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Account Freeze:
Definition, Purposes,
Time Length
By ADAM HAYES Updated August 02, 2023

Reviewed by KHADIJA KHARTIT

Fact checked by SUZANNE KVILHAUG

What Is an Account Freeze?

An account freeze prevents some bank or
brokerage transactions from taking place.
Typically, any open transactions are canceled, and
checks presented on a frozen account aren't
honored. The account holder can still deposit
money into the account, but may not be able to
withdraw it.

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KEY TAKEAWAYS
Account freezes prevent transactions from
going through in a bank or brokerage
account.
Essentially, money can be deposited into
the account but no money can leave the
account.
Account freezes can be put in place by an
account holder (in the event of a lost or
stolen debit card), or the bank or
regulatory authority.
Freezes can occur for many reasons,
including suspicious activity, suspected
criminal activity, civil actions, or
garnishments.

How an Account Freeze Works

Account freezes can be initiated by an account
holder or a third party, such as a government, a
regulatory authority, or a court order. When your
account is frozen, the bank may send you a notice.
However, you likely won't receive advance notice.
Instead, you'll receive notice after the account is
frozen. A joint bank account may be frozen, even if
a debt or problem is only the issue of one account
owner. [1]

The account freeze will not allow you to withdraw

money in any way, including through ATM
machines or automatic payments, by writing a
check, or through other transactions. You can still
deposit funds but may also lose access to those
funds.

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Some funds in your bank account cannot be frozen

if owed to a commercial entity, according to state
and federal law. These funds include your Social
Security payments and Veterans Administration
benefits, as long as the amounts are added to your
account by direct deposit. [2]

A brokerage account may face a 90-day restriction

if you engage in activities violating federal trading
regulations, such as buying and selling a security
before paying for it, also known as "freeriding."

FAST FACT
A brokerage account restriction is not a
true freeze—you can still purchase stocks
and other securities, but you must pay for
the purchase on the trade date. [3]

Types of Bank Account Freezes

Account freezes can be initiated by different
entities—and even by you. Many banks and credit
card providers now allow consumers to freeze an
account online. If you lose your card or it gets
stolen, you can quickly freeze the account to
prevent spending.

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Court Order
One of the more common reasons for an account
freeze is due to court-ordered garnishments, such
as when a collector wins a lawsuit against you for
an unpaid debt. Your bank or credit union may
then be asked to provide money in your account.
While the process is playing out, your account
could be frozen. [4]

Government Action
A government or regulatory authority may freeze
an account due to suspicious activity or suspected
criminal activity or to pay past-due child support.
Some states can temporarily freeze a bank account
to stop suspected financial abuse involving older
adults. [5]

Bank Failure
If a bank fails and is closed by the government,
bank accounts may temporarily be frozen so that
insured deposits can be provided to bank
customers. While this allows you to access any
insured deposits, it may also mean your
transactions and automatic payments may not go
through. [6]

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Accidental Deposit
If a deposit was credited to your account by
mistake, the deposit amount could be frozen or
put on hold until the issue is resolved. [7]

Account Holder Death

Furthermore, a bank or brokerage account may be
frozen when the account holder dies, depending
on how the account is set up—even if it's a joint
account. [8]

Warning: A frozen account can result in

missed payments, fees, and problems
with your credit report. Act promptly to
address a frozen account and ensure
your monthly rent, mortgage, or other
bills are paid on time, and get legal
assistance if necessary.

How Do You Freeze a Bank Account?

You can freeze your bank account to prevent any
debit transactions from clearing by logging into
your online banking platform or mobile banking
app (assuming your bank offers the option). Or
you can contact customer service and request an
account freeze.

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Why Would a Bank Freeze an Account?

Banks can freeze an account for a variety of
reasons, including suspicious or illegal activity, or
unpaid debts due to creditors or governments.
Banks may freeze accounts for using the account
in a manner that goes against its policies.

How Long Can a Bank Freeze an

Account for?
There is no set timeline that banks have before
they have to unfreeze an account. For more
complicated situations, the bank may request
detailed information and take 30 days or more to
review and decide whether to unfreeze or close
the account entirely or release a portion of the
funds to you—such as Social Security or other
federal benefits.

The Bottom Line

Banks and brokerages have the ability to freeze a
bank account for a variety of reasons. If you
discover that your account has been frozen, you
should contact your financial institution as soon
as possible to learn the reasons for the freeze and
what you need to do to have it lifted. Your next
steps may require reaching out to creditors
expecting payment, and getting legal help from an
attorney.

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ARTICLE SOURCES

Related Terms
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When a financial institution places an account on hold, it
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