Blocking Application in Bank Accounts: Legal and Financial Processes

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Blocking Application on Bank Accounts

The block applied to bank accounts is a legal procedure that restricts the use of funds in an account for a specific reason. This application is usually implemented when the debtor fails to meet their debt obligations, ensuring that the creditor can legally collect the owed amount. However, blocking is not limited to debts alone; various legal regulations, tax liabilities, guarantees, and other reasons can also lead to the application of a block on an account.

What is a Blocked Account?

A blocked account is when a restriction is placed on a person's or institution's bank account due to debts or other legal obligations. This restriction results in only a certain portion of the balance in the account being available for use. The debtor cannot access the blocked amount, which is either directed to the creditor or blocked until the legal process progresses and the payment is made. Blocking is not applied to the bank account itself but to the money in the account. For example, if the balance in a debtor's account exceeds the debt amount, the debt is blocked, and the remaining balance can still be used. If the account is fully blocked, the individual cannot perform transactions from this account. Banks typically carry out such blocking procedures in line with court orders, enforcement offices, prosecutors' instructions, or other legal institutions' directives.

How is a Block Applied to an Account?

The process of applying a block on a bank account becomes a legal obligation and occurs based on the creditor's requests. If a person fails to pay their debt, the creditor (such as a bank, tax office, student loan authority, or private companies) can take legal action to block the person's account. Banks can only execute these transactions in accordance with the instructions of the relevant legal institutions. There are various reasons why a block might be applied:

Debts: Unpaid obligations like loans, credit card debts, or tax liabilities.
Bankruptcy and Guarantees: If a person has declared bankruptcy or entered into a debt as a guarantor. When a block is applied due to a debt, the creditor institution can seize the money in the bank account until payment is made. However, if there is no money in the account, the debt cannot be collected, but the individual's banking transactions will be blocked.

Duration of the Block Application

The duration of a block is not legally fixed. The period for removing a block from a bank account depends on the nature of the debt and the creditor representing the relevant institution. For example, a block due to a bank loan is automatically lifted once the debt is paid off. However, if a block is imposed by another institution, such as a tax office or enforcement office, the block can only be removed after payment is made and the official notification is sent by the relevant institution. A block on an account can be lifted after the debt is fully paid off or restructured. The duration of the block typically shortens as payments are made and the creditor institutions acknowledge the payments.

Institutions That Can Apply a Block and Their Reasons

There are many different institutions that can apply a block. These institutions typically request a block on an account when individuals fail to meet their legal obligations in order to collect their debts. These institutions include:

Banks and Financial Institutions: A block can be applied by the bank due to unpaid loan debts, credit card debts, or other financial obligations.
Tax Office: Accounts may be blocked due to unpaid tax debts. If tax debts are restructured, the block can be lifted as payments are made.
KYK (Student Loan Authority): If university students fail to repay their loans, KYK can apply a block on their bank accounts. These actions are carried out in accordance with legal obligations and procedures, and the institution must follow the legal steps before applying a block.

How to remove a block

A block placed on an account can be lifted when certain conditions are met. These conditions may include paying the debt, restructuring the payment, or receiving official notifications from the relevant institutions.

Block Due to Bank Debt: If the block was due to a bank loan and the debt is fully paid, the bank will automatically lift the block. However, once the payment is made, the debtor may need to obtain a written document from the bank and submit it for confirmation.

Block Due to Tax Debt: To lift a block applied by the tax office, the debt must be paid or restructured. Once payment is confirmed through a receipt, the tax office can remove the block.

Prosecutor’s Office and Enforcement Offices: Blocks applied by the prosecutor’s office can only be lifted with the prosecutor's approval. Blocks applied by the enforcement office can be lifted after payment or an agreement is reached.

Types of Accounts That Can Be Blocked

The block application process can be implemented on different types of accounts and can be carried out for various reasons. Blocking is typically done for debt collection, legal compliance, or various legal causes. Here are the most common types of bank accounts that can be blocked:

Personal Accounts 

These accounts are opened by individuals in their own names for personal needs and are commonly used for salary payments, savings, and daily expenses. The block can be applied due to personal debts, creditors' requests, or court orders. The block prevents transactions from the account until the debtor settles the debt.

Deposit Accounts

Deposit accounts are used by individuals or businesses to earn interest by depositing money for a fixed period. These are generally referred to as term deposit accounts. When a block is applied, the account holder’s access to interest or the use of the deposit can be restricted. The block on a deposit account typically arises from a legal or official procedure, and the account holder cannot access the funds or earn interest.

Foreign Currency Accounts

These accounts are used for transactions in foreign currencies, and individuals or businesses maintain funds in different currencies. A block on a foreign currency account usually occurs due to foreign trade-related debts or international legal procedures. Fluctuations in foreign currency and international economic conditions may lead to the block of such accounts, preventing the account holder from trading or transferring foreign currency.

Current and Joint Accounts

Current accounts are used by businesses to carry out daily financial transactions, track revenues and expenses, make payments, and receive customer payments. A block can make it difficult for business owners to operate. Joint accounts are accounts held by more than one person, often opened by spouses, business partners, or family members. A block can also be applied to joint accounts due to partnership disputes or legal processes. When a block is placed on a joint account, all account holders may be restricted from performing transactions.

Conclusion

Blocking bank accounts is a practice implemented for reasons related to debts or other legal matters. It can be lifted once the related debt is paid off or the legal process is completed. Individuals can check if a block has been placed on their accounts through various methods and request the removal of the block after making payments. These processes require adherence to legally established procedures and allow individuals to regain their financial freedom by settling their debts. People can contact their banks or use online platforms to check for any blockages and determine if there are any restrictions. After making payments, it is important for the debtor to communicate with the bank or relevant institution, notifying them that the legal process has been completed and the block should be lifted.