Funds protected against debt collection

If a court decides that you owe money to a person or a company, a debt collector may come after your bank account:

• The debt collector may use the court judgment to restrain, or freeze, your account.
• The debt collector may hire a sheriff or marshal to levy, or seize, money from your account.

Federal and New York state laws exempt, or protect, some of the money in your account against being frozen or seized by debt collectors:

• A certain amount of your money is automatically protected.
• You can claim more of your funds to be exempt, if they are eligible government benefits or retirement funds.
• Some money you have in payment apps or prepaid or debit cards may also be protected.
• These rules apply only to accounts owned by individuals – not companies.
• The rules may be different if you owe taxes, child support, spousal support, or student debt. 

Read on to learn more about how the laws protect your bank account. 

The Exempt Income Protection Act (EIPA)

An important New York law that protects some of the money in your bank account is the Exempt Income Protection Act (EIPA). New York passed EIPA in 2008 to prevent debt collectors from draining people’s bank accounts, leaving New Yorkers unable to cover their basic needs.

EIPA applies to bank accounts and many payment apps and prepaid cards, which are often owned by banks or which deposit your money into a bank. For example, in January 2025, the Attorney General secured over $1 million in a settlement with a prepaid card company in part for ignoring the rules under EIPA, and in April 2024, the Attorney General secured a separate $700,000 settlement against the bank holding customers’ funds for that prepaid card company.

EIPA does not apply if: 

• You owe the government money, such as taxes.
• You owe child support, spousal support, alimony, or student debt.
• Your bank account is owned by your company, rather than you as an individual. EIPA applies only to accounts owned by individuals.

A certain amount is automatically protected

EIPA automatically protects (exempts) a certain amount of money in your bank account from being frozen or seized. This amount is based on the minimum wage and may change. As of January 2025, this protected amount is: 

• $3,960 if you live in New York City, Long Island, or Westchester
• $3,720 if you live anywhere else in New York state 

No matter how much the court judgment says you owe, you’re entitled to access and use this much money in your account:

• The debt collector can only freeze or seize funds in each account over the applicable amount. 
• If you have less than the protected amount in your bank account, the bank cannot freeze your account.
• This rule applies separately to each account you own. If you have more than one bank account, the rule protects this amount in each of your accounts.

How to protect more than the automatically exempt amount

If you have more than the automatically protected amount, your bank must leave the exempt amount available to you. However, your bank can legally freeze the rest of the funds in your account. 

The bank must also send you two copies of a document called an exemption claim form.

If more of your money is protected because it is government benefits or retirement funds, use this form to claim that the money is exempt:

• Complete both copies of the exemption claim form. 
• Send one copy to your bank and the other copy to the debt collector that froze your account. 
• Keep a copy for your records.
• You may be able to get your account released faster if you include proof, such as recent bank statements, that your money is exempt.

Send the completed exemption claim forms within 20 days of when the bank mailed them to you. This will trigger certain deadlines under EIPA that the bank and debt collector must follow:

• The debt collector has eight days from receiving your exemption claim form to file an objection with the court. 
• If the debt collector does not object, the bank must release your account eight days after receiving the exemption claim form.

Even if you can’t send your exemption claim forms within 20 days, you can take other steps to release your exempt funds:

• Send proof to the debt collector that your bank account contains exempt funds. 
• Go to court to request help getting your bank account released.

If you discover that your bank account is frozen, but you didn’t receive exemption claim forms, contact or visit your bank to request the forms. Under EIPA, your bank may not freeze your account unless it received these forms from the debt collector.

If you think your bank is violating EIPA:

• Bring a copy of this information to your bank branch and ask to speak to a branch manager.
• Find legal services organizations that may be able to help with EIPA-related issues at www.lawhelpny.org.

Contact the Attorney General

If you have had exempt funds frozen or seized in violation of these rules, report the violation to the Office of the New York State Attorney General (OAG). Any identifying information provided to OAG will be protected according to laws and policies on the safeguarding of identifying information.

Call: 1-800-771-7755