A frozen account is a bank account that is locked due to an issue that needs to be resolved. Creditors can freeze accounts until they are paid, and governments can freeze accounts linked to criminal investigations or terrorism. Mistakes can sometimes occur, but proof can unblock the account.
A frozen account is a bank account in which no activity is permitted. The account will not be unlocked until the account holder resolves the issue that led to the account lockout in the first place. The classic reason for freezing a bank account is a lien on the account by a creditor. Creditors can freeze accounts until they are paid, although they cannot withdraw money from an account without a court order authorizing them to do so.
When someone has a frozen account, it is not possible to make withdrawals from the account. Purchases cannot be debited from the account and checks written on it will not be honoured. The bank must send a notice to the account holder informing them of the freeze and providing information about the bank’s legal department so that the account holder has contact information to discuss the situation. You may want to warn people who have outstanding checks to wait so they don’t deposit their checks and get charged because the check can’t be cleared.
If an account has been frozen by a creditor, the account holder will need to pay the creditor or process the terms of a payment agreement before the creditor releases the lien and allows the account to be released. People who can’t figure out why their accounts were frozen can contact the bank’s legal department to get information about a frozen account, including who placed the lien on the account and the lien amount.
Rarely, accounts are frozen by accident. A mistake in the banking system can result in a freeze order being applied to the wrong account, or a mistake in the legal process can result in a freeze that is not actually authorized. In these situations, providing proof that there is a mistake should allow the bank’s legal department to unblock the account.
Governments can also freeze accounts. An account may be frozen if it is linked to a criminal investigation or, in some countries, if there is evidence that it is being used to provide funds to terrorist groups. In these cases, even a frozen account may be subject to seizure, with the government seizing funds on deposit in accordance with the laws permitting. If funds in a frozen account are at risk of forfeiture, information will be provided to the account holder.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
