What to do when the bank blocks your account

An account block, also known as an account attachment, is a legal measure by which a credit institution restricts access to a bank account. This is usually triggered by outstanding payment obligations towards creditors, such as unpaid invoices or court decisions.

A typical scenario that can trigger an account block is an unsettled debt owed to a creditor. Suppose a person has failed to pay an outstanding invoice owed to a supplier. The supplier then initiates legal proceedings and obtains a court judgment. On the basis of this judgment, the supplier may apply for enforcement, with the result that the debtor’s bank account is blocked.

What other reasons are there for an account block

Account blocks can occur for a variety of reasons, including:

• Unpaid debts: Unsettled debts are the most common cause of an account block. If a debtor fails to meet their payment obligations, creditors can take legal action to recover their money.
• Court order: A court can order an account block in order to enforce a lawful claim. This happens when a creditor succeeds in court and obtains an enforcement order.
• Insolvency proceedings: In the context of insolvency proceedings, certain accounts may be blocked in order to protect assets and ensure a fair distribution to creditors.
• Suspicion of fraud: If a credit institution suspects that an account is being used for fraudulent activities, it can impose a temporary block in order to carry out further investigations.
• Social scoring and ESG rating: In the age of social scoring and ESG rating (Environmental, Social, Governance), a person’s conduct in relation to ethical, social and environmental matters may have an impact on their financial situation and, in extreme cases, lead to an account block.
• Voicing unpopular opinions: Expressing opinions that are controversial or unpopular in public can have legal consequences, including an account block.
• Foreign payments: Unusual or frequent foreign payments may be classified by banks as suspicious. Furthermore, payments via payment service providers or anonymous cash transactions can also lead to a temporary block on the account in order to minimise potential risks.
• Other “suspicious” account movements: Unusual, unexplained or suspicious transactions can be regarded by the bank as potentially high-risk and lead to the account being blocked. This also includes suspicious payments to or from “suspicious” countries that are, for example, under observation or currently subject to sanctions.
• Suspicion of money laundering: If there are indications of money laundering, the bank is obliged to take appropriate measures, which can lead to a temporary account block.
• Difficulties in administering estate accounts: The complicated administration of estate accounts can lead to delays and uncertainties, which can occasionally result in a temporary account block.
• Improper handling of legal guardians and holders of a power of attorney: Incorrect handling of authorised representatives or guardians can lead to uncertainty regarding the power of disposal over the account and result in a temporary account block.
• Liquidity shortage at the credit institution: If the credit institution itself runs into financial difficulties, this can lead to temporary account blocks.
• Payments for acquaintances, friends, third parties: Unusual payment patterns, in particular to third parties, may be classified by the bank as potentially risky, which can lead to an account block.
• Sudden termination: An abrupt termination of the account by the bank can lead to a temporary account block.
• Lack of response from the bank to calls and transfer orders: If communication with the bank breaks down and enquiries are not processed, this can lead to a temporary account block.
• IT migrations reported in the press: Well-known IT migrations that are publicly known can temporarily lead to restrictions on account accessibility while the migrations are being implemented.

Who can initiate an account block

An account block can be initiated by various parties, including:

• Account holder: Perhaps surprising at first glance, but the account holder, too, can have their account blocked. This often happens when there is a risk that third parties could gain access. (this also applies to legal guardians, holders of a power of attorney, heirs, insolvency administrators, etc.)

Legal guardians, holders of a power of attorney, compulsory administrators, heirs, estate curators, executors of wills, estate administrators, insolvency administrators

• Creditors: In the case of unpaid debts, a creditor can take legal action to obtain an account block.
• Court: A court can order an account block on the basis of a legally binding judgment.
• Bank: A bank can impose a temporary account block if it suspects fraudulent activity or money laundering.
• Insolvency administrator: In the context of insolvency proceedings, an insolvency administrator can initiate account blocks in order to secure assets.

Possible consequences of an account block

The consequences of an account block can be very varied and can primarily be divided into two categories. On the one hand, short-term consequences that are felt immediately, such as a lack of liquidity and temporary insolvency, which goes hand in hand with exclusion from commercial trade. On the other hand, medium- and long-term consequences that affect one’s financial future and can have a lasting impact on a person’s reputation:

Schufa entry:

• Negative impact on the Schufa score: An account block is usually recorded as a negative entry with Schufa (Germany’s main credit bureau). This can lead to a significant drop in the Schufa score.
• Harder access to loans and financial products: A lower Schufa score can make it more difficult to obtain loans or to take out certain financial products, such as credit cards or instalment plans.
• Higher interest rates on loans: If loans are approved, the interest rates may be higher, as a lower Schufa score is regarded as a greater risk for lenders.

Rating with banks:

• Restriction of account options: The current bank that imposed the account block might be reluctant to open further accounts for the affected customer.
• More difficult account opening with other banks: Other banks might be reluctant to open a new account for the affected customer due to the negative entry with Schufa.
• Restriction on the use of financial services: The affected person could have difficulty obtaining certain financial services such as credit cards, overdraft facilities or loans.
• Loss of trust at the bank: The bank could lose confidence in the customer’s financial reliability, which could have a long-term negative effect on the relationship with the bank.

How to prepare for an account block

Despite an account block, there are various measures one can take in order to remain liquid. Here are some possible precautions:

• Emergency fund: It is advisable to set up an emergency fund that covers enough money for three to six months of living expenses. This fund should be held in a separate account that is not affected by the account block.
• Cash reserves: Keep a certain amount of cash at home in order to be able to cover short-term expenses.
• Alternative accounts: Consider opening a second account with another bank or financial institution. Make sure that this account is not connected to the blocked account.
• Online payment services: Use online payment services such as PayPal, Venmo or similar to carry out transactions.
• Credit card: A credit card can in many cases serve as a substitute for cash. Make sure that you can settle the monthly credit card statement.
• Transfers via third parties: If possible, ask trusted persons or family members to help out financially on a temporary basis.
• Advance payments and instalment plans: Arrange alternative payment terms with landlords, service providers or creditors, such as advance payments or instalment plans.
• Social support: Check whether you are entitled to state benefits, such as unemployment benefit or social assistance.
• Legal support: Consult a lawyer to find out whether legal steps can be taken to lift or mitigate the account block.
• Budget planning: Draw up a strict household budget in order to minimise your expenditure and ensure that your liquid funds are used as efficiently as possible.

Account block lawyer: how we help you

Our experienced law firm in Munich offers comprehensive support for individuals affected by an account block. Our services include:

• Legal advice and analysis of the situation: We analyse your individual situation and provide you with comprehensive legal advice on the possible steps that can be taken.
• Representation in court: Our lawyers represent you competently in court in order to safeguard your interests as effectively as possible.
• Negotiations with creditors: We contact the creditors on your behalf and attempt to reach an amicable solution.
• Challenging the account block: Under certain circumstances, we can challenge the lawfulness of the account block and initiate measures to have it lifted.
• Support in insolvency proceedings: In the event of insolvency proceedings, we are at your side with our expertise in order to ensure a fair distribution to creditors.
• Communication with the bank: We take over communication with the bank and work towards a smooth resolution.

Our law firm has many years of experience in supporting clients with legal matters relating to account blocks. Please feel free to contact us for further information or to arrange a consultation appointment.

Helpful articles on the topic of asset protection:

• Liechtenstein – opening a secure bank account – no enforcement from Germany
• Criminal tax fraud or money laundering with the help of foundation trustees and life insurance policies
• Account check – what the authorities are allowed to ask
• Contract nullity, asset confiscation and arrest for breaching sanctions
• Banking law lawyer in Munich

by Dr. Johannes Fiala

with the kind permission of

www.network-karriere.com (published in issue 12/2024, pages 26 and 27)