Bank account frozen by a judgment in New York
When a creditor with a judgment serves a restraining notice on your New York bank, the bank freezes the account, but the law protects some of the money. Direct-deposited Social Security, veterans and other federal benefits from the last two months are protected by federal rule, New York shields a further amount tied to exempt deposits and the minimum wage, and the bank must send you exemption claim forms that you return within 20 days.
Your card was declined at the grocery store. The bank's app shows a hold for the whole balance, or twice the amount of a judgment you have never heard of. A letter from the bank arrives a few days later with a stack of forms.
This is a restraint. It is serious, and it is also governed by rules that protect some of your money and give you a short window to claim it. The window is what matters most.
How the freeze works
A creditor with a money judgment can serve a restraining notice on your bank. The notice can tie up money up to twice the amount of the judgment; once the bank holds that much, the notice does not reach your other property (CPLR 5222(b)). Within two business days after receiving it, the bank must send you a copy of the restraining notice, an exemption notice and two exemption claim forms (CPLR 5222-a).
If the bank cannot lawfully restrain the account, it may not charge you a fee (CPLR 5222(j)).
What the law protects
- Federal benefits, two months' worth. If Social Security, VA, federal retirement (OPM) or Railroad Retirement benefits were directly deposited, the bank must review the account within two business days of a garnishment order and protect the benefits posted during the prior two months, or the balance if lower. You must have full and customary access to that amount, and the bank may not charge a garnishment fee against it (31 C.F.R. §§ 212.3, 212.5, 212.6).
- New York's exempt-deposit amount. If payments reasonably identifiable as exempt, such as Social Security, veterans benefits, public assistance, workers' compensation, unemployment insurance or pensions, were directly deposited in the 45 days before the restraint, a set amount in the account may not be restrained (CPLR 5222(h), 5205(l)). The Department of Financial Services lists the adjusted statutory exemption amount as $3,425, effective April 1, 2024, for cases commenced on or after that date; the next adjustment is scheduled for April 1, 2027.
- A minimum-wage floor. Separately, a restraining notice does not apply to an amount equal to or less than the greater of 240 times the federal or the New York State minimum hourly wage (CPLR 5222(i)). The figure rises with the minimum wage; confirm the current amount with the bank or a lawyer rather than relying on an old number.
- Other exempt money. The exemption notice the bank sends lists other kinds of exempt funds. You claim those on the exemption form, with proof of the source.
The 20-day window
Return the exemption claim form within 20 days
Complete the forms, sign them under penalty of perjury, and serve them within twenty days of the date postmarked on the envelope the bank sent you (CPLR 5222-a). One copy goes to the bank, one to the creditor or its lawyer.
Attach proof of where the money came from: an award letter, deposit statements. If you send documentation that the funds are exempt, the creditor must tell the bank to release them within seven days of the postmark on your claim form. If the creditor does not serve motion papers objecting within eight days of that postmark, the bank releases the funds (CPLR 5222-a).
Where did this judgment come from?
Many people learn about a judgment only when the account freezes. In New York City, the Sykes case described a debt buyer and its law firm that filed more than 124,000 cases over four years, where most defendants never appeared and process servers claimed to be in several places at once. A settlement later provided for transferring and potentially vacating about 192,000 default judgments.
If you were never served, the judgment may be open to challenge. See the default judgment you never knew about. If a collector's conduct in getting or enforcing the judgment was deceptive, the FDCPA and N.Y. Gen. Bus. Law § 349 may apply; an FDCPA claim must be filed within one year of the violation. If you are being sued now, do not ignore the papers; the answer deadline is short. Read sued by a debt collector.
What to do this week
- Find the bank's envelope and write down the postmark date. Count 20 days.
- Gather proof of every exempt deposit: benefits letters, the last two months of statements.
- Fill out and serve the exemption claim form, one copy to the bank and one to the creditor's lawyer, with proof of mailing.
- Get the judgment's index number from the restraining notice and look up the court file, so you can see how and when you were supposedly served.
The New York page covers the state rules on collectors.
Sources: N.Y. CPLR 5222, 5222-a, 5205(l); N.Y. DFS, Amount Exempt from Judgments; 31 C.F.R. §§ 212.3, 212.5, 212.6; Sykes v. Mel S. Harris & Assocs., No. 13-2742 (2d Cir. 2015); 15 U.S.C. § 1692k(d); N.Y. Gen. Bus. Law § 349.
Common questions
How much of my account is protected?
It depends on what was deposited. Federal rules protect up to two months of directly deposited Social Security, VA, federal retirement and railroad retirement benefits. New York adds a protected amount when exempt payments were directly deposited in the 45 days before the restraint (listed by DFS as $3,425 for cases commenced on or after April 1, 2024), and a separate floor tied to 240 times the minimum hourly wage. Money that is itself exempt, such as public assistance or unemployment benefits, can also be claimed on the exemption form.
How long do I have to return the exemption claim form?
Twenty days from the date postmarked on the envelope the bank sent you. Sign the form under penalty of perjury, send one copy to the bank and one to the creditor or its lawyer, and include proof of the source of the money, such as a benefits letter.
I never knew I was sued. Can I undo the judgment?
Possibly. New York law lets a court vacate a judgment for lack of jurisdiction, such as improper service, and gives other routes with time limits. See our post on default judgments you never knew about, and act quickly.
Tell us what they did.
One conversation with an attorney, in your language. We tell you which laws the collector or the credit bureau broke, which deadline runs first, and what to save this week. If it is not a case we can take, we say so and tell you where to go.
(718) 484-7510The FDCPA and the FCRA require a company found liable to pay the consumer’s reasonable attorney’s fees and costs. Our fee arrangement is confirmed in a written retainer before we begin. English, Russian and Spanish in-house; an interpreter for any other language.