What is Lien amount & How to remove Lien amount?

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Have you noticed a lien amount mark in your bank account?  Lien amount is an important financial term and you should be aware of what it means and indicates. Well,  if you’re not sure what a lien is, then that’s what we’re here for. We will help you understand what a lien amount is and everything there is about it!

Lien amount

What is a lien amount?

In simple terms, a lien refers to a lock that is placed on your account by your respective bank. It is to be noted that it has been set by the bank for a defined period of time. It is a certain restriction set and locked by bank regulators for a fixed length of time. When the bank freezes the amount in your account, you won’t be able to do anything with it, such as withdraw it or make any transactions using it, until the bank removes the lock. The bank has the jurisdiction to freeze the whole balance of the account and designate it as a lien amount.

Why do banks put lien amounts?

It can be traced to several reasons why banks put lien amounts. We have tried to list the major ones here for your understanding.

  • When you open an account with a bank, you agree with their terms and conditions. One of these conditions is that a user’s bank account must hold the minimum required balance. Customers who fail to maintain the requisite balance will be penalized by the bank. However, if the account does not have a required balance, the bank will place it on a lien.
  • When you apply for a loan from a bank using your FD (Fixed Deposit) as collateral, the bank creates a lien over that FD. When the deposit is due for payment or if you decide to close it before the loan tenure, the amount will be altered towards paying off the debt in the loan account connected to the deposit, and only the remaining amount will be given back to you.
  • Credit card debt may be the cause of the lien amount.
  • The bank will place a lien on the account for the loan amount if you don’t succeed to make the required payments. Therefore, the majority of banks will have the authority to place a lien on the account. They may even place a lien on another account within the same branch if you fail to make the required payment from one account.
  • At certain times, the bank will take care of the problem as it could be caused by a glitch in the bank software. You must go to the branch or contact customer support to resolve it.
  • The bank can simply place a lien on that amount until the problem is rectified if you are having any problems with a draught or a cheque on your account.

How can you remove a lien from your bank account?

One must add the necessary balance to the account after the bank has marked the lien amount. The bank will remove the lien mark from your account when all liabilities are settled. One can use the extra cash in the account once the lien is paid. If you are unable to pay the debt, the amount of the lien will be utilized to pay off the debts that are the cause of the lien. You must go to the home branch and request the officials take care of any lien-related issues if you want them to be resolved. You can also contact your bank’s customer service department to resolve the lien.

How long does a lien last?

As soon as you clear your debt, the bank will remove the lock from your account. Where the lien is an error from the bank’s side, you can contact the bank immediately to remove it.

When will the lien amount be credited?

You won’t be able to withdraw the frozen funds unless the bank releases the lien on your account. One can contact their branch to request the removal of a lien for a legitimate reason. You will be able to make transactions once the lien is uplifted.

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