Your business bank account has been frozen.
A restraining notice under CPLR 5222 can freeze a business account without a court order once a judgment exists, and a bank may hold up to twice the amount claimed. Moving quickly matters. A court can modify or vacate enforcement under CPLR 5240, and the underlying judgment may itself be challengeable.
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Why is the account frozen?
A frozen business account almost always means a judgment already exists and a judgment creditor has served a restraining notice on the bank under CPLR 5222. No court order is needed to serve one. The creditor's attorney signs it, the bank receives it, and the bank stops honouring transfers out of the account.
A garnishee served with a restraining notice is not required to hold the entire balance indefinitely: the statute frames the restraint by reference to twice the amount due on the judgment. In practice, how a particular bank applies that varies, and it is worth confirming what is actually being held.
Separately, some funds are exempt from restraint altogether. CPLR 5222-a sets out the notices a bank must send and the form a judgment debtor uses to claim an exemption, which is a different question from whether the underlying judgment is sound.
How does a judgment exist if I was never sued?
Two routes are common in merchant cash advance matters. Either a lawsuit was filed and a default judgment was entered because nobody appeared, or a confession of judgment signed at the outset was filed with a county clerk. In both cases the first real notice is often the bank.
Finding out which happened is the first step, because the two are unwound differently. The bank can usually tell you the county and index number, and the filed papers follow from there.
What can actually be done about it?
Two tracks run at once, and they answer different questions.
- The restraint. CPLR 5240 lets a court make an order regarding the use of any enforcement procedure, including modifying or vacating it. Courts also see applications aimed at releasing funds that are not the judgment debtor's, or that exceed what the statute permits to be held.
- The judgment. If the judgment is a default, CPLR 5015 sets out the grounds for vacating it, which generally call for both a reason for the default and a defense worth hearing. If it came from a confession, the challenge runs to the filing itself.
Neither track is a formality, and neither has a guaranteed result. Which one matters more depends on what the papers say.
What should you do today?
Ask the bank for the name of the judgment creditor, the county, and the index number, and get anything they will give you in writing. Do not move money between accounts. Then get the papers reviewed. Payroll and rent deadlines do not pause for this, which is why the first call is worth making the same day.
Sources
- CPLR 5222: Restraining notice (New York State Senate)
- CPLR 5240: Modification or protective order; supervision of enforcement (New York State Senate)
- CPLR 5015: Relief from judgment or order (New York State Senate)
Every case turns on its own agreement, facts and procedural posture. Nothing on this site is legal advice or a prediction of any outcome.
FAQ
Questions people ask at this stage
Can the bank release the money if I explain the situation?
Generally not on its own. Once a restraining notice is served the bank is following a statutory instruction from the judgment creditor, not exercising discretion. Releasing funds usually takes either the creditor's agreement or a court order, and CPLR 5240 is what lets a court make that order.
Can I open a new account and keep operating?
Moving money while a restraint is in place is a bad idea and can create problems well beyond the original debt. Judgment creditors also have information subpoenas available to them, so new accounts are not difficult to find. Deal with the restraint instead.
How fast can a restraint be lifted?
There is no standard answer. It depends on which court the judgment is in, whether the creditor will agree to release funds, and whether relief has to be sought by motion. What reliably helps is starting the same day you learn about it, with the filed papers in hand.
Why is my business bank account frozen?
A frozen business account almost always means a judgment already exists and a judgment creditor has served a restraining notice on the bank under CPLR 5222. No court order is needed to serve one: the creditor's attorney signs it, the bank receives it, and the bank stops honouring transfers out.
Two routes are common in merchant cash advance matters. Either a lawsuit was filed and a default judgment entered because nobody appeared, or a confession of judgment signed at the outset was filed with a county clerk.
How much of my money can the bank hold?
A garnishee served with a restraining notice is not required to hold the entire balance indefinitely. The statute frames the restraint by reference to twice the amount due on the judgment. In practice how a particular bank applies that varies, and it is worth confirming what is actually being held.
Ask the bank for the judgment creditor's name, the county and the index number, and get whatever they will give you in writing.
How can a judgment exist if I was never sued?
Either a lawsuit was filed and a default judgment was entered because nobody appeared, or a confession of judgment signed at the outset was filed with a county clerk. In both cases the first real notice is often the bank, rather than anything that arrived in the post.
Finding out which happened is the first step, because the two are unwound differently. The bank can usually tell you the county and index number, and the filed papers follow from there.
What can actually be done about a restraint?
Two tracks run at once and they answer different questions. CPLR 5240 lets a court make an order regarding the use of any enforcement procedure, including modifying or vacating it. Separately, if the judgment is a default, CPLR 5015 sets out the grounds for vacating it.
Neither track is a formality and neither has a guaranteed result. Which one matters more depends on what the papers say. Do not move money between accounts while a restraint is in place.
Speak to the attorney
Book a consultation
Six short questions about what arrived and when, ending with a time that suits you. It takes about two minutes.
- The call is with Migir Ilganayev directly, not an intake desk.
- He asks what arrived and when.
- He reads the agreement and the payment history against each other.
- He tells you where you stand and what the options are.
- Fees are discussed on the call and depend on the matter.
- No obligation. Sending it does not create an attorney-client relationship.
- If it is urgent, calling is faster than writing.
- 139 Fulton Street, Suite 801, New York.
Prefer to speak now? Call 646-396-8050, or see the office address and email.
Ready to put this in front of the attorney?
Book a consultationA frozen account is a same-day problem.
Get the judgment creditor's name, the county and the index number from your bank, then call. Payroll and rent do not wait for this to resolve itself.