What Happens When There's a Freeze on Your Checking Account?

It's a situation you generally don't want to be in.

The money in your checking account is something you might access almost every day, whether in the form of a debit card swipe or an ATM withdrawal. As such, a freeze on your checking account could be really bad news. Here's what you need to know.

What happens during a checking account freeze?

When your checking account is frozen, your access to your money is effectively cut off. With a frozen account, your debit card is apt to get rejected when you try to swipe it to pay for purchases. You won't be able to withdraw cash from your checking account, and you won't be able to transfer money out of that account and into another one, like a savings account.

Why might your checking account have a freeze put on it?

Banks don't freeze checking accounts on a whim. Generally, your account will get frozen when you owe money you haven't paid.

Let's say you took out a loan and have fallen behind on payments. In that case, your lender might be able to go to court and get a judgment entered against you. From there, your bank may be instructed to freeze your checking account so your lender can get repaid. Similarly, you might have your checking account frozen if you're overdue on child support payments.

Another common reason for checking account freezes? Not paying your taxes.

When you owe the IRS money and you can't pay in full, the agency will generally give you an opportunity to pay off that debt in installments. And if you stick to one of these agreements, the IRS won't go after your wages or assets.

But if you ignore an overdue tax bill, the IRS will have the right to put a levy on your checking account. Before that happens, though, you'll get a heads-up from the agency in the mail and an opportunity to arrange for the payment of your overdue taxes.

How to avoid a checking account freeze

Generally speaking, a checking account freeze happens when you fall behind on a financial obligation. So if you don't want your account frozen, pay all of your debts in a timely manner, and keep up with things like child support.

If you've fallen on hard times, reach out to the parties you owe money to and aim to work out an arrangement. A lender, for example, might agree to pause your loan payments for a period of time if you can show proof that you're out of work. And, as mentioned, the IRS is generally pretty flexible about getting repaid. But you do need to reach out about getting on an installment plan.

Of course, in rare cases, your checking account might be frozen due to an error by your bank. But for the most part, a freeze is the result of your actions -- or, more accurately, your inaction. But if you know you're current on all of your bills and have no idea why your checking account might be frozen, dig deeper with your bank to get to the bottom of things -- and regain access to your money.