How To Unfreeze Your Bank Account

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Discovering that your bank account has been frozen is frightening and frustrating. Usually, you receive no advance notice before you’re suddenly separated from your funds and left scrambling to find another method of payment. Bank accounts are frozen for a variety of reasons, and each one requires a unique set of steps to get the bank to unlock the account. Continue reading to find out how to unfreeze your bank account.

Reasons your bank account was frozen 

A frozen account is one in which no debit transactions can be made. This means you won’t be able to withdraw money or make purchases. Account freezes are usually the result of a court order, but in some cases, the bank will take that action itself for other reasons.

Account inactivity

Accounts may be closed by banks at any time and without prior notice. Inactivity or low usage are a couple of potential causes. If this is the case, your account isn’t really frozen even though you can’t immediately withdraw the funds. The bank must release your funds if the account is closed for inactivity. It can legally deduct money you owe from the account balance. Usually, it just takes a phone call to request a check if it’s not automatically mailed to you. 

Suspicious or fraudulent activity

Account security is taken seriously because a bank’s reputation depends on its ability to keep money safe. Banks are aware of how and where you typically spend your money, so an unusually large purchase or cash withdrawal may be a sign of fraud that will cause an account freeze. Traveling and using your card outside the state or country could trigger a fraud freeze if you didn’t notify the bank beforehand. 

When working with law enforcement agencies, banks may freeze the accounts of people who have been found guilty of a crime or are the subject of an investigation. If the bank suspects criminal activity, such as money laundering, it can freeze the account. 

Creditor judgment

Creditors have the right to sue you and, if they are successful, obtain a  judgment giving them the authority to collect the debt they are owed. The ability to freeze a debtor’s bank accounts is a particularly effective tool for enforcing court-ordered judgments

What happens when your bank account is frozen

If your account is frozen, you won’t be able to access your funds until the problem is resolved. This action prevents you from withdrawing money and also stops scheduled payments from being processed. As a result, you’ll likely pay a non-sufficient funds (NSF) fee because these payments will bounce if you don’t cancel the automatic payments.

If your bank account is frozen for suspicious activity

The freeze may last 7 to 10 days in cases where there’s a minor issue or misunderstanding. For more complicated situations, the bank might ask for thorough documentation, review it, and make a decision regarding whether to unfreeze the account or completely close it after 30 days or more.

If your bank account is frozen for unpaid debt

A bank account may be frozen indefinitely or until you meet the requirements set forth for lifting the freeze. However, it usually takes 3 weeks, which is intended to give you enough time to resolve your dispute with the creditor. 

Until the statute of limitations (which varies from 3 to 15 years depending on the type of debt and where you live) has passed, creditors and collection agencies may file a lawsuit against you for unpaid debt.

Steps to unfreeze your bank account

You can use these steps to try to fix the problem when your bank account is frozen.

Contact your bank 

Calling your bank will take care of any issues if your account has been frozen as a result of suspicious activity. 

Contact your creditors

A creditor may unfreeze your account in exchange for a lump sum or if you agree to enter a repayment plan to satisfy the judgment.

Certain funds, including Social Security benefits and government assistance, are exempt from bank freezes. Even if a creditor has a judgment against you, it has no right to freeze the account if all the money in it is exempt from debt collection. You’ll need to provide proof these funds are exempt to have that portion of money released. If the entire account is exempt, they’ll be required to lift the freeze. 

Consider bankruptcy 

Filing bankruptcy can help unfreeze the account, but it won’t happen immediately. The bank will wait for a court order before taking action. Bankruptcy is often effective in preventing account freezes and levies before collection activity takes place. Bankruptcy does negatively impact your credit and brings with it other implications you’ll want to consider before filing.  

Bottomline for frozen accounts 

A frozen bank account can leave you feeling helpless, but using the advice here, you can lift the freeze and regain access to your money. If the freeze is from debt you owe to creditors, contact the creditor to resolve the debt. You can take legal action, such as consulting an attorney to vacate the judgment or explore bankruptcy as possible means for accessing funds.

FAQ

How long does it take to unfreeze a bank account?

The length of time it takes to unfreeze a bank account varies based on the reason for the freeze. If it was from suspected fraud, usually it can be unfrozen within a week. For more complex issues, the account can remain frozen indefinitely. 

What happens if I don’t unfreeze my bank account?

If you don’t take the steps to unfreeze a bank account, creditors can seize the money owed from the account. If you don’t unfreeze a bank account for fraud, you won’t have access to your money, and you’ll risk insufficient funds fees and overdraft fees for any transactions.

How do I get money out of my frozen bank account?

You can get money out of a frozen bank account by resolving the issue that caused the freeze. Until the freeze is removed, you can’t make withdrawals or purchases.

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