Why Did My Bank Account Get Frozen?

You go to pay a bill and the funds aren't there.  You try to access your bank account online, and you are locked out.  Or your bank sends you a notice saying your account has been frozen. Why?

The reason may be that a creditor has taken you to court and has a judgment saying you owe them money.  Once they have a judgment, they can do things like garnish your wages or freeze and levy on a bank account.  That means they send your bank a notice telling them to freeze your accounts.  Unlike with a garnishment, there's no limit on how much they can take.  If you owe them $10,000, they can take up to $10,000.

Some state laws do protect your bank accounts, though.  Iowa law says that the first $1,000 you have in cash or bank accounts is "exempt," meaning that creditors cannot take it away from you.  No matter what state your live in, if you have Social Security, disability, child support payments, or VA benefits in your account, those are also "exempt" and protected from your creditors.

But the catch is that you have to stand up for yourself.  If you don't do anything, you lose the money. If your accounts are frozen, you need to figure out why, and read the paperwork carefully.  Either on your own or with an attorney's help, you can file a Notice of Resistance to the garnishment. That will get you a hearing in front of a judge, and it may just keep the money in your hands.