The Law Offices of Robert J. Nahoum, P.C. - A New York Consumer Protection Law Firm

Frozen Bank Account

The quickest way for a debt collector to collect on a debt collection judgment is with a frozen or “restrained” bank account.  Often, a consumer doesn’t even know he or she has been sued in a debt collection lawsuit until a check bounces or the ATM won’t dispense any money due to a frozen bank account.

When a consumer’s bank account is frozen, to account for interest, the bank freezes twice as much as the judgment amount.  To add insult to injury, the bank will almost always charge the consumer some kind of penalty or administrative fee for restraining the account, usually around $100.00.

The ideal way to avoid this unfortunate circumstance is to answer the lawsuit in the first place.  However, as is often the case, the consumer’s account was frozen as the result of a default judgment and the consumer didn’t even know he or she was sued.

On January 1, 2009, the New York Exempt Income Protection Act (“EIPA”) came in to effect and limited the ability of judgment creditors to freeze a consumer’s exempt assets.  Exempt assets include

  • social security;
  • pensions;
  • public assistance;
  • workers compensation;
  • unemployment insurance;
  • child support, and spousal support or maintenance;
  • 90 percent of earnings deposited into a consumers’ bank account within 60 days prior to the date the bank receives the restraining notice.

To make certain that none of these exemptions are overlooked, the EIPA precludes certain funds from being frozen including:

  • the first $2,500 in a consumer’s bank which are “reasonably identifiable” as “statutorily exempt” AND that were made electronically or by direct deposit during the 45-day period prior to service of a restraining notice; or
  • where deposits are not made by direct deposit, the first $1,716 of such deposit.

The Law Offices of Robert J. Nahoum, P.C. routinely represents consumers who have learned that a bank account has been frozen.  We go to the courthouse and file an “order to show cause” to have restrained bank account released have the judgment vacated.

As with all of our consumer cases, we understand that our clients are under financial distress.  Our job is to make things easier for our clients not harder.  It is with this understanding that we have structured our fees.  We charge our consumer clients based on a flat fees arrangement.  Cases where we are hired to vacate a default judgment and release a frozen bank account generally range from between $750 and $1,500.

If you have questions, concerns, or legal needs regarding a frozen bank account, we urge you to contact The Law Offices of Robert J. Nahoum, P.C. today by calling 845-232-0202.