One of the worst things to happen when you are overwhelmed with debt is a creditor freezing your bank account. A frozen bank account is detrimental when you’re already struggling to make ends meet. Yet, it is a very real possibility for individuals who owe money to certain agencies. Here’s what you need to know about a frozen bank account and what you can do to stop it or prevent it from happening.
What Creditors Need to Freeze Your Account
More often than not, a creditor needs to obtain a judgment against you to freeze your bank account. You’ll be notified by your local court before your account is actually frozen. This gives you time to get money out of your account and make other arrangements if you get paid by direct deposit.
However, some creditors do not need a judgment to freeze your account. This includes federal and state tax entities like the IRS, student loan servicers, and entities that collect child support.
How to Avoid Getting Your Bank Account Frozen
If you have creditors contacting you, don’t delay in making payment arrangements. Even if it’s not much, getting on a regular payment plan can reduce the chances that your bank account will be frozen by a creditor. If you received a letter of intent to freeze your bank account, don’t wait to contact them or a bankruptcy attorney for help.
What Happens If Your Account Does Get Frozen
The creditor can typically freeze two times the amount in the court order. If this exceeds how much money you have in the account, your account will be completely frozen. If you have more than that, you’ll be able to use the rest of your funds. Depositing money into a frozen account means that you risk those funds being frozen as well. There are a few strategies to get your money back. For example, making payment arrangements, claiming exemptions, and filing for bankruptcy. If your account is frozen, speak with a bankruptcy lawyer to find out effective strategies for your situation.
Call the Law Office of Howard Tagg today for a consultation at (903) 730-6366.