6
September
2011

What is frozen account-

Frozen account defines a state when you are no longer able to access to your bank account because your creditor has brought court judgment against you for not paying his debt. This is a hard tactic that creditors employ to put pressure on you to squeeze money out of you. However, you are always welcome to deposit money into a frozen account. Only, you cannot use it to take out or withdraw money from here. This is the general perception of account freezing..

Protection under EIPA-

Here, you need to remember that a special law called Exempt Income Protection Act (EIPA) has been brought into effect on 1st January, 2009.  From this time onwards, creditor cannot freeze your account that contains some directly deposited exempt benefits like pension fund, Social Security, child care, spousal support, unemployment insurance, workers compensation, disability and veteran benefits. If you find that your bank has frozen your account after 1st January, 2009 and it is not following the rules under EIPA, you can directly contact NYC Financial Justice Hotline at (212) 925-4929 to know your legitimate rights and get proper solution. However, in case your account was frozen before the date, you might not automatically unfreeze the account later. You need to take up specific course of actions to access your account.

Account may be frozen without prior intimation-

Many times people are surprised when they suddenly discover that their ATM card is not working and they are denied of accessing money from their own account. It is because your bank is not legally bound to notify you before freezing your account. Once your creditor wins a court judgment against you, the court will direct the bank to impose restraint upon your account. Then, your bank will have to freeze the account immediately after getting the court hearing. However, you can expect to get formal notification from your judgment creditor. He should inform you that he has filed a law suit and won a court judgment against you. But, if you receive nothing of that sort before the event, you may consider it unlawful.

Be well informed about your legal right and negotiate your judgment creditor-

In this circumstance, you need to vacate the default judgment in order to release the account. Once you are able to erase the judgment against you, creditors can no longer freeze your account. Until you do that, your credit report will show the sign. As long as it is there on your credit report, it will hinder you from getting new loans, securing a job and taking a new mortgage. In order to fix things up, you should better negotiate your creditors. We suggest you to handle the matter within the court room. If your account contains all exempt funds, you must immediately contact your judgment creditor’s attorney and tell him to release the account. Judgment creditor has no right to freeze account funds that are non-collectable. Now, the attorney of your judgment creditor may ask you to send exempt income proof. Here, you should promptly send him your bank statements of previous three months.

Caution- Sometimes judgment creditor’s attorney makes unnecessary delay to release your account. You should better follow up to release it as early as possible and vacate the default judgment.

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