When does a bank freeze money?

Talkin go money

It can be a nasty surprise that your checking account is frozen. If a bank freezes your account, you will have limited access to it. You can check your transactions and receive certain deposits. However, you will not be able to withdraw or transfer your funds until the issue that frozen the account is cleared.

Make sure to contact your bank immediately if your account is frozen. Bank accounts are blocked for a variety of reasons, and each reason requires specific actions to be taken to unblock the account. Below are the top three reasons a bank account can be frozen.

Suspicious or Illegal Activity

A bank can suspend your account if they suspect you are using your account illegally, e.g. B. for money laundering or cashing of checks. Sometimes a bank also freezes an account related to terrorist financing. This includes receiving suspicious payments from a third country or depositing large amounts of money in a suspicious manner, thereby flagging your account. Even gambling can cause a bank to freeze an account if it suspects suspicious activity.

It is rare for bank accounts to be blocked for these instances, especially innocent users. It is best to seek the help of a lawyer to help you resolve this type of case.

Unpaid debts by creditors

Creditors can access your unpaid debt account; However, the obligee must obtain the approval of the courts before commencing the lawsuit. For account holders who have their credit accounts with the same institution as their bank account, the lender can gain access to a checking or savings account to collect payments for defaulted loans without first filing a lawsuit or judgment. As a rule, you must first sign the fine print for these accounts, which gives the bank this authorization.

Once your account of unpaid debt is frozen, it is important that you get the attorney's information from your bank immediately. You need to have a better idea of ​​what is happening to your account and work out a payment arrangement. Unfortunately, ignoring a frozen bank account can make the problem worse, resulting in a decline in your creditworthiness and an increase in bank fees.

Unpaid government debt

People who owe government loans or taxes may also find their bank accounts frozen. The IRS may levy a tax levy on unpaid taxes that should not be waived until the debt is paid in full.

For unpaid student loans, the government can do a few different things that don't require a judgment, including seizing your tax refund or embellishing a percentage of your paycheck monthly. If your loan is default, your federal lender can likely garnish wages and taxes without a judgment prosecute the courts. Student loans only go away after payment. They only go away with bankruptcy under certain circumstances.

Key takeaways

With the possibility of your bank account being blocked due to debt collectors or suspicious activity, your bank account should not be free of funds. Depending on which state you live in, there are limits to the type of income you can get from your account. For example, in some states, it is illegal for creditors to withdraw social security benefits, child support, employee compensation, and more. However, you must submit an exemption request within 10 days of your account being frozen.

Contact the Legal Department to assist you in unlocking your bank account. Consumer bankruptcy attorneys do not force you to prosecute bankruptcy, but they do help you understand the legal actions creditors can take, as well as your rights in these situations.