Although your bank account is exclusively your private property, certain situations can warrant the government freezing and taking charge of it.
File photo: A banking hall
Apart from your activity causing the bank to freeze your account, there are certain times when the government or court may ask the bank to freeze your account.
It can be a nasty surprise to find out that your current account is frozen. When a bank freezes your account, you still have limited access to it. You are able to check your transactions and receive certain deposits. However, you are not able to withdraw or transfer your money until the issue that caused the account to be frozen is cleared.
Make sure to contact your bank immediately if your account is frozen. Bank accounts are frozen for a number of different reasons, and each reason requires specific actions to unfreeze the account.
According to investopedia.com, the following are the top three reasons as to why a bank account may be frozen.
1. Suspicious or illegal activity
A bank can freeze your account when it suspects that you are using your account illegally, such as for money laundering or cashing back cheques. Sometimes a bank also freezes an account in correlation to terrorist financing. This includes receiving suspicious payments from an outside country or depositing large amounts of money suspiciously, which results in your account being flagged. Even gambling can cause a bank to freeze an account if it suspects suspicious activity.
It is rare for bank accounts to be frozen for these instances, especially for users who are innocent. It is best to seek the help of a lawyer to help you clear up this kind of case.
2. Unpaid debts through creditors
Creditors can access your account for unpaid debts; however, the creditor must gain approval from the courts before taking this action. For accountholders who have their loan accounts at the same institution as their bank account, the lender can gain access to a current or savings account in order to collect payment on defaulted loans without filing a lawsuit or obtaining a judgment first. Usually, with these accounts, you must first sign the fine print, which grants the bank this authority.
Once your account is frozen over unpaid debts, it is crucial to get the attorney’s information from your bank immediately. You need to have a better idea of what is going on with your account and work out a payment arrangement. Unfortunately, ignoring a frozen bank account can make the problem worse, causing drops in your credit score and a build-up of bank fees.
3. Unpaid debts to the government
Individuals who owe taxes to the government may also find their bank accounts frozen. For unpaid taxes, the government can issue a tax levy that is not to be lifted until the debt is paid in full.
Should you find out your account is frozen, consult your bank and thereafter seek legal help to aid you in unfreezing the account.
Culled from The Punch