7 Things a NYC Marshal Can Do to Your Business Bank Account (and 3 They Cannot)

The Officer Who Actually Shows Up in the Five Boroughs

Outside New York City, a judgment creditor hands its paper to a sheriff. Inside the five boroughs it usually goes to a city marshal, and the difference matters because marshals are private officeholders who are paid out of what they collect, which makes them fast in a way a county sheriff’s civil bureau generally is not. N.Y.C. Civil Court Act §1609 gives a marshal the powers of a sheriff as to the taking and restitution of property, extends that authority throughout the city, and then takes two powers back out. Everything below tracks those grants and those limits, because the difference between them is most of what a business owner needs to know in the first 48 hours.

None of the seven steps that follow requires a hearing, a phone call to you, or a judge’s signature on the day it happens. The judgment already gave the creditor everything it needs, and the statutes turn that judgment into instructions an officer follows. That is why owners describe the same experience over and over: payroll bounces on a Thursday, the bank has no explanation beyond a legal hold, and the funder’s counsel does not return calls until Monday. Knowing which of these steps is actually running against you decides whether the fix is a phone call to the bank, a motion under C.P.L.R. §5240, or a negotiated payoff with a satisfaction attached.

1. Take an Execution to Your Bank the Week After Entry

An execution is the piece of paper that turns a judgment into an instruction. Under C.P.L.R. §5230 it may be issued by the clerk of the court or, more often, by the judgment creditor’s own attorney acting as an officer of the court, and it directs the enforcement officer to satisfy the judgment out of your personal property. Nobody appears before a judge to get one. The funder’s lawyer prints it, delivers it to a marshal along with the docket information, and the marshal is authorized to act on it immediately. In practice the interval between entry of a judgment and delivery of an execution is measured in days.

From the creditor’s side the economics push hard toward speed. The execution has a 60-day return under C.P.L.R. §5230(c), extendable once for another 60 days by the attorney’s own written extension, so the paper has a shelf life and everybody in the chain knows it. A marshal who collects gets paid; a marshal who returns the execution unsatisfied does not. Meanwhile the judgment itself is accruing post-judgment interest at 9% under C.P.L.R. §5004(a), because the reduced 2% rate reaches only a natural person’s consumer debt and a business judgment is not that.

What this means on your side is that the window you think you have is usually already closed. Owners frequently tell us they were waiting on a settlement conversation while the execution was already in a marshal’s hands. If a judgment has been entered against your company, the correct assumption is that an execution exists, and the correct question is not whether the account will be reached but which account and on what day. Counsel can find out by pulling the county clerk minutes and the docket entries, which show the judgment, the amount, and often the enforcement filings that followed.

2. Levy on the Operating Account Without Setting Foot in Your Office

Money in a bank account is a debt the bank owes you, and under C.P.L.R. §5232(a) a levy on that kind of property is made by serving a copy of the execution on the garnishee. The garnishee is your bank, not you. Service on the branch or on the bank’s designated legal-process unit is what freezes the funds, and the levy remains effective for 90 days from service unless a court extends it. There is no requirement that anyone tell you first, and in the ordinary case the first notice you get is a declined transaction.

The reason funders like this route is that it is cheap, remote and repeatable. A levy served on a bank costs a marshal’s fee and a courier. Compare that to sending an officer to a warehouse to inventory and seize equipment, which requires transport, storage, valuation and a sale. A collections department chasing forty files does bank levies on all forty and seizures on almost none, which is why a business that keeps one account at one bank is the easiest possible target and a business whose receipts route through a lockbox with a factor is a much harder one.

The 90-day figure is the number to hold on to, because it changes what an empty account means. A levy served on a Tuesday against an account holding $1,400 does not simply fail. It sits on the relationship, and the bank’s treatment of deposits arriving afterward is a genuinely contested question in New York rather than a settled one, so plan for the worse reading. Our page on the restraining notice that usually arrives alongside it walks through how the two instruments interact.

3. Have the Bank Hold Twice the Amount You Actually Owe

This is the provision that surprises people most. Under C.P.L.R. §5222(b) a garnishee that holds twice the amount due on the judgment has satisfied its obligation as to the rest of your property. Read the other direction, that is a licence to freeze double. A $86,000 judgment supports a hold of $172,000, and the bank has no incentive to hold a dollar less than the statute permits, because holding too little is what creates liability for the bank and holding too much creates liability for nobody but you.

The people on the other side of this understand exactly what it does. A funder that is negotiating with you while holding a judgment is negotiating with the knowledge that it can double the pain on demand, and the doubling is the point: it is not designed to secure the debt, it is designed to take the business out of operating condition until somebody pays. That is also why the number frozen and the number owed almost never match on the bank’s hold notice, and why the first conversation with the bank tends to go nowhere. The bank is following a statute, not exercising judgment.

What you can do about it is narrower than it should be and still worth doing quickly. A judgment debtor may move under C.P.L.R. §5240 for an order modifying or denying the use of any enforcement procedure, and courts do use it to release over-restrained funds, condition a release on an escrow, or carve out a payroll run. That motion needs a lawyer, a proposed order and bank statements showing what the frozen money is for. It does not need you to have a defense to the underlying judgment, which is the part owners usually assume disqualifies them.

4. Add 5 Percent Poundage to the Bill for Collecting It

A marshal is compensated by poundage, which is a percentage of the money collected. Under C.P.L.R. §8012(b) the rate is 5% in the City of New York; elsewhere in the state the schedule runs 5% of the first $250,000 and 3% of the residue. Poundage is not paid out of the creditor’s recovery in the way a contingency fee is. It is an enforcement cost that gets loaded onto the debtor, which means the amount that has to move before the judgment is satisfied is larger than the judgment.

Understanding that fee explains behavior that otherwise looks irrational. A marshal has a direct financial interest in collecting the full amount, promptly, and in as few executions as possible. It also means there is a real cost to a partial settlement negotiated after a levy has attached, because poundage can be claimed on money the marshal’s process produced even when the parties then paper the deal as a voluntary payment. Anyone settling a judgment with an active execution should ask, in writing, who is paying poundage and on what number.

Run the arithmetic before you agree to anything. On a $400,000 judgment, poundage in the city adds $20,000, and that assumes a single collection event. Add 9% statutory interest running from entry and the gap between the number in your head and the number that satisfies the judgment gets wide fast. The practical move is to negotiate a payoff figure that is expressly stated as inclusive of interest, costs and poundage, with a satisfaction of judgment filed against it.

5. Come Back for the Register, the Inventory and the Vans

A bank levy is the first move, not the only one. Property capable of delivery is levied on by seizure under C.P.L.R. §5232(b), and that reaches the cash in a register, finished inventory, tools, and titled vehicles registered to the company. Once seized, personal property is sold, and C.P.L.R. §5233 requires notice of the sale to be posted at least six days beforehand in three public places in the town or city where the sale will be held. Six days is the entire warning period, and it runs from posting rather than from anything mailed to you.

Seizures are rarer than levies for the cost reasons in item two, but they happen on a predictable trigger: an account that came back empty, a business that clearly has physical assets, and a creditor who has decided the file is going to be worked rather than parked. Once a marshal has been to the premises once, the calculus changes again, because now the creditor has an inventory and knows what is there. Vehicles are the usual target because they are titled, easy to value and easy to move.

Two defensive points matter here and both need counsel. First, property subject to a prior perfected security interest is not free money, and a marshal selling equipment out from under a first-position equipment lender creates a mess that a lienholder will litigate. Second, C.P.L.R. §5239 gives a person with an adverse claim to the property a proceeding to determine rights before the sale, and §5240 is available here too. Both are useless the day after a sale and effective the week before one.

6. Serve Four Banks on a Single Judgment the Same Morning

Nothing in the statute limits a creditor to one garnishee. An execution can be delivered to a marshal with instructions to levy at every institution where the debtor is believed to bank, and each garnishee applies the twice-the-judgment measure to itself. Four banks served on one $86,000 judgment can each hold up to $172,000, and none of them knows what the others are doing. The creditor is only entitled to be paid once, but the freeze is not the payment, and the excess sits locked while the parties sort it out.

The creditor learns where you bank from information it already has. Your voided check from the advance application, the ACH origination records, the routing number on every debit that ever cleared, and a C.P.L.R. §5224 information subpoena, which carries a seven-day response period and a certification requirement without which the subpoena is null and void. Funders keep every bank statement you sent during underwriting, which is why the "open a new account quietly" instinct tends to produce a second levy rather than breathing room.

Untangling a multi-garnishee freeze is a matter of showing the court an aggregate that no longer resembles the statute’s purpose, and it is one of the strongest §5240 applications there is. It is also the moment where doing nothing costs the most, because every day of an over-freeze is a day of missed vendor payments that turn into their own claims. If you are seeing declines at more than one institution, that is not a coincidence and it is not a banking error.

7. Move From the Company Account to the Guarantor’s Paycheck

If you signed a personal guarantee, and in this market you almost certainly did, the judgment usually names you as well as the entity. That opens an income execution under C.P.L.R. §5231, which is served on your employer and captures a percentage of your wages. The caps are real and they are the only thing standing between the creditor and the whole check: 10% of gross earnings, nothing at all in a week where disposable earnings do not exceed 30 times the federal minimum hourly wage, and an overall ceiling of 25% of disposable earnings. The officer serves you first and has 20 days to do it.

There is a second layer that owners of closely held companies discover late. C.P.L.R. §5205(d)(2) exempts 90% of earnings from personal services rendered within 60 days before, and at any time after, an income execution. That protects working income, but distributions, draws and shareholder loan repayments are not earnings for personal services, and a creditor who reads your K-1 will say so. If you have been paying yourself in distributions to manage payroll taxes, you have optimized yourself out of the protection.

This is also where the enforcement stops being about the business at all. A guarantor with a judgment carries it for 10 years as a lien on real property from filing of the judgment roll under C.P.L.R. §5203, and 20 years before the presumption of payment in C.P.L.R. §211(b) even arrives. Any settlement that resolves the company balance and leaves the guarantee judgment standing has solved the smaller half of the problem, which is why the release language matters more than the number.

The Three Things a City Marshal Simply Cannot Do

First, a marshal cannot touch real estate. N.Y.C. Civil Court Act §1609 says in terms that city marshals shall have no power to levy upon or sell real property. If the funder wants your building, your co-op shares or a parcel you hold personally, it has to take a different road: docket the judgment with the county clerk so it becomes a lien on real property under C.P.L.R. §5203, then run a sheriff’s sale under C.P.L.R. §5236, which requires posting 56 days ahead, publication once in each of four successive 14-day periods, 30 days’ service on recorded interests, and a sale between the 56th and 63rd day after first publication. That is a months-long, expensive, highly visible proceeding, and it is nothing like a bank levy.

Second, a marshal cannot arrest you. The same section states that city marshals shall have no power of arrest. This sounds obvious until you have received a collection call telling you that an officer is coming to your home with a warrant, which happens often enough that it is worth writing down. New York also has a constitutional and statutory bar on imprisonment for debt, and the only realistic arrest exposure in a civil enforcement matter comes from disobeying a court order, which is contempt and requires a judge.

Third, a marshal cannot put the creditor ahead of your own bank. The Court of Appeals held in Aspen Industries, Inc. v. Marine Midland Bank, 52 N.Y.2d 575 (1981), that a restraining notice creates no lien on the restrained property, and that a bank’s own right of setoff against its depositor is superior to the restraint. If your bank is also your lender and you are behind on a line of credit or an equipment note, the money in the account may leave in the bank’s direction rather than the funder’s, whatever the marshal serves.

None of the three is a defense to the judgment. They are boundaries on the enforcement, and the reason to know them is that the collection scripts you hear on the phone routinely claim powers that do not exist. When a caller tells you a marshal is coming for the house or for you personally, that caller is describing something N.Y.C. Civil Court Act §1609 forbids, and the right response is to write down the time, the number and the words used, and give them to counsel. Counsel who handle these files every week are listed on our New York City MCA defense page.

Who the Bank-Account Protections Were Actually Written For

New York has a serious set of protections for restrained bank accounts, and almost none of it reaches a company. C.P.L.R. §5222(h) sets a floor below which a bank may not restrain, conditioned on statutorily exempt payments having been directly deposited in the 45 days before service; the statute writes $2,500 and the Department of Financial Services adjusted it to $3,425 effective April 1, 2024, with the next adjustment due April 1, 2027. C.P.L.R. §5222(i) protects 240 times the greater of the federal or state minimum hourly wage, which on the New York minimum in effect from January 1, 2026 works out to $4,080 downstate and $3,840 upstate.

Then read C.P.L.R. §5222-a, the Exempt Income Protection Act procedure that gives a debtor exemption-claim forms, two business days for the bank to act and 20 days for the debtor to respond. It applies to a natural person’s account. Your operating account, held by an LLC or a corporation, is outside all of it, and so is the account you opened under a trade name for the business, because an assumed name is not a separate legal person and the money in it is the company’s.

The consequence is blunt and worth stating plainly: a business checking account in New York can be restrained to the last dollar, and the tools that stop that from happening to an individual do not fire. What a company has instead are C.P.L.R. §5240, the general protective-order provision that lets a court modify or deny the use of any enforcement procedure, and C.P.L.R. §5239, the adverse-claim proceeding. Both are discretionary, both need a motion, and both work far better before the funds have moved than after. If you want the full mechanics of the freeze itself, we set them out in the warning signs that precede an account freeze.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.