Has your bank account been frozen? If so, you are not alone. A frozen account can be a frustrating and confusing experience that leaves you unable to access your funds or make transactions. But do not panic. There are steps you can take to unfreeze your account and get back to accessing your funds.
This blog post will explain how to unfreeze your bank account quickly and easily so you can return to your financial life with minimal hassle. So, whether you are dealing with unpaid debts, suspicious activity, or other reasons for a frozen account, read on to learn what to do next.
How do I unfreeze my frozen bank account online?
Step 1: Contact the Bank
If your bank account is frozen, the first step is to contact your bank’s customer service. They will help you find the reason why your bank account was frozen.
You can usually find the customer service phone number or chat feature on your bank’s website.
The reason for an account freeze may be debts, unpaid taxes or suspicious transactions. You can also review your bank statements for any fishy activity or concerns.
Step 2: Stop outgoing payments
Notify every person or organization with whom you have automatic payments or pending transactions. You will not be able to send money or access deposits that you get.
Step 3: Follow the bank’s instructions
Cooperation with the financial institution is the key. The bank usually tells you what steps you need to take. So, act fast. Find proof to substantiate your claim and provide any necessary information or documentation.
If you have a joint account, both holders may need to provide documentation and work together to unfreeze the account.
For an investment account or an online business bank account, you may need to provide additional information or documentation.
Step 4: Seek professional help
If you are concerned about the freeze on your account, you can speak with your nearest bank branch or credit card company for further aid.
On the other hand, if you are a judgment or debt collector or concerned about money owed to you, consider seeking the advice of a debt collection defence attorney.
Step 5: Be patient
Wait for the bank to review your request and lift the freeze on your account. This process may take time, depending on the cause behind your account freeze.
How long does it take to unfreeze a bank account?
Some banks may be able to unfreeze a bank account immediately if the issue is related to a simple administrative error or if the account holder provides the necessary documentation quickly.
More complicated concerns may require the financial institution to conduct a thorough review, which could take 7-10 business days.
In some cases, a court judgment, a debt collector or other collection efforts may be involved, which could result in freezing your bank account from 30 days to 2 years.
However, how long it takes to unfreeze a bank account will depend on the specific policies of your bank’s discretion and the reason for the account freeze.
Communicating with your bank customer service throughout the process is crucial to understanding the timeline and any additional steps you may need.
What are common reasons for a bank account to be frozen?
A bank may freeze a bank account for several reasons, like suspicious activities, potential fraud, unpaid debts or taxes, or court judgments.
Safety concerns
If the bank sees unfamiliar spending on your account, suggesting potential unauthorized access or a hack, it may temporarily freeze your account for protection.
You can also choose to freeze your account temporarily if your credit or debit card is lost or stolen to secure your money.
How to unfreeze a bank account due to safety concerns:
Contact your bank about the issue and follow the instructions provided by your bank. Provide any verification document that the bank requires.
Suspected fraudulent activity
Banks can freeze an account due to suspicious activity on an account, such as:
- an unusual spike in activity or transactions
- unauthorised transactions
- identity theft
- etc.
According to the Proceeds of Crime Act 2002, if the bank account is used in connection with the crime, the bank will report suspicious activity to the national law enforcement agency. They will investigate it for 7-31 days.
Unfortunately, your manager cannot notify you about your frozen account or the reason for it due to the tipping-off offence under the Proceeds of Crime Act 2002.
If the national law enforcement agency believes you are guilty, it will request an account freezing order for accounts with as little as £1,000. It includes your business account and a savings account.
The bank and Building Society accounts freeze can last between 3 months and 2 years while the investigation is ongoing.
How to unfreeze a bank account due to fraudulent activity:
- Seek legal advice and cooperate with authorities to navigate the process.
- In some cases, if you have a good relationship with your bank and provide sufficient evidence that you are not engaged in fraudulent activities, the bank can unfreeze your account instantly or within a few hours.
- If it was a court order to freeze your bank account, you do not necessarily need to win the case to unfreeze it. Providing the required documentation and complying with court orders can be enough, regardless of the case outcome.
Unpaid debts and overdrafts
Debts to the Internal Revenue Service (IRS) or other creditors and unpaid taxes can also result in a bank account being frozen.
However, banks and other financial institutions can only freeze an account if they have a court order. Also, they should send you a notice.
In this case, judgment creditors freeze bank accounts to pressure people into making payments.
Also, they place a hold on your account for double the judgment amount. However, you only owe the judgment creditor the actual judgment amount, not the total sum mentioned.
How to unfreeze a bank account due to unpaid debts:
In general, you must have no outstanding debts or unpaid taxes that could be causing the account freeze.
- The first solution is to resolve any such outstanding debt or issues as quickly as possible.
- Some creditors may be open to negotiating a payment plan. If they agree, they can tell the bank to unfreeze your account.
Compliance with legal obligations
Financial institutions must freeze accounts in response to court orders or judgments in cases related to money laundering, terrorist financing, or other illicit activities.
For example, in 2022, over 200 bank accounts, totalling almost $8 million, were frozen by the federal government using emergency powers. According to CBC, the government did it to end the mass protest occupation of downtown Ottawa.
How to unfreeze a bank account due to compliance with legal obligations:
- It is crucial to understand the Legal Implications and comply with legal obligations.
- Address the underlying problem and work with the parties involved to resolve it.
- Consultation with an attorney is always advisable.
Prolonged account inactivity
Financial institutions freeze accounts without any activity or transaction history for a specific duration.
How to unfreeze a bank account due to account inactivity:
- Try to make a deposit or withdrawal. Some banks may automatically unfreeze your account after completing a transaction within a set timeframe.
- If this method does not work, consider contacting your financial institution. Explain the situation. The bank will tell you what to do, or they will solve the issue by themselves.
In the future, you can keep your account active by initiating transactions or maintaining a minimum balance.
📚Related: How to Withdraw Money from a Frozen Account?
What are the consequences of having a frozen bank account?
Frozen accounts not only make it impossible to access your money. It also results in some other issues:
- You can not transfer money
- Standing orders will be suspended
- Scheduled payments will not go through
- You can not use the credit or debit card linked to the frozen bank account.
- Checks on the account will bounce
- Account freeze can negatively impact your credit score
- A credit judgment could remain on your credit history for a maximum of seven years
- You may face non-sufficient funds (NSF) charges and additional penalties
- Illegal actions may lead to prosecution
These are only the most common outcomes of having your bank account frozen. If you see other unusual effects, contact your bank for clarification.
What are the alternatives to using a debit card if your bank account is frozen?
If you have a cheque, you can take it to the bank or a branch to cash it. However, you may incur fees and need to provide two forms of ID.
Consider opening a new bank account elsewhere to redirect crucial payments or income until the freeze is resolved. Various financial service providers offer fast and easy account opening and provide debit or other types of payment cards.
Another option is prepaid debit cards. They are a convenient option for cashless purchases without a traditional bank account. Typically, these cards feature low or no fees and reload options at various retail locations.
If the reason for the freeze is related to compliance with legal obligations, it doesn’t mean that all your bank accounts are frozen. You should still be able to access those bank accounts containing a small amount of money.
How can I prevent my bank account from being frozen?
Account freeze is an uncomfortable situation, but you can avoid it by applying some methods:
1. Do not ignore debt collectors
Even though it may be tempting to press mute when you see a call from debt collectors, resist it. Debt collectors have strict procedures to recover unpaid debts from you.
Avoiding or ignoring debt collectors may heathen the situation, potentially leading to legal proceedings and an account freeze.
2. Monitor account balances and keep up with your bills
Be aware of incoming and outgoing money transfers. Warn the bank if you see any suspicious transactions. It will help you avoid further unpleasantness with legal powers.
Also, pay your bills on time and avoid overdrafts. If an overdraft occurs, always pay off the balance as fast as possible.
If you find it challenging to meet your bill payment deadlines, reach out to your creditor and seek to arrange a payment plan.
4. Update your contact information
Sometimes, the reason for an account freeze is incorrect bank account holder’s information. To avoid this situation, update your home address, phone number, email, and other important information.
5. Understand and comply with the bank’s terms and conditions
It is crucial to know your rights and obligations to the bank and obey the rules. Breaking these rules may lead to penalties or even an account freeze.
Therefore, being familiar with the policies of the bank can help account holders understand the reason for the freeze and avoid it.
6. Do not open an account in a bank where you owe money
The bank will freeze any account until they get back the money you owe.
Some people advise opening an account at a different bank. Yet, a new bank will inquire about your existing bank accounts. They will check your credit score and history for bankruptcy or accounts in court recovery stages.
Moreover, any bank or building society has the right to deny the opening of an account. And they do not need to give you an explanation.
7. Have several accounts at different banks
Do not rely on one account. It is better to have savings or another account at a different bank. This way, if one account is frozen, the other is still available, and you do not end up with nothing.
Remember, you should open additional accounts before you get one frozen.
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FAQ
What does it mean when a bank account is frozen?
A frozen bank account means you can not withdraw or move money from that account. Your account can be frozen due to unpaid debts, government requests, or any illegal activity.
On the other hand, a frozen account can indicate that your identity was stolen. In this scenario, an account freeze can be considered a security measure shielding you from unauthorised access and transactions.
Can a bank freeze your account without warning?
Usually, banks must warn you before freezing an account. However, there are situations where a bank can freeze an account without warning.
- Fraudulent activity and illegal transactions — banks can freeze the account immediately, obeying the national law enforcement agency. It is done to prevent further damage.
- Court order — if the bank receives a court order to freeze the account, they may do so without prior notice.
It is crucial to monitor bank accounts regularly. Look for any unusual activity and stay informed about bank policies related to account security and freeze.
Can money be paid into a frozen bank account?
Even though you can not move money out of a frozen account, you still can receive deposits.
What happens then? There are two main scenarios:
- Money is added to the current funds.
New deposits can be frozen along with the rest of the account. You can not access it while the account is frozen. However, when you get your account back, the money should still be there.
- Money contributes to debt repayment
If you owe taxes, have unpaid judgments, federal student loans, or child support, the money in your frozen account can be used to pay creditors. This way, all the money that goes into the account is deducted.
📚Related: What Happens if You Send Money to a Closed Account?
Can I get my money back from a frozen bank account?
You can not make any money transactions or withdrawals from frozen accounts. The only way to get your money back is by addressing the issues that have caused the account freeze.
How do you withdraw money from a frozen account?
You do not. Until the freeze is lifted, you can only make deposits to the frozen account. The same rules apply to the joint account.
Can I close a frozen bank account?
While your bank account is frozen, you can not close it. Only after you have resolved the issue that caused the bank to freeze your account can you close your account.
If the reason is suspicious activity, provide all needed verification documents. In case of debts, settle the amount you owe.