You log into your business account at 7am and the balance reads zero. Yesterday's batch deposit is sitting there flagged "hold." A notice arrived at the bank's legal department the previous afternoon. The bank did not have to tell you first, and your account officer cannot reverse it. Payroll runs in 48 hours.
What a restraining notice actually does
A restraining notice is a one-page document a judgment creditor's lawyer serves on your bank. In New York it runs under CPLR 5222. Most states have an equivalent. The notice freezes funds on deposit up to twice the amount of the underlying judgment. If the lender holds an $80,000 judgment, the bank will restrain up to $160,000.
What it does not do: it does not freeze incoming deposits at other banks, it does not touch accounts the judgment creditor has not identified, and it does not capture funds that are statutorily exempt. In New York the notice lasts one year unless renewed. Most lenders follow the restraining notice with a levy or marshal's execution within days, and that is what actually removes the money. The restraining notice is the hold. The levy is the withdrawal.
The freeze is mechanical. A clerk at the bank's legal department processed the paper and tagged the account. There is no judgment of merit happening inside the bank. They are following the document on its face.
The first 48 hours
The order matters. Call counsel before you call the lender. An attorney who has dealt with MCA judgments will read the underlying paper, the confession of judgment if there is one, and the venue clause, and know within an hour whether you have grounds to move to vacate. Calling the lender first commits you to a number you have not done the math on, and anything you say goes into a collections file.
While you wait for that call, pull documents. The original MCA agreement, every amendment, the confession of judgment if you signed one, 90 days of bank statements showing payments, and the wire record of the original advance. If the lender's accounting is off, the dispute starts here.
Move incoming receivables. Tell customers paying you this week to hold checks or reroute to a separate account at a different bank, one the lender has not identified. This is different from moving money out of the frozen account, which is a separate problem covered below.
Why the bank cannot help you
The branch manager has no discretion. The bank's legal obligation is to the court that issued the judgment, not to you. Asking a manager to release funds for payroll wastes a morning. The notice has to be lifted by the same court that issued it.
Exemption claim forms protect specific categories of money: certain government benefits, child support, in some states a small payroll account exemption. They do not protect a business operating account. Filing the form does not unfreeze anything; it preserves a future argument.
The options on the table
Vacating the judgment is the cleanest outcome and the hardest. If the judgment was entered on a confession of judgment, the grounds usually argued are improper venue, defective affidavit, fraudulent inducement at signing, or jurisdictional defects. Courts vary in how receptive they are. The motion takes weeks, but a temporary stay of enforcement can sometimes be obtained quickly while the motion is briefed.
Partial release for payroll is the most common short-term move. Counsel contacts the lender's attorney and proposes that a fixed amount be released to a payroll account in exchange for an immediate good-faith payment and a written restructure. Lenders who agree often want 10 to 20% of the judgment up front. It is not principled, but it is faster than a motion.
Full settlement closes the file at a discount. Stacked borrowers with three or four advances in default sometimes settle the lead judgment at 60 to 70 cents on the dollar because the lender knows the next creditor in line will take whatever is left. Settlement requires capital you may not have, which is the part that often kills this option.
If this freeze is one of several problems, Chapter 11 Subchapter V is on the table. The automatic stay halts all collection on filing, including restraining notices and pending levies. It is a heavy tool, but Subchapter V is built for small businesses with under roughly $7.5 million in debt, and the relief is immediate.
What not to do
Do not open a new account at the same bank. The legal department will sweep it under the same notice within days. Move to a different institution entirely.
Do not move money out of the account between learning about the lender's lawsuit and the notice arriving. Transfers in that window can be unwound as fraudulent transfers under state law, and they hand the lender free leverage in any negotiation that follows.
Do not ignore the notice hoping it expires. A year is a long time to operate without your primary account, and the levy that follows the restraining notice does not expire. It collects.
The restraining notice is designed to put you on the lender's timeline. The first 48 hours are not enough to fix the underlying problem, but they are enough to stop making it worse. The first call is to counsel. The second is to the customers whose deposits land tomorrow.