The option of freezing a bank account is a choice at hand for creditors in order for them to get the outstanding debt when payments are delayed. A frozen bank account can be a sight of a lot of problems. Since your ability to withdraw or transfer money is taken away, it can have a trickling affect in areas like gas, rent, groceries and other daily expenses.
In most cases there are three types of creditors that are most likely to freeze your accounts. Firstly there are the general creditors that can freeze your account based upon the reason of unpaid debt which includes credit card debts, loans you have financed, bank loans, and going as far as payday loans. The creditor will seek a judgment in court against you and once they obtain that they can appeal to the court to put out an order which will freeze the bank account or will target your wages with a wage garnishment.
There is also the CRA (Canada Revenue Agency) which has authority to freeze your account without the permission of a court order. When you have an outstanding debt to pay for your taxes, you should work out a payment plan, consumer proposal, or bankruptcy or else your account may be frozen so that you are forced to take some sort of action to fix the outstanding issue.
If you are involved in a lawsuit or any other court cases, the creditors can ensure payment by freezing your bank account in these circumstances as well.
How To Clear The Bank Account
It isn’t all of sudden that creditors freeze your bank account right away. They will make many attempts to collect the debt in other ways such as letters, collection calls, and legal notices requesting the payment of the debt.
What you should do right off the bat is to work out a payment plan that gives them their repayment or work with a Licensed Insolvency Trustee to purse the option of filing a consumer proposal or going the route of bankruptcy.
When your account gets frozen, you should seek to start a new account with another bank. If you have been receiving payment from your employer electronically, then contact them immediately to make the appropriate changes so that it gets deposited in your new account.
If the debt is too much you may want to consider filing for a consumer proposal or elect for bankruptcy. Here we have Licensed Insolvency Trustee’s that have the knowledge at hand to clear your bank account that’s frozen. When a consumer proposal or bankruptcy has been filed you are automatically granted a stay of proceedings. This will refrain creditors from applying wage garnishment or freezing your account.