Bynes was caught talking to herself while walking the streets of NY alone earlier this month.
The judge temporarily denied the conservatorship until he has a one-on-one with Bynes and talks to her doctors.
The former Nickelodeon star's parents are looking to control their daughter's finances after she has reportedly spent a huge amount of money in a very short amount of time.
According to legal docs obtained by TMZ, Bynes had $4 million in the bank and recently spent $1.2 million, in addition to two $100,000 withdrawals in June and then July.
Bynes' parents have no idea where she spent the money, but say they believe she spends "a substantial amount" for marijuana and other illegal substances.
In the docs, they say Amanda has become "extremely paranoid about being watched," covering smoke alarms with towels and taping windows shut to prevent cameras from shooting her.
The docs continue that Bynes has "profound issues with her body image" and is "obsessed with the fact that she (and others) are ugly" -- which anyone who follows her Twitter account can attest to.
While doctors suspect Bynes may be schizophrenic, her parents agree that she isn't in touch with reality.
When they asked her how she arrived from New York to Los Angeles last week, the former child star reportedly told her parents she "cabbed it." They also believe she is now homeless.
But as her parents are fighting for control, Bynes is aggressively seeking freedom as her lawyer just filed legal docs asking for an emergency hearing to free her from the psych ward.
Stay tuned.