How to Remove Lien from Bank Account: Causes, Process and Important Steps
A bank account or financial lien may sound scary when one suddenly notices that a certain amount in their bank account is marked as restricted. As the name suggests, a bank account lien basically means a ‘restriction’ that goes against one’s account and keeps them from easily removing or transferring those funds.
So if you are thinking about how to get lien off bank account, here are a few important pointers to understand and deal with the situation. One has to first know why a lien is imposed on their bank account. The process of removing such a lien will also depend on who exactly put it there.
What Is a Lien on a Bank Account?
Sometimes banks restrict the withdrawal or transfer of funds on a customer’s bank account. And a lien basically refers to such a restriction.
So for example, if one’s account had ₹60,000, but a bank puts a ₹15,000 lien on it, then until and unless that amount is cleared, the customer may not be able to access it.
It must be noted that a lien is usually not the same as a bank account freeze. Even though in both the cases certain funds might not be available for immediate withdrawal, the difference is the extent of the restriction — in a bank account freeze, almost everything gets locked out, while in the former one can only withdraw funds beyond the extent of the lien. Nevertheless, either of these may cause major inconvenience.
But why do banks put liens on bank accounts? Well, there are a plenty of reasons for that. Here are five major ones:
Why Is a Bank Account Lien Placed?
1. Owing a Loan/Bank Dues
Banks sometimes restrict one’s funds in case they fail/owe to pay back a loan or any other dues. This obviously depends on what type of agreement one has with the bank itself.
2. Suspicious or Unusually Large Transactions
Banks keep an eye on their customers’ transaction. So a suspicious transaction could potentially keep a portion of one’s funds restricted. If one tries to move this amount without resolving the issue, their bank might decline the transaction.
3. Cyber Fraud or Financial Investigation
If any cyber fraud or online money transaction goes wrong, sometimes the concerned authorities place a lien or freeze a certain amount in the bank account for investigation.
4. Court or Legal Order
In order to keep one’s funds restrained, sometimes banks receive such orders from the law courts. One will then need to clear up the court-related issue to lift this restraint.
5. Other Banks’ Requirements
A lien sometimes happens to be imposed in situations other than the above scenarios. So one will need to clarify directly with one’s bank about it.
So now that we know why people have liens on their banks accounts, let’s understand how one can actually take out a lien from the bank.
How to Remove Lien from Bank Account?
As mentioned earlier, how to get lien off bank account, i.e. clear out a certain restriction, will depend largely on the reason behind it. But here are a few generic steps one can take:
Step 1: Contact the Bank
If one suspects that they have a lien on their bank account, their first step should be to directly contact their bank to clarify the situation. One must inquire as to what is the reason behind this and what was the extent of the amount under lien.
Also, one needs to request the specific documentation that they need to submit to help in resolving this issue. The following things should be enquired and made a note of:
Amount under Lien
Date of Lien
Reason behind Lien
Reference number, if any
Bank or Department that put the Lien
Documents required to remove the Lien
Step 2: Submit the Applicable Documents
Depending on the reason behind the lien, one needs to submit the documents that their bank asked for.
One can provide proof of identity, information about the suspected transaction, details regarding a disputed payment or loan, and any other documents.
Step 3: Clear Up the Dispute/Issue
Depending on the reason behind the lien, one needs to provide proof of resolving the dispute. If a bank restricts one’s funds because of, say, a cyber fraud, they will have to provide the bank with the necessary proof of resolving the dispute or cancelling the online transaction.
Step 4: Contact Authority, if Any
Sometimes simply contacting the bank is not enough; if one’s bank froze or restricted their funds based on legal orders or due to a cyber fraud case, it might be needed to directly contact the concerned authority, and follow their procedure. One will then need to get the necessary approvals to unfreeze their funds.
Step 5: Keep the Written Records
One must keep a record of all the documents, emails, and applications for the dispute resolution in case the situation prolongs in any way.
Bank Account Freeze vs Lien
One has to understand that a bank account freeze and a bank lien basically are two different things.
While a lien could be thought of as a restraint of one’s funds to the extent of a selected amount, a bank account freeze completely locks one’s account.
So if a person has a bank account of, say, ₹50,000, and the bank puts a lien of ₹10,000 against this amount, it would be possible for the customer to transfer or withdraw the rest of the money, depending on their bank’s policies. The opposite would be the case in a freeze.
If a person’s account gets frozen by mistake or due to any wrong reason, they have to contact their bank to discuss the issue. To add, a bank account holder can also raise a complaint before any financial or official authority.
If a customer finds the bank not responding, or even after submitting all documents fails to successfully get the amount released, they should raise a formal complaint with the bank or contact them.
If the bank issue pertains to a legal issue, a cyber fraud, or in case of any large-scale dispute with the bank, then it might be required to obtain the services of a reputed and experienced advocates to get any resolution.
Conclusion
A lien on a bank account is not necessarily an end-all situation. However, its removal will always depend on its reason and origin.
A general roadmap to tackle the situation nonetheless is to first comprehend the situation and reason behind the lien, contact one’s bank, submit all applicable documents, and finally resolve the issue. In case this does not work, one will then have to contact the concerned authority, and finally consult an advocate.
Understanding the basic difference between a bank account lien and its account freeze helps one understand the exact nature of the problem. And there are always steps to resolve it, which are discussed above.
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