Lien In Bank Account – How To Remove Lien Amount in your bank account?

How do you remove the lien amount from your bank account? Are you looking for an easy way to remove the lien amount?

Then, read this post, you may be able to understand why it happens and how to remove it from your bank account.

What is a Lien?

A lien is a tool used by lenders to secure a loan. It’s a legal right against the asset used as collateral against the debt. In layman’s terms, a lien is just a contract between the parties where the money lender gets the right to the property. 

Another similar contract is hypothecation. The difference lies in the possession of the property. You may see that in a lien, the possession of the property is with the lender whereas in hypothecation you find that the possession of the property is with the person who gets a loan. 

Loan EMIs usually come with a lien. When you have an overdraft Or demand loans against security, the collateral security will have a lien marking. It may directly correspond to the account you are setting monthly EMIs. 

A lien amount is money owed to a person who has won a judgment. When recovering the funds, that individual can exercise the lien contract, by putting a hold on an asset controlled by the subject of the judgment until the lien is paid.

Liens can be exercised on real estate, bank accounts, and many other types of assets. When a lien is placed on an asset, people are entitled to notification about the amount of the lien, who the funds are owed to, and how to resolve the matter. 

Until the funds are paid in full, the hold will remain in place and the person will not be able to use the asset as desired.

The bank usually marks a lien on an account that has a loan EMI overdue, Loans against fixed deposits are usually securitized with a lien, when you have given any property which involves the total transfer of the property right as well as possession, a lien is exercised. 

Hypothecation is usually exercised on the property such as vehicles, plants and machinery and stocks which are provided as a security when getting a loan. You may see a car is hypothecated to the bank when you avail of a car loan. The same goes for the business loan where stocks, plant and machinery are being hypothecated to the bank.

Here possession of property stays with you but the property right gets transferred to the money lender. These contracts of lien and hypothecation fall under the Indian Contract Act.

Lien in a Bank Account

If you have a lien against your property, then you will need to pay off the debt before the creditor can sell your home. This means that you will not be able to use any money from your bank account until the debt has been paid off. 

For any loan, if the monthly EMI falls short, an automatic lien arises on your savings bank or current account. Unless you pay off the overdue amount, you won’t be able to use the balance.

How to know whether your bank has a lien mark on your account?

You can check whether your bank has a lien against your account by visiting the website of your bank. You can also call up your bank representative and ask them whether there is a lien against your bank account.

On your own, you can see it in the statement of account. You may see details such as the cleared balance, lien amount, overdue amount, current balance, and available balance. If you have access to the bank’s internet banking, you might be able to see there also.

How to remove the lien amount from your bank account?

If you find out that your bank has a lien against your account, then you need to contact your bank representative and ask to remove the lien amount from your bank account.

Usually, banks remove a lien if there is no overdue balance in the account. But there is a certain contract where lien marking on the account stays till the loan account is closed. Such as loans against security. The lien will be removed at the end of the loan tenor only.

If you have cleared your dues and the lien marking is still there, you may advise your bank to remove the lien at the earliest. With the lien removal application, it can be done quite easily.