What you need to know about a “bank freeze”

If a creditor wins a court judgment, the creditor can ask the courts to freeze your bank account to collect the money. If they do this, you should get a notice in the mail or your bank may call you.

When can a creditor freeze my bank account?

The creditor must file a lawsuit in court. Before a creditor can freeze your account, the court must have decided the case in favor of the creditor. This is called a judgment. When the creditor has a judgment, it can serve a “Summons to Trustee” on your bank. The bank must freeze the funds in your account, except if the funds were direct deposited by the Social Security Administration or the Veteran’s Administration.

How do I unfreeze my account? How long does this take?

You can file a Motion to Adjudicate. If successful, your account will be “exempt”. Exempt means that funds of a certain kind can’t be taken by a creditor to pay a judgment. It takes weeks for a motion to be heard by the court. You can ask that it be decided sooner if you explain in your affidavit that the funds in the account are exempt, and why you need the money sooner.

What kinds of money in my account are exempt?

These funds are automatically exempt from a bank freeze:

• money from the last two direct deposits paid by the Social Security Administration or the Veteran’s Administration
• $700 in your account
• see a list of other common exemptions on the Vermont Judiciary website 

More funds can be exempt if you ask for it in an affidavit that you file with your Motion to Adjudicate:

• up to $7,400 if you haven’t claimed that amount before

NOTE: If a creditor or your bank is trying to get your 2020 stimulus check funds in your bank account, contact us. We can give you advice and may be able to represent you to argue that they should not be able to take your stimulus check.