You try to use your debit card and it is declined. You open your banking app and discover that the money you thought was available is suddenly frozen. Then you find out that a creditor has placed a levy on your bank account.

If a creditor freezes your bank account in New Jersey, do not ignore it and do not assume the money is already gone. A bank levy usually means the creditor already has a judgment against you, but you may still have options.

The most important thing is to act quickly.

What Should I Do Right Away If My Bank Account Is Frozen?

Start by finding out exactly what happened.

Get copies of the Notice to Debtor and any other papers concerning the levy. You should also try to determine:

• Who obtained the judgment?
• How much is the judgment?
• What court entered it?
• What is the docket number?
• When was the judgment entered?
• Were you ever served with the original lawsuit?
• Was the judgment entered by default?
• How much money has been frozen?
• Where did the money in the account come from?
• Is anyone else’s money in the account?

You should also obtain recent bank statements.

These questions can help determine whether the levy can be challenged, whether any of the money is protected and whether there may also be grounds to challenge the underlying judgment.

Is There a Deadline to Object to a New Jersey Bank Levy?

Yes. Do not put the Notice to Debtor aside.

New Jersey’s Notice to Debtor warns a debtor claiming that money or property is exempt to submit a written exemption claim within the time specified in the notice.

The current notice states that an exemption claim should be mailed within 10 days after service of the notice.

That does not mean you should wait until day ten.

If your bank account has been frozen, contact an attorney promptly so there is time to review the judgment, determine where the money came from and decide whether an objection or another court application is appropriate.

Why Was a Creditor Able to Freeze My Bank Account?

A private creditor generally cannot simply call your bank and tell it to freeze your account.

Usually, the creditor first sues you and obtains a judgment.

After obtaining a judgment, a creditor can use New Jersey’s post-judgment collection procedures to try to collect the money owed.

One collection method is a bank levy.

In a New Jersey Special Civil Part case, a Special Civil Part Officer can serve a writ of execution on a financial institution where the judgment debtor has an account.

The bank may then restrain funds subject to the levy.

This is why a frozen bank account is often not the beginning of the problem. It is the result of something that happened earlier.

Does the Creditor Get My Money Immediately?

Not necessarily.

Freezing money and turning that money over to the creditor are not necessarily the same step.

In a Special Civil Part case, there is a procedure for objecting when a debtor believes some or all of the restrained funds are exempt. New Jersey Courts provides a specific bank levy objection packet for that purpose.

A frozen account requires immediate attention, but a freeze does not necessarily mean the money has already been permanently lost.

Is Any Money Protected From a Bank Levy?

Possibly. Certain types of money may be protected from execution under New Jersey or federal law.

The New Jersey Judiciary identifies potential exemptions involving funds such as:

• Social Security benefits
• child support
• welfare benefits
• unemployment benefits
• certain other funds protected by law

The source of the money matters. If you believe the frozen account contains protected funds, gather documents that show where the deposits came from.

Does Financial Hardship Make My Money Exempt?

Not necessarily. This is an important distinction. You may desperately need the money for rent, your mortgage, utilities, groceries, medication or your car payment.

Unfortunately, the fact that losing the money causes a serious financial hardship does not make the money legally exempt.

We need to look at questions such as:

• Where did the money come from?
• Who owns the money?
• Is the source of the funds protected by law?

Those questions can be much more important than what you planned to use the money for.

How Do I Object to a Bank Levy in New Jersey?

New Jersey Courts provides a specific procedure for objecting to a bank account levy in the Special Civil Part.

According to the Judiciary’s instructions, the debtor generally files:

• a Certification in Objection to Levy
• a Certification of Service
• supporting documentation, including bank statements

There is no filing fee for the objection.

Bank statements can be especially important because they may establish where the frozen money came from.

If you claim that the money came from Social Security, unemployment, child support or another protected source, you should be prepared to document that claim.

What Happens After I Object to the Levy?

Filing an objection does not automatically mean the money will be released.

You have to establish why some or all of the funds should not be taken.

New Jersey’s Special Civil Part instructions state that, if the objection papers and service certification are properly completed, a hearing will be scheduled within seven days before a judge to determine whether some or all of the money is exempt and should be released.

You should bring the documents and other evidence needed to establish your objection to the hearing.

What If I Never Knew I Was Sued?

This is one of the first things we look at.

Sometimes a person first learns that a lawsuit even existed when a paycheck is garnished or a bank account is frozen.

If the judgment was entered by default, we may need to determine:

• Where were you supposedly served?
• When did service occur?
• Did you actually live at that address?
• Did you receive the complaint?
• Why wasn’t an answer filed?
• When did you first learn about the judgment?
• Do you have a legitimate defense to the original lawsuit?

Objecting to the bank levy is not the same thing as asking the court to vacate the judgment.

The New Jersey Judiciary’s bank levy packet specifically states that it cannot be used to file a motion to vacate a judgment.

Depending on the circumstances, both issues may need to be addressed.

Can I Vacate a Default Judgment?

Possibly.

A default judgment is not automatically vacated simply because you say you did not know about the lawsuit.

The circumstances matter.

We may need to examine:

• whether service was proper
• why you failed to answer
• how quickly you acted after discovering the judgment
• whether you have a legitimate defense to the creditor’s claim

There can be a major difference between someone who received a lawsuit and deliberately ignored it and someone who was served at an old address and first learned about the case when the bank account was frozen.

Why Would Vacating the Judgment Matter?

The judgment is what gives the creditor its collection power.

If there are valid grounds to vacate a default judgment, the underlying lawsuit may become active again. However, in order to vacate the judgment you must have a valid meritorious defense and a valid reason for not answering the complaint.

That can give the defendant an opportunity to defend the claim, challenge the amount allegedly due, raise defenses and potentially negotiate from a much different position.

We do not look only at the frozen bank account. We look backward and ask how the creditor obtained the judgment in the first place.

What If the Frozen Account Is a Joint Bank Account?

A joint account can create additional issues.

For example, some of the money may actually belong to a spouse, parent, child, business partner or another person who is not the judgment debtor. Simply having another person’s name on the account does not automatically decide the issue.

The source and ownership of the money need to be examined.

If another person claims ownership of some or all of the frozen funds, bank records and other documentation may become very important.

Should I Call the Creditor’s Attorney?

Before agreeing to anything, it may be better to understand your rights.

A collection attorney may offer a payment arrangement or ask for a lump-sum payment in exchange for resolving the levy.

But first, we want to know:

• Was the judgment properly entered?
• Were you properly served?
• Can the default judgment potentially be vacated?
• Is some of the frozen money exempt?
• Does part of the money belong to somebody else?
• Do you have a defense to the original lawsuit?
• Can the debt be negotiated?
• Would bankruptcy or another debt-resolution strategy make more sense?

Do not panic and agree to something simply because you want your account unfrozen.

Understand your options first. Then decide how to respond.

Can I Negotiate With the Creditor After My Bank Account Is Frozen?

Sometimes. However, your negotiating position may be weaker after a judgment has been entered.

Before judgment, the creditor still has to prove its case. There may be defenses. There may be court mediation. There may be opportunities to negotiate a settlement or payment arrangement.

Once the creditor has a valid judgment and has successfully located money in your bank account, the situation changes. The creditor may have less incentive to accept a reduced settlement if it believes it can collect the money through the court.

That does not mean negotiation is impossible.

It means leverage matters.

This is why we repeatedly tell people not to ignore a debt lawsuit.

Usually it is very difficult to negotiate and there is not much that can be done. However, there have been times when we have been able to help at this state. Take Scott for example. He had the same name as his dad. Scott Sr. had a judgment against him but the creditor levied Scott Jr.’s account. We were able to get Scott’s account unfrozen as well as damages from the creditor

What Should I NOT Do After My Bank Account Is Frozen?

• Do not ignore the court papers.
• Do not assume the bank will fix the problem for you.
• Do not assume money is exempt simply because you need it to pay living expenses.
• Do not enter into a payment agreement without first understanding whether you have grounds to challenge the levy or judgment.
• Do not wait until after the money has been turned over before investigating what happened.

The earlier we can evaluate the judgment, levy and source of the funds, the more options you may have.

Can the Creditor Freeze My Bank Account Again?

Yes. A levy does not necessarily mean the entire judgment has been satisfied.

If money remains due on the judgment, the creditor may continue using lawful collection methods.

That is why it is often important to address the entire judgment rather than simply deal with one frozen account.

Should I File Bankruptcy Because My Bank Account Was Frozen?

Not automatically.

A bank levy can be a warning that you have a larger debt problem, but bankruptcy is not the right answer for everyone.

We look at the entire financial picture.

For example:

• How much debt do you have?
• Is this your only judgment?
• Are other creditors suing you?
• Are your wages being garnished?
• Do you owe back taxes?
• Are you behind on your mortgage?
• Do you own a home?
• What other assets do you have?
• Is the judgment dischargeable?
• Would Chapter 7 or Chapter 13 actually improve your situation?

Sometimes the solution is defending the lawsuit. Sometimes it is challenging the judgment. Sometimes it is negotiating the debt. Sometimes bankruptcy is the best answer.

The right solution depends on the facts.

What If I Just Received a Lawsuit and My Bank Account Has Not Been Frozen Yet?

This is the best time to call us.

If you have been served with a debt collection lawsuit in New Jersey, do not wait for a default judgment, wage garnishment or frozen bank account.

Before judgment, we may be able to:

• defend the lawsuit
• challenge the creditor’s evidence
• raise legal defenses
• participate in court mediation
• negotiate a settlement
• work out a payment arrangement

After judgment, especially when a creditor has already found money in your bank account, those options can become more limited.

Ignoring the lawsuit does not make the debt disappear. It can make the creditor stronger.

What Should I Bring to an Attorney?

If possible, gather:

• the Notice to Debtor
• the complaint and summons
• the judgment
• any papers concerning the bank levy
• recent bank statements
• documents showing the source of deposits
• prior correspondence with the creditor or collection attorney
• documents showing payments you made toward the debt

If you do not have everything, do not let that stop you from seeking help.

With a frozen bank account, acting quickly may be more important than having a perfectly organized file.

Can Tomes Law Firm Help If a Creditor Froze My Bank Account?

Yes.

At Tomes Law Firm, PC, we represent New Jersey consumers dealing with debt lawsuits, default judgments and post-judgment collection.

When someone calls us because a bank account has been frozen, we do not simply ask how much money is in the account.

We want to know: How did the creditor get here?

Was there proper service? Was a default judgment entered? Is there a defense to the original lawsuit? Are any of the frozen funds legally protected? Does some of the money belong to someone else? Can the levy be challenged? Can the judgment be vacated? Is settlement realistic? Or does the client need a broader debt-resolution strategy?

A frozen bank account can create an immediate financial crisis.

But before assuming the money is gone, find out what legal options you have.

Call Tomes Law Firm, PC at 732-333-0681 to discuss a New Jersey bank levy, debt lawsuit or default judgment.