How long can a bank account be frozen in Canada?

Your bank account is a pillar of your financial security. If you discover that your bank account is frozen, don’t panic. Instead, contact your bank or branch to understand what has happened and what steps you need to take next.

There are laws in Canada (under the Bank Act) that give these companies the rights to freeze an account:

• Banks: Your bank can freeze your account due to suspicious activity. If your bank suspects fraud, a quick call or visit can resolve the matter. All Scotia debit cards come with free mobile and online banking so it is easy to identify suspicious transactions or report fraud.
• General creditors: If you are severely behind on paying your debts, whether consumer debts or bank-owned loans, the creditor can freeze your bank account. However, this action can only be done after they go to court and obtain a judgment against you.
• Canada Revenue Agency (CRA): If you have unpaid taxes, the CRA can freeze your accounts without obtaining a court order. They will likely not give you any warning to ensure you don't have time to shift your funds. Your account will remain frozen until you resolve your outstanding tax obligation.

Bank accounts are frozen for two main reasons: suspicious activity or debt obligations. If suspicious activity is identified and it looks like you might be the victim of fraud, many financial institutions will put holds or freeze on your account.

If you are struggling to make your debt or tax payments, seek help before your account is frozen. You can work with your financial advisor to come up with a strategy to help pay off your debt. As well, creditors and the CRA can be contacted and a payment plan should be established before matters escalate.

If you are in a situation where you have pursued the above options and still need additional support with your debt, you might consider contacting a Licensed Insolvency Trustee (LIT). A LIT is a federally regulated professional who helps individuals and businesses with debt. They have a legal responsibility to review your financial situation and explain all possible solutions, including bankruptcy. For many situations, a LIT can help you develop a consumer proposal, which is a legally binding way to pay off a percentage of the debt owed to creditors or to extend the time to pay off a debt.

The very first thing you want to do after you discover that your bank account is frozen is to contact your bank. Figure out why your chequing account was frozen and discover what the next steps are. If your account was frozen due to owed debt, the bank can provide all the details you will need, including contact information of the creditor and the details around your debt.

When your account is frozen, any incoming deposits (such as paycheques or direct deposits) will also be frozen. If you have your payments coming out of an account that is frozen, you will need to set up alternative ways to pay your mortgage, utilities, and vehicles until the account is accessible.

A common question is how long can a bank account be frozen in Canada? There is no time limit for a frozen bank account. For example, if the CRA froze your account, your account can remain frozen until your tax obligation is paid in full.

Once you know why your account is frozen, you will want to know how to deal with a frozen bank account. The first step is to always talk with your financial institution for more details. Your bank will help you know what your next step is and if it is to provide further information for an investigation, dispute a fraudulent transaction, talk with creditors or schedule a free meeting with a LIT.

Your bank account will be unfrozen once any investigation is completed, you pay a debt you may owe, or settle on a payment plan method with the creditor or CRA. Be aware that frozen bank accounts happen after many attempts of contact, so the financial institution, creditor or CRA might not be willing to unfreeze your account until you provide information, or your debt is paid back in full.

Dealing with frozen chequing accounts can be stressful. Don't wait for the problem to get worse. Seek information or advice immediately to discover the options available for you.