Written by attorney Eric Charles Lewis

Help! My bank account is frozen! Using Indiana exemptions to release funds

Help! My bank account is frozen!

It doesn’t get much more frustrating than finding out your bank account has been frozen and you cannot access the funds on deposit. This can happen when a creditor has a judgment against you and in some cases, such as child support, tax liabilities and other obligations, no prior court involvement is needed at all.

When a creditor obtains a judgment against a “judgment debtor," the “judgment creditor" can ask the court for an order freezing any assets belong to the judgment debtor, including checking, savings, credit union and similar accounts.

The account may be “exempt" in part, or in whole, depending on the type of funds on deposit.

Notice Required by Indiana Law

Indiana law requires that upon freezing an account, the bank must send the judgment debtor information that contains:

  • Notice that the account has been frozen
  • Notice of the court and case number
  • Notice of the right to a prompt hearing
  • Notice of the hearing date set regarding the freeze
  • Notice that certain funds are exempt from execution

What Creditors Can’t Touch

Certain funds are either partially or fully exempt from execution to satisfy an outstanding judgment under federal or Indiana law. Those funds include:

  • Benefits derived from Social Security
  • Veteran’s benefits
  • Certain retirement accounts and benefits
  • Some or all funds belonging to joint depositor(s)
  • $350 of any other funds (for a debtor domiciled in Indiana)

Request an Exemption Hearing

To get “exempt" funds freed up before the hearing date set in the notice received, one must ask the court for a prompt “exemption hearing." The purpose of the hearing is for the court to determine the extent that the funds on deposit may be exempt from execution in satisfaction of the judgment.

To get a hearing, fill out the form provided in the notice and send one copy to the court for filing and one copy to the attorney who represents the judgment-creditor. If no form was received, simply write a letter or prepare a legal “motion" requesting the hearing. Under current Indiana law, the hearing should be set within five days of receiving the request for a prompt hearing.

Rights of a Joint Depositor

If a spouse or other joint depositor is on the frozen account, that person has the same rights and responsibilities regarding a prompt hearing. If the joint depositor is not subject to the judgment and corresponding order that froze the account, funds traceable to that depositor are exempt and should be released. It is most important for the depositors to trace the source of the funds on deposit to determine what is exempt from execution.

For More Information:

Lewis Legal Services, P.C. is a consumer rights law firm that focuses on Chapter 7 bankruptcy liquidation and Chapter 13 reorganization. This information is provided courtesy of Lewis Legal Services, P.C. and should not be construed as legal advice.

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