Why would my bank account be blocked? This is the question which comes first to the mind when you hear about blockage of your account by the bank. Bank still gives you access to check your transactions but you cannot use the withdrawal facility and cannot transfer the money from your account. You need to clear the issue to regain access and to enjoy all the facilities. First thing you need to do once your account is blocked, is to contact the bank straight away and learn the possible reason behind this action.
There are many reasons because of which your bank account is restricted. The most common issue is you haven’t paid the debt, and the creditor has sued you.
What is a frozen bank account?
Frozen bank account means that you can no longer use the facilities of transferring the money from your account or withdrawal the money because of your suspicious activity or overdue debts. Restriction on bank accounts are placed due to non-compliance of the policies of the bank. You can only have access to those funds received from social security payment, government pensions, unemployment, or child support.
Reasons why a bank account is blocked:
When you use account illegally:
The bank will freeze your account if they come to know that you have done an illegal activity, which includes money laundering. Terrorist financing is another reason. A large amount of payments deposited into the account or receiving it from the outside country is known as suspicious money. In this case restrictions are placed to avoid money laundering. If you are suffering from such an issue and you know that you are innocent, contact a lawyer to help you.
If you have taken a loan and it’s delayed, and you aren’t paying it back. Any creditor can file a suit against you to recover the money. The bank freezes the account first. Non-payment of taxes to the state and not being able to keep up child support money may result in the same consequences.
The account is frozen in the case of bankruptcy, where the creditor claims to freeze his account till clearing of dues. But the bank allows access for the debtor to some of the funds to use it for child support and other necessary expenditures.
The creditor, while getting access to the accounts of the debtor, takes the permission of the court. The creditor needs to secure a judgment. For this, he must file a suit, and if the court gives him a judgment, he can proceed further.
The creditor must inform about the suit and all other details. You need to contact a lawyer immediately once you know that your account is blocked. Because if you don’t clear the issue, it will make the situation even worst. You must pay bank fees and other dues later.
An overdue loan taken from the government:
Many students who ask for a loan from the government, which they are unable to pay back later, end up with a busted bank account. The process of loan from the government is different where judgment is not necessary. This process includes seizing your tax refund etc. Once the loan is paid back, the issue gets resolved.
How to regain access to frozen account?
Please note that when your account is locked, it is not permanent. Rather block has been placed temporarily. All you need is to contact the bank to clear the doubts if any. If the problem is of overdue debt, then you must clear all the money to get back your bank account in its previous position. There are some cases where the debt is of low amount so the creditor makes a settlement with the debtor. It’s up to him.
If the account is frozen because of a doubtful illegal activity, the bank unfreezes it once the doubts are cleared. But when the activity (Fraud or an illegal activity) is confirmed then the account is blocked permanently. This time severity depends on the nature of illegal activity. Account holder can be blacklisted from all banks in the state. Hope this explains your queries regarding “why would my bank account be blocked”.