As the weather gets colder, some of us are happy to welcome the brisk cold weather – a break from the heat of the summer months, even if it brings with it some snow and frozen rain. However, when the freezing isn’t just taking place outside, and instead it is your finances taking a hit from Jack Frost, you may be in deeper trouble than you’d care to admit. This week we talk about the dreaded frozen bank account.

Bank accounts are typically frozen by one of two different types of institutions – a creditor or the Canada Revenue Agency (CRA). The two processes differ but the end result is the same.

• In the case of a creditor. If your account has been frozen by a creditor, that creditor will have been required to sue you in civil court, obtain a judgment against you, and then file enforcement action with the court in order to freeze your bank account.

• In the case of the CRA. The CRA does not require a court order. An agent simply sends a notice to your bank and your account is frozen.

In both cases, you likely will not be notified that your account is about to be frozen – you’ll find out after the fact, when you go to use your bankcard or account. That’s never a good thing. In the meantime, any automatic payments, any cheques, really any payments you attempt to make, will fail – doing a great deal of harm to your credit.

Once a bank account is frozen you have to act fast – often the bank will leave the frozen funds in your account, inaccessible, for up to 30 days before they are sent to the party who froze your account. It is this small window of time within which you need to get the issues straightened out.

What are your options? The best course of action is to pay the debt in full. Whatever is owed needs to be paid – that is the best way to get things unlocked quickly. But what if you can’t pay the debt?

If your account was frozen by a creditor who has obtained a court order, you can make a motion to the court to ask a judge to unfreeze the account. Whether or not they unfreeze the account depends on the discretion of the judge. There are no guarantees here.

File a consumer proposal. In this scenario, a consumer proposal is negotiated with all of your creditors and as long as the majority of your creditors accept the proposal, it is binding upon all of them. As soon as a consumer proposal is filed, all creditor collection action is stopped. This includes having a freeze lifted. If accepted, the debt itself may be reduced, interest will stop and you will be able to make a single monthly payment to pay down your debt.

File for bankruptcy. When a bankruptcy is filed, all collection action stops, including any frozen bank accounts.

No matter the situation, a frozen bank account can wreak havoc on your financial stability and your credit.

Don’t wait. Contact DebtCare today to find out about all of your options. 1-888-890-0888.