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Can the bank freeze my bank account? This guide outlines the top 5 reasons why you could receive a frozen account and the steps to take to un-freeze it.
Most Americans who have a job or a business open a bank account to deal with all financial transactions. Bank accounts are not only important for receiving money, they are just as important for paying bills and creating budgets after learning the difference between the two. In the event, you need to take money from your account and you can't, you are likely experiencing a frozen account. There are certain times a bank may freeze your account, leaving you unable to access your account asides from depositing money. Keep reading to learn a few common reasons you have a frozen account so you can take the right steps to unfreeze it.
1. You Have Debt You Owe the Government
If your account has been frozen, one possibility is that it could be due to money you owe the government. Those who owe student debt, and are in default, or owe taxes to the IRS may find their bank will freeze their account. All the money you have in that account, whether it is $100 or 1,000 is put on hold until you are able to satisfy the money you owe. Should you have enough money in your account to satisfy the debt, the account will return back to normal after the government takes the required debt. Your account will remain frozen if you do not. On top of freezing your account, the government may also take your tax refund and garnish up to 15% of your paycheck each month. The government can take any funds without getting a court order. The only way to get a frozen account lifted aside from having enough money in the bank is to directly speak with the government to see if you can make a payment plan.
2. You Have Debt You Owe To Creditors
Similar to the bank, creditors can also collect unpaid debts by accessing funds in your bank. However, they will need a court order to do this first after they get a judgment against you. Only by showing this will banks honor the request. Those who owe money through loans at the same institution may find that lenders are able to freeze and take your funds without an order. This is because when you sign a loan, you often allow the lender to have full access to your account depending on the terms you sign. Bank restraints or bank levies can also happen to business owners who have problems with merchant cash advances when they take loans. Your account as well as other assets are things the provider can take. You may be able to work an agreement even when you are in default whether you are an individual or business by talking with the lender.
3. The Bank Suspects Illegal or Odd Behavior
If you are wondering why would a bank freeze an account if you do not owe any money, it may be because the institution suspects odd or illegal activity on your account. During the times they suspect illegal activity, banks will freeze an account then question you as well as track activity.
Banks will freeze accounts they suspect of money laundering or terrorist financing. They may also freeze accounts that attempt to deposit or write out a bad check, especially when it is large or there are no funds in the account. Banks may still do this even if the check is legit, but it strays from your usual activity. Let's say you win the lotto and you want to cash the $1,000,0000 you won; expect the bank to be alarmed. If your checks are legit and you are not doing anything illegal the bank will unfreeze your account. It may take a few business days.
4. Account Verification Is Needed
Banks will also freeze an account in an attempt to protect you and ensure the money in the account goes to the person or people on that account. The only way a bank will remove a frozen account in these cases is when you verify the account and verify you are who you say you are. Whether you just open an account or you had the account for a while, the bank may ask you to provide or confirm your address, photo ID, or place of employment. Banks will also freeze an account to protect you if there is suspicious activity on the account. For example, if you take a trip out of the state or country, banks will not allow you to use the account until you can confirm who you are. The same goes for unusual activity from online mobile banking. Banks will do this as a way to negate fraud.
5. You Have a BVN Freeze
Some banks require you to complete a BVN registration when you open an account. They will freeze accounts that are unable to provide accurate information and evidence during times information they have and you give are not the same. This can happen if you have several names and use more than the one you provided. If the bank has your full name and you provide them your shortened name or initials, this can also be a flag for them to freeze the account until you provide identification. Name changes of any kind can raise an eyebrow to banks. They may also question those who have compound names or changed their name for marriage or other reasons. Asides from your name, having a different date of birth in the system can also cause banks to freeze your account. After verification, they will release the freeze.
Help is Here
Correct Your Frozen Account to Regain Access. Having a frozen account can be a hard thing to deal with when you need to withdraw money and complete transactions. The money you want to access is no longer available. Banks will hold these funds until they confirm who you are or determine how much money they need to release to pay the debt you owe. It is possible to unfreeze your account if you can address which issue you have. You may be able to work a solution with the government if you owe them money. Frozen accounts that need verification are sorted out once you provide proper identification. If you are experiencing a frozen account due to a merchant cash advance or other unsecured business loans, MCA Defense Now can help you.