Frozen & Restrained Accounts
Payroll bounced and the bank says it cannot help. It is telling you the truth. Relief comes from a court, and the clock on your operations is already running.
- Restraint lasts 1 yearCPLR 5222(b)
- Up to 2x the judgment heldCPLR 5222(b)
- Relief by order to show causeCPLR 5240
Nobody signed off on the freeze. That is the design.
A restraining notice under CPLR 5222 is served by the attorney for the judgment creditor (the funder that holds the judgment), as an officer of the court, directly on your bank. No judge reviews it. No hearing precedes it. Your bank receives a form, applies it, and is legally obliged to hold the funds. When you call the branch, the answer is that they cannot lift it, and that answer is correct. Only the creditor or a court can.
The notice reaches property in which you have an interest, up to twice the amount of the judgment, and it stays effective for one year from service. It can be served again.
A frozen operating account stops the whole business
Payroll fails. ACH debits for rent, insurance and suppliers reverse. Each reversal generates a fee, and enough reversals put the merchant account itself at risk. Meanwhile the bank charges a legal processing fee for handling the restraint, and vendors who get bounced payments start asking for cash in advance.
The legal problem usually has a remedy. The operational damage that piles up while you pursue it often does not. That is the reason we treat these as same-day work.
The relief that actually exists
An order to show cause invoking CPLR 5240
An order to show cause is a fast-track motion: a judge signs it at the outset and sets a short return date. CPLR 5240 is the workhorse behind it. It gives the court broad discretionary power to deny, limit, condition, regulate, extend or modify the use of any enforcement procedure. That language is deliberately wide, and it is the provision under which a court can carve payroll out of a restraint, cap what the bank holds, or lift the restraint entirely where the creditor is overreaching. Where the underlying judgment is itself defective (most often a confession of judgment), we move to vacate it and seek the enforcement relief in the same application.
A proceeding to determine adverse claims
Restraints routinely capture money that is not the judgment debtor's: funds held for subcontractors, customer deposits, sales tax collected and payable to the state, a co-owner's share, or the account of an entirely different entity that happens to use the same bank. CPLR 5239 provides a special proceeding to determine those competing claims to the restrained property.
Statutory exemptions, where the account is an individual's
If a personal account is caught, commonly because the guarantor was named individually, CPLR 5222-a, New York's Exempt Income Protection Act (EIPA), protects direct-deposited exempt funds and a statutory minimum balance, and requires the creditor to serve an exemption notice and claim forms. CPLR 5205 supplies the broader personal-property exemptions. These do not apply to a business operating account, which is why it matters from the first call whether the account is yours personally or the company's.
The negotiated release, which is often the fastest path
In our experience, creditors' counsel will often agree to release operating funds, payroll in particular, rather than litigate an emergency application on short notice. We pursue that in parallel with the motion rather than instead of it, so that the application is already drafted and ready to file if the conversation goes nowhere.
What else is probably already running
A restraint rarely travels alone. Expect some combination of an information subpoena with restraining notice served on your bank under CPLR 5224, a levy by the marshal or sheriff under CPLR 5232, a CPLR 5227 proceeding against a customer who owes you money, and, if there is an individual judgment debtor, an income execution under CPLR 5231. Each carries its own duty to respond, and ignoring the subpoena can be punished on its own, even if the restraint is later lifted.
The dates that govern
| Event | Governing rule | Timetable |
|---|---|---|
| Restraining notice in effect | CPLR 5222(b) | One year from service; may be served again. Reaches property up to twice the judgment amount. |
| Bank's obligation on receipt | CPLR 5222(b) | Immediate. The bank has no discretion to release and no authority to decide the merits. |
| Information subpoena response | CPLR 5224 | Within the period stated in the subpoena. Non-response is separately sanctionable. |
| EIPA notice and exemption claim form (individual accounts) | CPLR 5222-a | Creditor must serve the notice and forms; the account holder's claim form triggers a further statutory timetable on the bank and the creditor. |
| Adverse-claim proceeding | CPLR 5239 | Before the property is applied to the judgment. |
| Motion for relief from enforcement | CPLR 5240 | No fixed deadline, but relief is discretionary, and a court weighs how long the restraint sat unchallenged. |
General information, not advice on your account. Whether a given restraint is defective, which exemptions apply, and what relief a particular judge will grant depend on facts we have not seen. Nothing here is a prediction about your matter.
What to send us today, not tomorrow
- The restraining notice, if your bank gave you a copy. If it did not, tell us the bank and the branch.
- The judgment and the case caption or index number, if you know it.
- Your funding agreement and any confession of judgment you signed.
- Which account is restrained, whether it is the operating account, and when payroll runs.
- Any information subpoena, levy, or notice from a marshal or sheriff.
If payroll is inside 72 hours, call rather than email: (718) 484-7510.
The four lines on a restraining notice that decide your week
Most merchants never see the notice itself. The bank sees it, and the merchant sees a declined payroll run. When you do get a copy, these are the parts that matter. The drawing below is a schematic, not a reproduction: the body is left blank on purpose.
- It was signed by the other side’s lawyer, not by a judge
Under CPLR 5222 a restraining notice is served by the judgment creditor’s attorney as an officer of the court. Nobody weighs it first. That is precisely why the answer is an application to a judge rather than a phone call to the funder. There is no judicial decision in the file yet for anyone to reconsider.
- The bank may hold up to twice the judgment
CPLR 5222(b) reaches up to twice the amount due. On a six-figure judgment that takes an operating account to zero and keeps it there, which is the point: the pressure comes from the freeze, not from the eventual collection.
- It runs a year, and it can be served again
The restraint does not lapse while you wait for a call back, and a fresh notice restarts it. Every week that nothing is filed works for the creditor.
- The exemption notice has to be there
Where the account belongs to a natural person, CPLR 5222-a requires the exemption notice and claim forms to go out with the restraint. Missing or defective service of that notice is itself a ground for relief, and it is one of the first things worth checking.
If you have the notice in front of you, send it. If your bank will only tell you there is “a legal hold,” send the bank’s letter and the account name. We can retrieve the rest.
The first three days, and day 21
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Hour 0
Get the paper
The restraining notice, the judgment behind it, and the last three months of bank statements. The bank produces the notice on request.
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Day 1 to 2
Draft and e-file
Order to show cause under CPLR 5240, with the request for interim relief on payroll, filed through NYSCEF the day the facts are in hand.
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Day 2 onward
Two tracks at once
The return date on the motion, and a negotiated carve-out with the creditor's counsel pursued in parallel. Whichever lands first, lands.
Frequently asked
No, and it is not being unhelpful. A restraining notice under CPLR 5222 legally obliges the bank to hold the funds. The bank has no authority to evaluate whether the judgment is valid. Release comes from the creditor's consent or from a court order.
Property in which the judgment debtor has an interest, up to twice the amount of the judgment. If the judgment is modest and the balance is healthy, the bank can be holding far more than the judgment, which is one of the arguments for relief under CPLR 5240 when the excess is shutting down an operating business.
That is a real argument, and the statute gives it a procedure. CPLR 5239 provides a proceeding to determine adverse claims to restrained property, and funds you hold for others (customer deposits, subcontractor funds, sales tax collected for the state) are not properly applied to your judgment. Document whose money it is before the money moves. Reconstructing that afterward is much harder.
Opening a new account to evade enforcement is a bad idea for reasons that go well beyond strategy. It invites a fraudulent-conveyance claim and it damages your credibility with the judge whose discretion you are about to ask for. Get the restraint addressed. If you need operating capacity in the meantime, that is a conversation to have with counsel first.
It may change everything. If the underlying judgment is vulnerable, most often on the residency and venue predicates of CPLR 3218 or because the amount entered exceeded what the affidavit confessed, then the restraint rests on a defective foundation and we attack both in one application. More on confessions of judgment.
We cannot honestly give you a number of days. It depends on the judge's calendar, whether the creditor will negotiate, and how clean the defect is. What we control is how fast the application is drafted and filed, and whether we are simultaneously working the phone with opposing counsel for an interim payroll release. Both start the day we have the documents.
If payroll is inside 72 hours, call.
Do not email and wait. The damage from a restrained operating account compounds daily, and it is harder to undo than the legal problem.