How to Prevent and Unfreeze a Frozen Checking Account

When a checking account is seized for an unpaid debt, the money it contains will be frozen and no longer available for use. This can put a consumer in an extremely difficult financial situation as he will not longer have access to his cash deposits or direct deposits contained within his bank account - resulting in an inability to pay bills and make purchases.
How to Prevent and Unfreeze a Frozen Checking Account

The Causes of a Bank Account Garnishment

A bank account garnishment occurs when an individual owes a debt that he failed to pay. The creditor may then file a lawsuit against the consumer. If the creditor is successful, the court will grant it a judgment. In some states, a judgment permits the creditor to take adverse action against the consumer to recover the funds such as:

  • Freezing bank accounts to seize the money directly
  • Garnishing the individual’s wages
  • Placing a property lien against the individual’s home (See The Use of Judgment Lien to Collect a Debt)

Not all states allow a creditor to seize money directly from an individual’s checking account. Of the states that do, however, a court judgment is always required unless the bank account seizure is performed by the IRS or another government entity. The U.S. government is not required to sue a debtor in court before freezing his assets in order to collect and not all funds contained within a frozen bank account can be subsequently seized. The Federal Trade Commission has released a consumer alert informing consumers of their rights regarding frozen bank accounts and checking account garnishment.

Avoid a Checking Account Freeze

Consumers who are concerned that their checking accounts may be subject to a freeze and seizure should do everything within their power to negotiate with their creditors to pay off their debts prior to a lawsuit. In the event that a lawsuit is eminent, an individual should immediately check his state laws to determine whether or not checking account seizures are legal in his state of residence.

Appearing in court and fighting the lawsuit can also be very beneficial to an individual - especially if the lawsuit is filed by a collection agency. Some creditors, such as collection agencies, are rarely able to prove that the consumer owes the debt in court and merely hope for a default judgment in their favor. A default judgment will always be granted to the creditor if the consumer fails to respond to the court summons or show up in court (See Avoid a Default Judgment).

Have a Bank Account Freeze Lifted

If an individual feels that he has been the victim of a bank account seizure by mistake, or was never notified of a pending lawsuit against him for a past debt, he can return to the court where the judgment was granted and file a Motion to Vacate Judgment. The most common reason for requesting that a judgment be vacated is that the individual did not receive the opportunity to defend himself in court. Should the checking account seizure be an act of the government, however, no judgment exists and a Motion to Vacate Judgment will be unnecessary.

Bank account freezes normally last for a period of 20 days before the funds within the individual’s bank account are seized. This can leave a consumer without the necessary money to pay his bills. Thus, it is imperative that consumers who are in debt stay aware of the possibility of a checking account seizure and take action to prevent in. In the case of checking account freezes by collection agencies, moving the checking account to a new bank is sometimes successful.

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