How To Unfreeze Your Bank Account
To unfreeze your bank account, you must contact your bank to figure out the issue and resolve the underlying problem, such as paying off debts or providing evidence of innocence. Unfreezing an account is at the bank's discretion and is not always guaranteed.
You don't want a frozen account; nobody does. You want to unfreeze it quickly. But how? In this article, we’ll show you why accounts get frozen, how to avoid it, and what to do to unfreeze your bank account.
Let’s dive in.
What Is a Frozen Account?
A frozen account is a bank account that cannot perform outgoing transactions. When your account is frozen, you cannot use it to withdraw money, transfer funds out of the account or make payments. Moreover, scheduled payments also won't be processed.
Note that while a frozen bank account is barred from outgoing transactions, it can still receive incoming payments.
When a bank account is frozen, it is for a reason the bank finds appropriate. Usually, it is to stop future regulatory violations, ongoing violations of bank policy, or cost-saving measures. The freeze is either due by court order or the financial institution itself.
Sometimes it could be a useful and needed tactic for you to keep your account secure. However, it could also cause a major inconvenience.
🔎Insight: Funds exempt from being frozen are governmental funds, such as Social Security, disability benefits, unemployment, child support, and private pensions.
The Difference Between a Frozen, Suspended, and Closed Account
The difference between an account being frozen, suspended, and closed is as follows.
- A frozen accountis unavailable until unfrozen, which can and will happen after the issue is resolved.
- A suspensionor restriction on an account can limit the use of the account. The account holder could lose the ability to withdraw money or be given a limit on the number of transactions made.
- A closed accountis not able to be opened back up at all. A bank must receive approval before closing an account, providing adequate evidence for why the account should be closed. Once it is closed, it will not cooperate or work with the account holder.
📝Note: Keep in mind that a bank can close or freeze both a business account and personal accounts.
Why Your Account is Frozen.
Banks regularly monitor accounts for suspicious or illegal activity.
If your account raises red flags, it will be frozen and put under investigation until the issue can be resolved.
These are the possible reasons why your account is made frozen.
1. You have debt.
Credit card companies can request that the bank put a freeze on your account if you have unpaid debts. Likewise, your account can be frozen due to tax debt.
However, creditors have to receive authorization from the court by getting a court judgment for debt written against you before your account is frozen, and you should receive a notice.
2. There is prolonged account inactivity.
An account without any activity or transaction history can raise concerns and appear unusual. In this case, the bank will follow precautionary measures, like freezing the account, to ensure security.
3. There is some suspicious activity linked to your account.
Specific patterns of behavior or dollar amounts trigger suspicion, so freezing is implemented to prevent money laundering, fraud, or other violations.
In some cases, law enforcement requires the bank to freeze an account to investigate.
4. A freeze is needed for account protection.
If the bank notices spending on your account that does not match your usual spending patterns, the bank may suspect that someone else has accessed your account or that the account has been hacked.
In this case, the account will be temporarily frozen to protect you.
You can also grant a temporary freeze on your own account in case your credit or debit card is lost or stolen to ensure the safety of your money.
Expert Insight
Suspicious transactions, which may include unusually large amounts, unusual spending patterns, inconsistencies, etc., can suspend payout operations. In such cases, the account owner will be requested to provide related verification and documents. The account will remain frozen until a proper resolution is found. This is done to comply with AML (anti-money laundering) regulations and ensure the account's safety.
How to Unfreeze a Bank Account
The first step is to find out the cause of the freeze.
When the account is frozen, the bank almost always sends a notice.So, once you’ve been informed of the reasoning behind it, you can assess the actions needed to unfreeze it.
The following is how to unfreeze a bank account.
| Causes | Solutions |
| Inactivity | Make deposits or contact the bank |
| Debt | Settle the debt with creditors or file for bankruptcy |
| Suspicious activities | Contact the bank to provide verification |
If your account was frozen due to inactivity
Consider trying to make a deposit or withdrawal. Certain banks may automatically unfreeze your account upon completing a transaction within a specified timeframe.
Alternatively, contact your bank directly to inquire about the necessary steps to unfreeze it. You might be required to provide identification and verification documents to confirm your identity and account ownership.
If your account was frozen due to debt
The credit card company can take the money they owe from the frozen account. There is little that can be done if this is the case.
The creditor could levy the rest if insufficient money is in the account to pay the debt.
In this case, if the debt is not drastic, consider settling that debt with the creditor. This will vacate the judgment against you, ultimately unfreezing your bank account.
However, if settling the debt is not viable, you could file for bankruptcy if necessary.
Filing for bankruptcy will not unfreeze your account but will halt collection actions and suspend wage garnishment.
You will not be able to withdraw money. Additionally, bankruptcy can negatively impact your credit score and ability to obtain loans for years. Hence, this action should only be taken if it is your last resort.
📝Tip: If your bank freezes your account due to debt without notice, consult a legal professional to protect your due process rights.
If your account was frozen due to suspicious activity
You can give your bank a call and should be able to clear everything up fairly quickly.
Suspicious activities that cause the freeze are typically unreported activity abroad, a larger transaction amount, stolen card, etc.
To clear the freeze, your bank may ask you to answer security questions, deliver verification codes, conduct digital 2-factor authentication, or provide some form of ID. This can be done online or through a visit to your bank.
In odd cases, your account may be frozen due to suspicion of the more serious crime of fraud. If you are just flagged, you won't incur a suspended or closed account status until proven to be fraudulent.
Fraud-based freezing, however, may require legal disputes before any judgment can be made.
You may want to familiarize yourself with some of your rights when your account is frozen if this happens to you.
📝 Tip: Unlike a freeze due to debt, a bank can freeze your account without notice for suspected fraud or money laundering.
How Long Can a Bank Freeze Your Account?
The duration of a bank account freeze depends on the circ*mstances. Simple misunderstandings may be resolved in 7-10 days, while more complex scenarios could take 30 days or longer. In cases where the freeze is due to tax obligations or legal disputes, there's no set time limit.
If you don't address the freeze, it will remain frozen until the matter is resolved, and in some cases, the account may be closed.
📝 Note: Unfreezing an account is at the bank's discretion and not guaranteed.
How You Can Prevent Future Freezing of Your Bank Account
A frozen account can cause a lot of stress and inconvenience. Fortunately, you can take some steps to prevent it.
Here are some tips:
- Pay attention to calls from debt collectors.
- Pay your credit bills on time. If you can’t, contact your creditor and try to work out a payment plan.
- Use different banks for personal and business accounts.
- Pay attention to your bank statements to ensure there is no fraudulent activity.
- Consider notifying your bank beforehand if you plan to use the account aboard or planning for a substantial purchase.
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