States have their own rules and regulations when it comes to freezing or restraining bank accounts. Creditors and debtors alike often wonder how debt collection attorneys restrain bank accounts. Below we demystify the process and explain how to freeze a bank account.
Accounts can be restrained before the entry of judgment is made by obtaining an order of attachment from the court. Accounts can be frozen or restrained once a judge signs the order. This prevents the judgment debtor from removing deposits from the bank, brokerage, or other accounts, pending a determination of the creditor’s application. The creditor must prove they are entitled to judgment and that the debtor has no other assets left in the state to satisfy a potential judgment.
Creditors may enforce a money judgment, in whole or in part, once judgment is entered in favor of the creditor, absent any limitation imposed by the court.
In New York, attorneys can issue restraining notices to one or more financial institution where they believe the judgment debtor maintains an account. This is why debt collection attorneys request copies of prior payments and ACH or wire transfers made to obtain the judgment debtor’s banking information.
The restraining notice requires the institution to freeze any and all assets on hand belonging to the judgment debtor. Although service of the restraining notice has always been done by certified mail, return receipt required. Due to COVID-19, and the fact that many companies are working off-site, some institutions have relaxed their rules and accept restraining notices by email or fax.
If the judgment debtor maintains a brokerage account at an institution and the judgment creditor’s attorney sends the restraining notice to the financial institution, they must restrain or freeze up to twice the amount of the judgment.
The court is not involved in the issuance of the subpoena unless more than one subpoena is sent to the same institution for the same judgment within one calendar year. Assuming there is money on deposit, the financial institution will restrain the account.
Because some people move money from one account to another, we serve the restraining notices together with information subpoenas. The information subpoena seeks information about the account(s) being restrained or those that may have been on deposit and no longer are. The information subpoena seeks information by asking answers to written questions posed to the financial institution which helps the judgment creditor locate where the assets have been transferred, information about the judgment debtor, payment information, and more.
More detailed information including copies of credits and debits, checks, wires, ACHs in and out of the accounts, and more are available through service of a different type of subpoena.
If you have information about your judgment debtor and are interested in having a debt collection attorney freeze an account, contact Frank, Frank, Goldstein & Nager for a free consultation. We have the experience that pays.