Bank Garnishment in Texas After a Business Judgment: What Creditors Can and Cannot Take

By MercResolution · Published 2026-09-02 · Updated 2026-09-07

A Texas business bank account garnishment begins with a writ served on the bank, without warning. Business accounts get little of the protection Texas gives wages, but there are still limits, deadlines and ways to win a release.

In Texas, a creditor holding a final judgment against your business can freeze the company's bank account by obtaining a writ of garnishment and serving it on the bank, and the bank must hold the funds without warning you first. A Texas business bank account garnishment reaches almost everything on deposit, because the exemptions that protect an individual's wages and homestead do not apply to a company's operating money. What the creditor cannot take is money that belongs to someone else, more than the judgment is worth, or funds a court releases after a timely motion or a negotiated deal.

This article explains how the writ reaches the account, why Texas treats a business balance so differently from a paycheck, which funds are off limits, what to do first, and how a release is negotiated. The short answer hides the useful part: a garnishment is a snapshot, not a permanent pipe into your account, and the weeks between the freeze and the payout decide the outcome.

"The owners who handle a frozen account well are the ones who stop arguing with the bank and start reading the paperwork. Once you know which court, which judgment and which creditor, you know exactly who can release the money and what they will want in exchange."

How a Texas Business Bank Account Garnishment Begins

Garnishment is a post-judgment remedy aimed at a third party who holds your property or owes you money. The judgment creditor files an application in the court that entered the judgment, with an affidavit stating that the judgment is valid and unpaid and that the business has no other property in Texas that could readily be seized. The clerk issues the writ and it is served on the bank, which the rules call the garnishee.

The bank's duty begins the moment it is served. It must hold the funds in the debtor's accounts and, within the period the rules allow, file a sworn answer stating what it held at service and what it holds when it answers. Because that window covers deposits that arrive in between, incoming receivables can be swept into the freeze too. The creditor must serve you with the papers promptly afterward, but by design you learn of the freeze after it has happened.

From there the sequence is mechanical: the bank answers, the creditor moves for judgment against the bank for the frozen amount, and the bank pays the money over, less its own fee. Absent a motion or a settlement, the whole process runs in weeks.

Why a Business Account Gets Less Protection Than Personal Wages

Texas has strong debtor protections, and that reputation causes a dangerous misunderstanding. The Texas Constitution and the Property Code shield an individual's current wages from garnishment for ordinary debts, protect the homestead, and exempt retirement accounts and a list of personal property. Every one of those protections belongs to a person or a family. An LLC or corporation has none of them, so a judgment against the entity reaches its bank balance in full.

First, wage protection does not follow a paycheck into the bank; once salary is deposited, Texas courts have generally treated it as ordinary cash. Second, the creditor is not limited to the bank. Garnishment reaches anyone who owes the business money, so a creditor who learns which customers pay you can serve writs on them and intercept receivables before they arrive.

A judgment against a personal guarantor is a different problem, because the guarantor's exemptions for a homestead, retirement accounts and certain federal benefits are real. The full set of remedies a creditor holds is laid out in what a judgment creditor can actually do to your business.

What a Judgment Creditor Cannot Take From the Account

The writ reaches property of the judgment debtor and nothing else. Money that belongs to someone else is not the creditor's to keep, even though the bank freezes it first and sorts it out later: customer deposits held under a written agreement, escrow funds, and receivables owed to a factoring company under a notice of assignment. Sales tax collected from customers and payroll taxes withheld from employees are held for the state and the IRS, and a garnishment that sweeps them creates a worse problem, so they belong at the top of any release request.

Other limits are procedural. A writ based on a judgment that is not final, is superseded on appeal, or names a different entity than the one whose account was frozen is vulnerable. An out-of-state judgment, including the New York judgments many cash-advance funders obtain, must first be filed in Texas under the foreign-judgment procedure, which brings its own notice and window to contest. Nor can the creditor collect more than the judgment, interest and costs.

What to Do the Day the Account Freezes

The broader first-week playbook for a business that cannot cover its obligations is in what to do the first week your business cannot pay its debts.

Contesting the Writ: Motions to Dissolve and Replevy Bonds

A motion to dissolve or modify the writ is filed in the garnishment case, and the court must hear it on a short clock measured in days. The burden is on the creditor to prove the grounds for the writ; the usual arguments are that the judgment is not final or valid, that the affidavit was defective, that the account belongs to someone else, or that specific funds are exempt. The money stays frozen until the court rules.

A second mechanism is the replevy bond: the debtor posts a bond the court approves, the bank releases the funds, and the bond stands in their place while the garnishment is resolved. For a business that needs its account back immediately and can obtain a surety, this is often the quicker route, though it does nothing about the judgment itself.

If the judgment was entered by default because the business never answered the suit, the more valuable step may be a motion to set it aside, and those deadlines are short. That path is covered in whether a default judgment against your business can be vacated.

Negotiating a Release With the Judgment Creditor

Most bank garnishments end in an agreement rather than a court order, because garnishment is expensive and uncertain for the creditor as well. The bank's fees come out of the pot, a motion to dissolve can tie the money up, and a business that loses its operating account often stops generating the receivables the creditor hoped to reach next. A creditor who can convert a frozen balance into cash now plus a reliable schedule will usually take that deal.

The shape of a release is fairly standard: the business pays an agreed sum from the frozen funds or other money, agrees to a schedule on the remainder or a discounted lump sum, and the creditor files a release of the writ and, when the terms are met, a release of judgment. Insist that the release be filed with the court and delivered to the bank in writing, that the agreement bar further writs while you are performing, and that any judgment against you personally is covered.

If you would rather have someone lay the numbers out with you than negotiate from the bank's parking lot, that is what the free 30-minute consultation is for. Stephanie can take the facts through the chat button at any hour, or you can request the free, confidential debt analysis and a specialist will call.

A cash-advance funder acting through your processor is using a contract right, not a court order, and an IRS levy follows its own notice sequence; see what to do when an MCA funder freezes your bank account and how an IRS levy on a business bank account works.

Where MercResolution Fits

MercResolution is a commercial debt resolution firm in Houston, Texas. When a judgment creditor has frozen a business account, our work is the negotiation: we establish what the creditor holds, what it could realistically reach next and what the business can actually pay, then negotiate the release and the resolution of the judgment with the creditor or its attorney. Where a court filing is called for, such as a motion to dissolve or a challenge to the judgment, we coordinate with licensed attorneys, because we are not a law firm.

The first conversation is a free, confidential analysis that tells you which of these paths is realistic given the paperwork in your hand. If the debt turns out to be personal rather than commercial, we will say so and point you toward the right resource. How an engagement runs is described on our how it works page.

Frequently Asked Questions

Can a creditor garnish my business bank account in Texas without notifying me first?

Yes. Post-judgment garnishment is served on the bank before the debtor is told, so the account is frozen by the time you find out. The creditor must then serve you with the writ and application, and you may move to dissolve it. A pre-judgment writ is rare and requires a bond and specific grounds.

Does Texas protect a business bank account the way it protects wages?

No. The wage, homestead and personal-property exemptions in Texas law belong to individuals and families. A corporation or LLC has none of them, so a judgment against the entity reaches its full balance. Even for an individual, wages generally lose their protected status once deposited, although retirement funds and certain federal benefits remain exempt.

Can I open a new bank account after my business account is garnished?

Yes. The writ binds the bank it was served on, not the business, and depositing future receivables at another institution is lawful. What you cannot do is move the frozen funds, and moving other assets to insiders or a new entity to defeat the creditor invites a fraudulent-transfer claim. Expect the creditor to look for the new account through post-judgment discovery.

Can a judgment creditor garnish my customers' payments to my business?

Yes. Garnishment reaches any third party who owes the business money, including customers with unpaid invoices. A creditor that learns who your customers are, usually through post-judgment interrogatories or a review of your bank records, can serve writs on them and take the payments directly.

This article is for educational purposes only and is not legal, tax, or financial advice. MercResolution is not a law firm. Every situation is different — get a free, confidential analysis of your specific circumstances.