Last week we talked about wage garnishments, a very common form of collection action, and how to stop them. This week we thought we’d follow up by discussing another very common type of collection action, frozen bank accounts, and what you can do when dealing with the freeze.

First things first – what is a frozen bank account? It is just as the term suggests – a bank account wherein funds have been frozen (money can go in but nothing can come out) as a result of a court order (in most cases). Your bank, once it receives a notice regarding the account, must freeze the account or be responsible for not doing so.

So, what types of creditors can freeze a bank account, and what can you do once this occurs.

Family Responsibility – if you owe child or spousal support, and your account is frozen, there is nothing you can do but go to court. The government treats these types of debt very seriously and having a frozen bank account unlocked without paying the debt, in this case, is very, very difficult.

Canada Revenue Agency – if you owe a tax debt, unlike other creditors, the Canada Revenue Agency does not need a court order to freeze your accounts – an agent simply needs to send a letter to your bank and the bank must comply.

Creditors – if you owe a creditor other than the two listed above, a court order is required. Once obtained, as with Family Responsibility and the CRA, your bank is required to freeze an account according to the letter outlining the judgement.

What can you do when you are facing a frozen bank account?

1. You can pay what you owe. Obviously this is the easiest way to have the block lifted, but unless you have the funds available, doing so is likely not in the cards.
2. You can go to court and ask a judge to unfreeze the account – this will involve getting a paralegal or representing yourself, then making a motion to the court which they may or may not grant.
3. If you can’t pay what you owe and don’t think court is for you, you can speak with a financial consultant about a consumer proposal.

A consumer proposal will not only lift any enforcement action, it will consolidate all debts into one monthly payment, stop interest, and it may even reduce the overall debt.

Important: don’t look at a proposal without speaking to a financial consultant first. Don’t go directly to trustees for these. Trustees represent your creditors and get paid depending on the amount of the proposal. A bigger proposal = more money for them.

DebtCare can protect you when it comes to filing a consumer proposal and thawing out that bank account.

Call us today at 1-888-890-0888.