Can a Creditor Freeze Your Bank Account for Unsecured Credit?

First, the creditor must give you notice that they are suing you, allowing you the opportunity to make payment arrangements or to defend yourself if you feel that their claims are unjustified. If you can prove that you made payments or that they creditor did not give you sufficient notice, you can go before the court and ask the judge to vacate the judgment. If the judgment is not vacated, the creditor may be able to go after other accounts, place liens against your property or garnish your wages. Hiring a lawyer to help you during this time period can be beneficial. If you feel that you cannot pay your bills despite all of your best efforts, filing for Bankruptcy protection may be an alternative for you. This is an action that should be taken before your creditors have received a judgment to place a freeze on your bank account. However, if your bank account has been frozen, you have 10 days to file a claim of exemption. Freezing your accounts is not the same as seizure. The creditor can only obtain a judgment to freeze the amount that is owed to them, not the entire balance of your account. The money owed to the creditor is still in the account, you just cannot access it. Some funds in a bank account are exempt, however. Social Security, Veterans and disability benefits are exempt from being frozen. In addition, they cannot freeze amounts owed for child support or back taxes.

How do you “unfreeze” your bank account?

The best way is to hire an attorney to help you erase the judgment against you, which is called “vacating” the judgment. A judge may agree to vacate the judgment if the creditor agrees to accept a settlement for the balance owed to them or if there is reason to believe that you were not given sufficient notice to defend yourself. However, if the creditor has proven that they gave you proper notice and they do not agree to a settlement, they may even be granted the right to garnish your wages.