Bank Account Frozen? Here is What You Need to Know

August 9, 2018

A frozen bank account can be financially devastating and often comes as a complete surprise. If your bank account is frozen, here’s what you need to know.

There are typically three situations in which your bank account can be frozen. These are:

  1. By the Canada Revenue Agency (CRA). The CRA does not need to go to court to have your bank account frozen, nor do they need a court order. All they have to do is send a notice — a requirement to pay — to your bank and your bank is legally obligated to comply.
  2. By Family Responsibility. According to the Ministry of Community and Social Services (MCSS), if you fail to make support payments, the Family Responsibility Office (FRO) has the legal authority to take enforcement action, such as garnishing your bank account. The bank is required to take the full amount you owe from your bank account (or a maximum of 50 per cent of the funds in a joint bank account) to pay the arrears.
  3. By a creditor other than the CRA. In this case, your creditor would have to get a court order and your bank would be legally obligated to garnish your bank account.

You may receive a letter warning you that your account is going to be frozen. Often, however, a frozen bank account can come as a complete surprise. You may not find out until you go to withdraw money or make a payment and your card is declined.

If this has happened to you, don’t wait to take action.

If you owe the money, a frozen bank account or requirement to pay processed through the correct channels is a legal collection action. But it can be incredibly damaging to your financial health. If you have $5,000 in your bank account and it disappears overnight, you might not have funds available to cover your cost of living expenses. Plus, depending on how large of an amount you are required to pay, there might be more coming out of your bank account if additional funds are deposited in.

One example detailed on for CRA collections is if you have a locked-in guaranteed investment with interest amounts being deposited into a savings account on a monthly basis. If the amount owing was greater than what was currently in your savings account, your bank would be legally required to transfer those interest payments to the CRA as they become available.

So, if you have a frozen bank account, what can you do?

You could:

  • Pay the debt in full if you have the funds available in another location. If you did, though, presumably you wouldn’t be in this situation.
  • Try to negotiate with the CRA, government agency, or creditor on your own. This is not recommended, however, as in most cases negotiation won’t be possible and won’t end in your favour.
  • File a court order and appeal to a court or judge to stop the collection action. This can be expensive and is not guaranteed to get results.
  • Contact a Licensed Insolvency Trustee to explore your options.

Your best option is to contact a Licensed Insolvency Trustee for assistance. Not only can a Licensed Insolvency Trustee help you make sense of your situation, but they are also the only professional, besides a judge, who can stop CRA collection action. They will help you determine the right recourse.

If you have a frozen bank account, don’t wait — contact Fuller Landau Debt Solutions today. We offer free consultations. Call (416) 927-7200 or visit for more information.