There's no feeling worse than going to make a simple payment, only to find that your card has been declined, and your bank account is frozen. Who froze it, and how can you regain access to your funds?
If you've just found out your bank account is frozen, here's what you need to know.
What Do I Do if My Bank Account is Frozen?
If your business bank account has been frozen, you have options, but it's important to act quickly. You'll also need to determine why your bank account was frozen to understand how best to resolve the issue. The most common reasons a bank account is frozen include:
- You made a large or international transaction. If you made a transaction of this kind without first notifying your bank, they may freeze your account to ensure no fraudulent activity is occurring. This is simple to resolve — you can easily call your bank to verify that you made the purchase, and they will free up your funds.
- Loan default or creditor bank levy. If your bank account has been frozen because you have defaulted on a loan, or a creditor has levied your account to take the funds they are owed, the resolution is more difficult.
This article offers solutions for businesses with frozen bank accounts due to the second reason, loan default or creditor bank levy. Let's look at three ways you can unfreeze your bank account.
Three Ways to Unfreeze Your Bank Account
In any situation, it's always best to contact the bank to get a copy of the document used to freeze the account.
If the levy is due to a court order, do not delay, connect with a business debt relief attorney in your state. An attorney can help assess your unique situation, and provide the best counsel according to your circumstances. A business debt relief attorney also has the experience to move quickly, helping you regain access to your funds as soon as possible.
If your bank account has been frozen due to debt collection, merchant cash advance, or loan default, the three most likely ways to unfreeze your bank account are:
01. Vacating the Judgment Against You
To freeze your bank account, a creditor must first win a lawsuit or obtain a judgment, whereby the court agrees that you owe that creditor a debt. When either the judgment is granted or filed (if you signed a confession or agreed judgment), that's when the creditor is legally allowed to freeze your bank account — usually for twice the amount! If you can act quickly, a business debt relief attorney can request a new trial or appeal the judgment.
This is one reason why it's so important to contact a Texas business debt relief attorney as soon as you are notified of your frozen bank account. An attorney in your state can help you fight or negotiate with creditors like these and has the experience necessary to deal with aggressive creditors such as merchant cash advance lenders.
02. Seeking a Temporary Restraining Order
Another way to deal with a frozen bank account is to seek a Temporary Restraining Order to abate (pause) the judgment. With a Temporary Restraining Order, you can use the frozen funds to settle the debt or come to a new payment agreement with the creditor, on your terms — not the creditors!
03. Filing Bankruptcy
Filing a business bankruptcy automatically halts all collection actions and lawsuits, and unfreezes your bank accounts. This can give your business and your business bankruptcy attorney the time you need to develop a plan to move forward.
Do I Still Have Access To My Frozen Bank Account?
When your bank account is frozen, you still have limited access to your account. You can:
- Make deposits (but they will also be frozen)
- Check your account balance
- And view your transaction history
When your bank account is frozen, you cannot access your account to make any kind of withdrawal. This means any outstanding checks or payments will bounce, which can contribute to additional fees from your bank.
How Long Will My Account Be Frozen?
How long your account is frozen depends on why it was frozen. Simple suspicious activity freezes are easily resolved with a phone call to the bank. But if a creditor has frozen your account, it's likely that it will remain frozen for thirty days, after which time the money will be turned over to the creditor.
What About Opening a New Bank Account?
Depositing money into a new bank is a temporary solution.
Once a creditor has the power to freeze a bank account, they will serve post-judgment discovery upon the “frozen bank”.
The bank will be required by law to disclose confidential information such as: assets, personal financial statements, other banking relationships, as well as bank statements, any of which could unveil customer lists and income sources. Additionally, most creditors pull credit reports which will disclose any new banking relationships.
Once the creditor knows where you bank, they will freeze the new accounts as well.
A frozen bank account will do significant damage to any business. If you've just received notification that your bank account is frozen, call a trusted, experienced business debt relief attorney who can work on your behalf to restore your funds as soon as possible. Let the experts at The Lane Law Firm work on your behalf to unfreeze that account, and build a debt relief plan that gets you and your business back on your feet.