"My bank called me and said... they froze my account."
A business owner, describing the call that started it
If that call just happened to you, you probably also heard nothing first. No letter, no warning, just a declined card or a payroll run that did not go through. Take a breath. A frozen business bank account is serious, and payroll may be days away, but there is an order to work through this. This page explains how an MCA lender freezes an account, what the freeze can reach, what to do in the first 48 hours, and when a program like ours can help and when it cannot.
Results vary by lender, contract terms, and individual business circumstances. Debt resolution involves risk, including potential legal action and UCC-1 filings by creditors.
Can an MCA lender freeze your business bank account?
Yes, but only with a court judgment. An MCA lender gets that judgment one of two ways: by filing a confession of judgment you signed with the agreement, which can become a judgment without a lawsuit you get to answer, or by suing you and winning, often by default when the lawsuit goes unanswered. The judgment creditor then serves a restraining notice or a levy on your bank, and the bank freezes the account. A UCC lien on its own does not freeze a bank account.
With a judgment, a funder can generally
What it generally cannot do
You Found Out From the Bank, Not From the Funder
Owners who call us about a frozen account describe the same few moments. If you recognize yours here, you are not the first, and it is not too late to make good decisions about what comes next.
"I haven't gotten any kind of registered letters. I haven't gotten anything."
The first sign was the bank, a declined card, or a check that bounced.
"Not a huge amount, but, you know, payroll."
The frozen balance is the money your people are counting on this Friday.
"They're telling them that I owe them $10,800."
One owner owed about $1,400 by his count. The judgment said something very different.
"Some of it's out of my personal account."
The freeze did not stop at the business account.
"They shut off QuickBooks so that I could not receive checks from customers."
An HVAC contractor lost a bank account and the way his customers paid him.
"When does my world start caving in?"
Every new account, every deposit, every phone call starts to feel like the next hit.
"I'm sorry to dump all this on you, but I, I just, my anxiety is..."
A business owner, on a first call with our teamThere is nothing to apologize for. A frozen account usually means a funder already has a judgment, which feels like the worst case. But a judgment can be reviewed, sometimes challenged, and very often negotiated. The panic makes people grab the first option in front of them. The next few sections slow it down: figure out what froze the account, what it can reach, and what to do in the first 48 hours.
Before You Do Anything Else, Find Out Who Froze It
"Frozen" can mean three very different things, and each one has a different next step. Your bank can tell you which one you are dealing with. Ask for the name of the creditor, the creditor's attorney, the court, the case or index number, and a copy of the restraining notice or levy.
Many MCA agreements include a COJ. If the account goes into MCA default, the funder files it with a court, the clerk enters a judgment, and a restraining notice goes to your bank. There is no lawsuit for you to answer first, which is why so many owners say they never got notice.
Your clue: you were never served with a summons, and the judgment is recent.
The funder sued for breach of contract, and a judgment was entered. Often it is a default judgment, because the summons went to an old address or a registered agent and nobody answered it in time. Merchant cash advance lawsuits move faster than most owners expect. If you are still at the summons stage, here is what happens once an MCA lawsuit is filed.
Your clue: there is a case with your business named as defendant, filed weeks or months ago.
Not every frozen account traces back to a merchant cash advance company. A tax levy from the IRS or a state agency, a different creditor's judgment, or the bank's own compliance or fraud hold can all lock an account. Each of those has its own process, and an MCA program is not the fix for them.
Your clue: the bank names a government agency, a creditor you do not recognize, or its own review.
On COJs specifically: New York has been the usual place to file them. Since late 2019, New York generally accepts a COJ only from someone who lived or had a place of business in New York when they signed it, which pushed many MCA funders toward lawsuits instead. Our sales team hears that COJs are starting to show up again, and the rules vary by state, so the agreement you signed is what tells you whether one applies.
How Your Account Goes From a Missed Payment to Frozen
Most owners only see the last step. Here is the usual order, so you can tell where you are. Not every MCA company follows every step, some skip straight to a judgment, and the timing can be weeks or months depending on the funder and the agreement.
The daily debits start bouncing.
Sales slow down, the ACH debits stop clearing, and the funder notices within days. This is where most MCA default stories start.
The MCA company declares a default.
Many agreements let the funder call an MCA default and demand the full remaining balance at once, often with fees added. The calls and emails pick up fast.
The pressure moves to your receivables.
Some funders send notices to your customers and payment processors based on their UCC lien. That squeezes incoming money, but it does not freeze your bank account.
The funder gets a judgment.
Either it files a confession of judgment with the court clerk, or it sues for breach of contract and wins, often by default. This is the step that makes a freeze possible.
The judgment creditor goes after the bank.
In New York that usually means a restraining notice. Other states call the process a bank levy or a garnishment. A sheriff or marshal can then levy the restrained money and move it out of the account.
If you are somewhere between step 1 and step 3, you still have time to plan. If you are at step 5 with your account frozen, the next section on what a freeze can reach and the first 48 hours checklist below are where to start.
What the Freeze Can Reach in Your Accounts, and What Is a Separate Question
A restraining notice is aimed at money the bank holds for whoever is named in the judgment. That usually means the balance when the notice arrived and, in many cases, deposits that land afterward. In New York, where many MCA judgments are entered, a restraint on a bank can generally tie up as much as twice the amount owed on the judgment and stays in place for up to a year or until the judgment is paid or vacated. Other states use different procedures, often called a bank levy or garnishment, with different limits.
A restraint can reach other accounts at the same bank held by the judgment debtor. That can include personal accounts when the owner signed a personal guarantee and is named in the judgment. One owner put it simply:
"They're going to take 8,100 and some of it's out of my personal account."
So do not assume a personal account is safe. The judgment itself tells you who is named, and that is one of the first things an attorney will look at. If you are not sure whether you signed a personal guarantee, it is almost always in the MCA agreement.
Money held by a payment processor, a marketplace, or a factoring company is not sitting in your bank account. Whether a funder can reach it depends on the judgment, who was served, and the agreements involved. Owners ask about all of these:
"They froze up the Amazon and there's eighteen hundred dollars sitting in the Amazon account."
"I get paid like through a factoring company. So can they, can they get to that money?"
Sometimes the hold on a processor or customer payment is not a bank freeze at all but a notice tied to the funder's UCC-1 filing on your accounts receivable, which works differently. If that is your situation, read how an MCA UCC lien reaches your receivables.
How bad a freeze is depends on what is in the account when it hits. Our client success team has worked with owners whose account was frozen with almost nothing in it. The funder collected little, and that can shape how negotiation goes later. A freeze on the account holding Friday's payroll is a true emergency. Knowing which one you have changes what you do next.
Your First 48 Hours: Get Information Before You Touch Anything
When an account is frozen, the instinct is to move fast and move money. Do the opposite first. These six steps take a day or two, and they give you and an attorney what you need to make the real decisions.
Ask the bank who placed the restraint, and get a copy.
Get the creditor's name, its attorney, the court, the case or index number, the date, and the amount restrained. Ask for a copy of the restraining notice or levy and which accounts it covers.
Find the case and the judgment.
Look up the case in the court system named on the notice. Many New York cases can be searched online. Get the judgment itself and check the amount and exactly who is named.
Check whether you were ever served.
Did a summons come to the shop, an old address, or your registered agent? If the judgment came from a confession of judgment, there may have been nothing to serve. Either answer matters to an attorney.
Pull your MCA agreement and look for COJ language.
Look for "confession of judgment," "affidavit of confession," and the personal guarantee. Note which funder, which agreement, and the date you signed.
List what is due this week.
Payroll, rent, suppliers, taxes, and any daily debits from other MCA funders. Write down the dollar amount you need and the date you need it by.
Talk to an attorney before you touch the account.
An attorney can tell you whether the judgment can be challenged, whether any funds may be released, and how money should be handled while the judgment is open.
Once the Account Is Frozen, You Usually Have Two Ways Forward
Our client success team explains it to panicked owners the same way every time. Neither path is right for everyone, and both come with a cost.
The funder holds the leverage right now, so a quick settlement on the position that froze the account will usually land close to the full number. As our team tells owners, if you settle now, "it's going to be for the full amount," or near it.
This can make sense when the frozen money is what keeps the business running and paying more is cheaper than losing it.
Steady the business first, with your attorney's guidance on how operating cash is handled while the judgment is open, and let the leverage come back before negotiating. A funder that cannot collect does not stay patient forever: "at some point they're going to want something."
This usually gets a better number, but it means living with the freeze longer.
Which path fits depends on how much is frozen, how long the business can run without it, and what the judgment allows. That call gets made with your representative and an attorney, not on a guess in the first panicked hour.
Not Frozen Yet? Use the Time You Still Have.
Three months beats seven days. Maybe you just found a confession of judgment in your agreement and you are scared of the call above. That fear is useful, because you still have time. The businesses that come through a COJ best are usually the ones that knew about it early.
Some businesses with COJ exposure have moved their operating banking to a community bank or credit union before any judgment existed. As one of our team put it, that is "a lot easier for a client to change their bank account over the next 3 months than... over the next 7 days," especially for businesses paid by Medicaid or Medicare, where changing where payments land is "a process that could take 60 to 90 days."
That is why the first call with any company should answer one question: does your agreement have a COJ in it?
To be clear: this describes what some businesses have done before any judgment existed. It is not a recommendation, and it is not legal or financial advice.
Sometimes a Program Is Not the Answer. You Deserve to Hear That Up Front.
When a caller had one small balance and the account was already frozen, our rep told him plainly that "there's very little that we can do at this point," and that working it out directly with the funder might cost him less. Here is when that is usually true:
If one of those is you, we will tell you on the first call, and we will tell you why.
If a Program Fits, Here Is What You Get
Attorney-backed MCA debt program · 19+ years · $300M+ in documented client savings
Most pages about a frozen business bank account are written by law firms that fight the judgment, or by funders who file them. ClearBizDebt is built for the owner with MCA debt across one or more funders who needs the legal side and the negotiation side working together, under one weekly payment.
When a creditor files a lawsuit or a UCC lien, an attorney is assigned to your case at no additional cost, covered by your program payment. If your account was frozen under a confession of judgment, ask on the first call how legal coverage applies to your situation. Here is how attorney assignment works compared with hiring a standalone MCA defense attorney.
ClearBizDebt is the program, not a law firm, and it does not practice law. The legal work on your case is performed by the attorney assigned to it.
The daily debits give way to one reduced weekly payment into an escrow account you can log into and verify, while your balances are negotiated. Here is how MCA debt settlement works across all your positions.
A dedicated representative stays with your case from the first call to resolution. Nineteen years in merchant cash advance debt means the team has seen how most MCA funders use COJs and judgments, and which ones settle.
*Attorney-Backed means that when a creditor files a lawsuit or UCC lien against your business while you are enrolled, an attorney is assigned to your case at no additional cost. ClearBizDebt is not a law firm and does not provide legal advice. Legal services are performed by the assigned attorney.
What Changes When You Are Not Handling the Freeze Alone
You know what froze it.
Instead of "I got no notices," you have the judgment, the court, and the name behind it. A known problem is easier to carry than a mystery.
Your payroll has a plan.
The question stops being "how am I gonna get this, this fast?" and becomes a dated plan for this week's obligations, worked out with people who have seen this before.
You have somewhere to send the calls.
When the funders and their collectors call, you have a representative to send them to, and a weekly payment going into an escrow account you can check yourself.
"I can finally sleep at night."
That is how one client described it to our team once the first settlement came through: "because I see some progress moving."
Your Account Is Frozen. Your Next Call Can Be a Calm One.
A frozen account is a hard week, not the end of the story. The sooner you know what froze it, the more choices you keep.
Frequently Asked Questions
Can an MCA freeze my business bank account?
Yes, but only after it has a court judgment. An MCA funder gets one either by filing a confession of judgment you signed with the agreement or by suing and winning, often by default. With the judgment, the funder serves a restraining notice or levy on your bank. Missing a payment or having a UCC lien on file is not enough on its own to freeze a bank account.
Does an MCA default always mean my account will be frozen?
No. An MCA default lets the funder demand the balance and start collection, but it still needs a court judgment before it can freeze your bank account. Many MCA default situations end in settlement or a lawsuit long before any account is frozen. The risk of a fast freeze is highest when your agreement includes a confession of judgment.
Why is my business bank account frozen?
The most common reasons are a creditor's judgment, a tax levy, or the bank's own compliance or fraud review. If you have merchant cash advance debt, the likely cause is a judgment from a confession of judgment or a lawsuit. Your bank can tell you who placed the restraint. Ask for the creditor's name, its attorney, the court, the case number, and a copy of the notice.
Why didn't I get any notice before my account was frozen?
With a confession of judgment, there is no lawsuit for you to answer, so the first notice is often the frozen account itself. Restraining notices are typically served on the bank, and in New York the rule that requires mailing a notice to the debtor after a bank restraint generally applies to individuals, not businesses. If the judgment came from a lawsuit, the summons may have gone to an old address or a registered agent.
Can an MCA company freeze your bank account without going to court?
Not without a court step, but you may never see a courtroom. With a confession of judgment, the MCA company files the document with the court clerk and a judgment is entered without a hearing. That is why so many owners find their account frozen with no warning. Without a COJ, the funder has to sue and win first.
How can I unfreeze my business bank account?
Generally, a freeze ends when the judgment is paid or settled, when the creditor agrees to release the account, or when a court vacates the judgment or orders funds released. An attorney can tell you whether there are grounds to challenge the judgment, such as problems with the confession of judgment or with service. In New York, emergency requests like these are often brought by an order to show cause.
What is an order to show cause, and can it unfreeze my account?
In New York, an order to show cause is a way to ask a judge to hear a request quickly instead of on the normal schedule. Attorneys use an order to show cause to ask the court to vacate a judgment, stay enforcement, or release certain funds. Whether one makes sense depends on the judgment and the facts, so it is a decision for your attorney, not a form to file on your own.
How long can a business bank account stay frozen?
It depends on the state and the type of hold. In New York, a restraining notice served on a bank generally stays in effect for up to one year, or until the judgment is satisfied or vacated, whichever comes first. A levy can move the money out sooner. A bank's own compliance hold follows the bank's process instead.
What is the difference between a restraining notice, a bank levy, and a garnishment?
A restraining notice tells the bank to hold the money in place. A bank levy, carried out by a sheriff or marshal, actually takes the money out of the account and moves it toward the judgment creditor. Garnishment is the broader term many states use for collecting a judgment from money a third party, like a bank or an employer, holds for you. The names and steps vary by state.
Can an MCA freeze my personal bank account?
It can, in some cases. If you signed a personal guarantee and you are named in the judgment, a restraint can reach personal accounts, including at the same bank as the business. The judgment tells you who is named. Do not assume personal accounts are safe, and have an attorney review the judgment.
Can they freeze a new bank account too?
Generally, yes. A judgment creditor can restrain accounts it identifies in the name of anyone on the judgment, including new ones, and it has tools like information subpoenas to find them. A new account is not a way to put money out of a creditor's reach after a judgment, and trying to use one that way can create fraudulent transfer or contempt problems.
Can they take money from QuickBooks, Stripe, Amazon, or my factoring company?
Those are separate questions from the bank freeze. Money held by a payment processor, marketplace, or factoring company is not in your bank account, and whether a funder can reach it depends on the judgment, who was served, and the agreements involved. Some of these holds come from a UCC lien notice rather than a judgment. An attorney can tell you which applies.
I owed one amount. Why is the judgment so much bigger?
A judgment amount can include the full remaining balance under the agreement, default fees, attorney fees, interest, and court costs, depending on the agreement and the court. Not every charge is always enforceable. Get a copy of the judgment and have an attorney compare it with your agreement and your payment history.
What is a confession of judgment?
A confession of judgment, or COJ, is a document some MCA agreements include at signing. In it, the business owner agrees in advance that if the agreement is breached, the funder can get a judgment without a lawsuit the owner gets to answer. Since 2019, New York generally accepts a COJ only from someone who lived or had a place of business in New York when they signed it, and rules vary by state.
Should I open a new bank account?
Not as a way to keep money from a creditor. Once a judgment exists, moving money to avoid it can create fraudulent transfer or contempt problems. If the business needs a working account to keep operating, ask an attorney first how to handle that properly while the judgment is open. Before any judgment exists, some businesses with COJ exposure have moved their operating banking to a community bank or credit union. That is general information, not legal or financial advice.
Can a settlement program help after the account is frozen?
Sometimes. If you have several MCA positions, a program can negotiate the position that froze the account, either now near the full balance or later once leverage returns, while handling the others. If you have one small balance that is already frozen, working it out directly with the funder may cost less, and we will tell you that on the first call.
Payroll Is Days Away. Get a Straight Answer Today.
Tell us what the bank told you. We will help you figure out what froze the account, whether a program fits, and what your options look like from here. The consultation is free.