Understanding Bank Account Holds: What They Mean & How to Resolve

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In many cases, a "hold" on a bank account refers to the time after a check is deposited before the bank clears the funds for use. However, it might also have a much more serious meaning -- that your funds are frozen by a debt collector or government agency.

Hold Account Basics

When your bank holds or freezes your bank account, you have no access to funds, and checks you have written won't clear. Creditors can't typically ask a bank to suspend your account on their own; they must get a judgment, according to the legal website Nolo. Government agencies can also put a freeze on your bank accounts when you fail to pay alimony or child support or when you owe back taxes to the state or Internal Revenue Service.

Consequences and What to Do

Not only do you lose access to existing funds when an account is frozen, but you likely won't have access to funds deposited directly by an employer, according to Nolo. Even though banks notify you of an account suspension, you typically don't find out until after the fact. To avoid holds, pay debt obligations or negotiate payment plans with creditors and collection agencies. Paying off government-mandated debts is a priority.