A bank account has been frozen; how long does it take to unfreeze it?

What happened if your bank suddenly froze your account? Money that freezes can cause serious problems with your budget. You may wonder, "How long does it take to unfreeze a bank account?" in this situation. Find out why banks freeze accounts and what you can do to unlock them.

When Do Banks Freeze Accounts and Why?

Customer or bank imposed account freezes are possible. You can put a temporary hold on your debit card's ability to make purchases if you've lost it or if you just don't feel like The freeze can be lifted at any time by accessing the account online or through the mobile app.   

The account holder need not approve a bank-initiated freeze. Frozen accounts are common responses to illegal or legally mandated activities, such as debt collection lawsuits. For the most part, a creditor will employ the services of a debt collector to pursue payment of an outstanding balance. In order to initiate a freeze, the bank is required to first send out a notice. Furthermore, creditors and debt collectors need a court judgment before they can immediately freeze an account.  

When there is unusual activity on a customer's bank account, the financial institution is obligated to file a suspicious activity report (SAR). Since 1992, all financial transactions have to be reported to the US Treasury. Workers at the bank report suspicions of illegal activity, such as money laundering, terrorism financing, criminal activity, and political corruption.  

Let's say an account shows large, unusual cash withdrawals. A currency transaction report (CRT) is then submitted by the bank. If anti-money laundering personnel identify suspicious activity during a CRT, a SAR may be filed.  

What Can't You Do With a Freeze Bank Account?

Frozen bank accounts prevent the account holder from making withdrawals from their checking or savings accounts. Withdrawing funds via electronic means, such as a debit card, is prohibited. The ability to fund your accounts may still be available, but this may not be the best course of action.  

If your account is frozen, any funds you deposit into it will remain frozen and unavailable. You should cancel any scheduled direct deposit payments so that you can access your paycheck in a timely manner.  

When a bank account freezes, how long does it take to unfreeze it?  

If your account has been frozen, you may want to take swift action to resolve the issue. There are a number of options available to account holders for thawing frozen bank accounts. You may have to wait a while, though, and that timeframe is going to be proportional to the severity of whatever caused the freeze in the first place.  

Take Care of a Freeze Caused by Unusual Behavior

Accounts may be frozen if a computer detects suspicious activity. An unusually large deposit from an unknown source is one example of a transaction that could be suspicious.  

If your bank freezes your account, you can contact them by phone or drop by a branch to explain what's going on. If your bank suspects fraudulent activity, they may require you to verify your identity in person. As soon as your financial institution is satisfied with your explanation, they will release the hold on your account.

Unfreeze Due to Overdue Bills

A lawsuit may be filed against you if you owe money to a creditor or debt collector. The best course of action would be for you to show up in court. If you ignore a court summons, you may end up losing by default.  

In court, the creditor will argue that you knowingly and voluntarily entered into a loan agreement, giving them the right to a monetary judgment. A judgment is a court order declaring the amount of money a creditor is owed as a result of a lawsuit. When a creditor has a judgment against you for money, they can request that your financial accounts be frozen.   

A creditor may place a hold on your bank account at any time without giving you any prior notice. A bank has an obligation to inform you that a court has issued an order to freeze your account, but by the time you receive this information it may be too late to retrieve your funds. Accounts are typically frozen until either the debt is paid or a motion to thaw is filed.  

You can ask a court to remove a judgment that was entered against you by filing a "motion to vacate." After a judgment has been issued by a court, you have a reasonable amount of time to file a motion to vacate and explain why you believe the judgment should be overturned. In most cases, the account holder has between 30 days and one year from the judgment date to file a motion to vacate a frozen account.  

When proper service of process has not been made, the court will likely grant a motion to vacate. For instance, if you were supposed to be served with a lawsuit but never did and you have no idea why you're being sued,  

The Steps to Take to Keep Your Account from Freezing in the Future  

It is a financial emergency if you have a frozen account. Money problems can cause major disruptions in your life and add unnecessary stress. There are, however, measures one can take to avoid having one's funds frozen in the future.  

Respond to Creditors

When did you last hear from a debt collector? Maybe you're still fighting zombie debt or have some outstanding medical bills. Dealing directly with debt collectors is the best way to avoid having money freeze up. What should you do about debt collectors, though, if you simply can't afford to pay them back?  

Verify that the debt collector is legitimate and that the amount you owe is correct. Debt collection agencies can be reached for payment plans if you owe money. If the organization doesn't offer installment plans, you have other options for making payments. If you need help paying off a large debt over time, monthly installment loans may be an option for you, even if you have bad credit. If you need to temporarily increase your income, dog walking is a good option because it requires little investment of time.  

If you want to avoid bad checks, avoid writing them.

A bad check is one that is not honored because the account it was written on does not have enough money in it. A non-sufficient funds (NSF) fee is charged when a check is written on an account that does not have enough money to cover its full face amount. Always make sure you have enough cash on hand to cover a check you write by keeping track of your spending.  

Cap Cash Withdrawals

If a customer deposits more than $10,000 in cash at a bank, the bank must submit a SAR (Suspicious Activity Report) to the Financial Crimes Enforcement Network (FinCEN). Let's say you come into a large sum of money suddenly, like from a lottery win or an inheritance. It is prudent to notify the bank in advance of making the deposit to avoid any unanticipated hold.  

Money from the government should be deposited directly into your account.

Debt collection can't be pursued for some sources of money, like government grants. Direct deposit is preferable for receiving government payments such as Social Security, disability payments, etc. Any government benefits that have been deposited within the previous two months cannot be withheld even if you have received a garnishment order. Direct deposit of benefits guarantees that you will have access to two months' worth of benefits immediately.  

References:
Discover How Banks Use the "Smell Test" to Detect Fraud
Bank Accounts Have Been Frozen
Apology for Judgment and Request for Reconsideration