The account was frozen on a Tuesday morning. Payroll was due on Friday. The landlord’s check was already in the mail. That was not a coincidence. The timing was the point.
An MCA company can freeze your bank account, but only through specific legal mechanisms. They cannot call your bank and request a freeze based on their status as a creditor. They cannot instruct the bank to hold your funds because you missed a payment. They need a court order or a judgment followed by a post-judgment remedy. The mechanism matters because the mechanism determines your response, your timeline, and your options.
How the Freeze Happens
The most common path to a frozen bank account in the MCA context starts with a confession of judgment. The funder files the confession, the court enters the judgment, and the funder’s attorney serves a restraining notice on your bank. Under New York CPLR 5222, a restraining notice is a post-judgment enforcement device that prohibits the bank from releasing funds in your account up to the amount of the judgment plus statutory costs.
The bank is legally required to freeze the account. The bank has no discretion. The bank did not choose to freeze your account. The bank did not make a judgment about your creditworthiness or your relationship with the funder. The bank received a legal document compelling it to restrain the funds, and the bank complied because the law requires compliance. Directing your frustration at the bank is understandable but unproductive. The bank is not the adversary.
The restraining notice applies to the account balance at the time it is served and to all deposits that arrive afterward, until the notice is lifted or the judgment is satisfied. This means incoming revenue — customer payments, credit card settlements, transfers, deposits — enters the account and becomes immediately restrained. The business continues to generate revenue, but the revenue is inaccessible. The operating account becomes a holding tank for the funder’s benefit.
Prejudgment Attachment
In some cases, the freeze occurs before judgment. A funder can seek a prejudgment attachment under CPLR Article 62, arguing that the debtor is about to dispose of assets or that the debtor is an out-of-state entity. Prejudgment attachment is more difficult to obtain than a post-judgment restraint because it requires a court order and a showing of specific grounds. But when granted, it freezes the account before there is any final determination of the dispute.