April 06, 2021
Summary: Were you sued for an old debt and had a judgment placed against you? If you're worried about having a debt collector freeze your bank account, find out what you can do about it.
Having your bank account frozen means that although your funds exist, you cannot access them. If you owe a credit card debt or loan, a debt collector has no right to freeze your bank account until they obtain a court judgment against you. Debt collectors see freezing your bank account as a way of pressuring you into paying off your debt, and sometimes it works.
After a judgment creditor puts a hold on your bank account, you may notice that you have a hugely negative balance. This is because the debt collector can legally charge you for twice the amount of the judgment against you. Although you do not owe this all, it will show up as a negative balance.
Unfortunately, you may receive no notice before your account is frozen. This is because the judgment acts as a notice to freeze your account immediately. You may even find out that your bank account is frozen while trying to pull money from an ATM or use a debit card.
Both your bank and the judgment creditor do not need to give you specific notice when freezing your bank account, but there are ways to avoid having your account frozen.
The best way to unfreeze your bank account is to remove the judgment against you. There are only three ways to remove a judgment against you, either by vacating it, satisfying it, or discharging it. Vacating the judgment is your best option as this will immediately release the freeze.
Some cases do not allow you to vacate a judgment against you. If you answered a lawsuit and the court entered the judgment against you, there is a rare chance it will happen. Despite this, if you were given a default judgment (meaning you did not answer the summons), then you may have the option to vacate. Different states have different laws, but most often you must file a motion with the court asking the judge to vacate the judgment.
By satisfying a judgment you are essentially paying it off. Oftentimes you can end up settling the judgment for less than the full balance that you owe. If you do seek to settle a judgment, ensure that the entire judgment is considered settled, and ask for written proof.
Essentially the only way that a judgment can be discharged is through bankruptcy. This should never be your first choice, but if you are suffering from other forms of financial hardship and you have explored all other avenues then it can be an option.
There are a few cases where you may not need to negotiate a settlement to unfreeze your account. If your account contains any form of exempt benefits or retirement benefits, then you will not need to go to court. Exempt benefits include:
If your bank account contains recent wages or nonexempt funds, then you most likely will need to go to court. You most likely will be able to negotiate much better in court versus out of court. This will allow you to vacate the judgment if possible.
Unpaid judgments can be collected within the statute of limitations which is typically up to 20 years. Not only do unpaid judgments allow your bank account to be frozen, but they can also allow debt collectors to garnish your wages.
On top of that, judgments also appear on your credit report. This may affect your ability to obtain loans, housing, and even employment. Typically it is always best to vacate the judgment if possible.
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
Here's a list of guides for other states.
Being sued by a different debt collector? We're making guides on how to beat each one.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.