When your bank account is frozen, you cannot use your money, outstanding cheques will not clear, and you may be responsible for bank charges as a result. When creditors freeze your account, it is also called a bank levy, attachment, or garnishment.
A frozen bank account is an account that has been suspended and cannot be used to withdraw money, pay cheques, make transfers, or fund your bill pay services.
Why is an account frozen?
Generally, an account is frozen because you owe someone money. Your account can be frozen if you have unpaid judgment against you, or if you owe taxes.
How are creditors able to freeze my account?: Most creditors will need to get a judgment against you before they are able to freeze your bank account. Once they have a judgment against you, if you have not taken steps to pay the judgment or agreed to a payment schedule for satisfying the judgment, the judgment creditor can request that the court issue an order that directs the bank to freeze your account. These orders are often called garnishments or attachments.
Is the entire account frozen or just part?:
In most cases, the bank can freeze up to two times the amount that is set out in the garnishment or attachment order. If this exceeds the amount in your account, your entire account will be frozen. If it does not, it will only be partially frozen
.Can I continue to make deposits?:
You can probably make deposits into the account, but you stand the risk that the new deposits are frozen as well. If the amount in the account at the time it was frozen was less than two times the amount set out in the garnishment or attachment order, the new deposits will likely be frozen.
Will I receive advance notice?: It is unlikely that you will receive any advance notice. The bank is required to notify you when it receives the attachment but the account will be frozen by the time you receive the notice.
Challenging the attachment:
The notice that you receive should set out your rights to object to the attachment and may identify exemptions, which will allow the funds to be released to you. The notice should provide the deadlines for you to object or challenge the attachment and identify the creditor and the case in which the attachment has been issued. In most cases, to challenge the attachment, you will need to file papers with the court telling the judge why you don’t believe the attachment is appropriate.
Getting your money back:
If you owe the money that the creditor is trying to collect through the attachment, your options are limited. You can contact the creditor or the creditor’s lawyer to see if they will release the attachment. If they won’t, you need to take further action. Dealing with a court order on your account if your creditor has taken court action against you for a debt, they may have got a court order against you. A court order means you have to pay the money back, either in instalments or in full by a certain date, according to Citizens Advice.
If you don’t keep to the terms of a court order, your creditor has a number of different options to try and get their money back.
If your creditor thinks that you have the money to pay them and are holding it back, or are due to be paid some money, which will cover the debt, they can apply for another court order. This is called a third party debt order. A third party debt order allows your creditor to take the money you owe them directly from whoever has the money.
Usually, it is your bank that is holding your money for you. However, if you are due to get a lump sum such as a redundancy settlement, an inheritance or insurance policy pay-out, your creditor can get your employer, solicitor or insurance company to pay the money to them instead of you. They can only take enough money to clear the debt.
The kinds of debts that may end up with your creditor trying to get a third party debt order include money owed on personal loans, credit cards, overdrafts or hire purchase agreements.
A third party debt order is different from an attachment of earnings order, where your creditor gets a court order to take money from your wages.
If your creditor wants to get a third party debt order, they will first apply for a temporary order called an interim third party debt order. This order tells your bank to freeze your account. At this point, your account will be frozen but no money will be paid to your creditor until the judge has decided what to do at the final hearing.
– Written by Punch’s Nike Popoola