Once a creditor wins a lawsuit, it obtains a judgment against the individual owing money. The creditor will generally try to find the debtor’s money wherever they can—including bank accounts.
My Spouse has a Judgment. Can the Creditor Garnish Our Joint Bank Account?
A garnishment is a judgment collected by taking money from a debtor. The money collected may include a paycheck or bank account if the debtor partially or wholly owns it. Depending on state law, a creditor may be legally prohibited from seizing the bank account.
Depending on where you live, the following could happen:
- Your joint account may be garnished for the debt, even if you did not personally owe that debt
- Your account may be garnished whether or not you own it separately from your spouse
- Credits may not be able to garnish your account at all
State laws vary widely on the extent of a creditor’s ability to garnish bank accounts belonging to spouses. Your rights will depend on the laws of your state. Generally, your exposure to garnishment depends on how you legally share property and debt obligations with your spouse.
Can My Bank Account Be Seized Even If I Don’t Share a Bank Account with My Spouse?
If the spouses live in a community property state, yes. Property acquired by one spouse in the marriage can be used to repay another spouse’s debt. The only exceptions are if the spouse received a gift or inheritance.
If the spouse has a separate bank account, the account can be garnished to repay the spouse’s debt. Community property rules for separate bank accounts depend on state law.
What If I Live in a Community Property State that Prohibits the Sharing of Debts?
If you live in a community property state, you and your spouse legally share equally in almost all property and debts incurred over the course of your marriage. All property you acquire during the marriage, other than property acquired by gift or inheritance, belongs to both of you. This is true whether or not the property is titled jointly or separately. You and your spouse share liability on debts whether or not you were included as a judgment debtor.
A judgment creditor of your spouse can garnish your joint accounts, and if you have your own separate bank account and a judgment is taken against your spouse, the creditor can also garnish your separate account to pay for your spouse’s debt.
Community property states and jurisdictions include:
- Alaska (if spouses sign an agreement to share assets as community property)
- New Mexico
- Puerto Rico
Are There Exceptions to the Community Property Rule for Separate Accounts?
Not every community property state will allow a creditor to garnish your separate account. Whether you are liable for your spouse’s debts depends on your state’s laws.
Some community property states provide for sharing property, but not debts. Texas is a community property state, but creditors cannot garnish an account for a spouse’s debt if the account is not shared with a spouse. In Texas, a bank account is protected as long as a spouse doesn’t make contributions into the account or take withdrawals from it.
If you or your spouse had separate property, such as a gift, inheritance, or pre-marital property, but income is generated from that property while you are married, that income might be subject to garnishment by a creditor if you live in a civil law community property state.
What Is a Tenancy by the Entirety?
In a tenancy by the entirety, you and your spouse have full rights to each other’s property, rather than just a half-interest. This type of property ownership is usually only available to legally married couples. If you own an account jointly with another person not your legal spouse, that account may be subject to garnishment for the other person’s debt.
Many states allow tenancy by the entirety, although some restrict the right to real estate ownership only. Research the laws of your state to determine if this right is available to you.
What Are the Common Law/Separate Property States?
In common law property states, the debt of each spouse remains their separate responsibility unless:
- The debt benefited both spouses
- The spouses took out the debt jointly
In common law property states, spouses that separate their finances are usually not responsible for the debt of the other. If the spouses jointly share debts and property, a creditor may get to reach that property.
If you have a joint account with a spouse in a common-law property state, and the debt is not owned as tenants by the entirety:
- A creditor can garnish the account in some states, even if you were never individually liable for the debt. The creditor can only garnish up to half of the funds in the account.
- In some states, if you were not individually liable for the debt, the creditor cannot garnish the joint account unless the debt was incurred for the benefit of you and your family or to acquire joint property.
What Are Tenants by Entirety States?
Some states recognize property ownership in the form of tenancy by the entireties. In these states, a creditor cannot garnish your account at all, regardless of whether you have a separate account or if you own an account jointly with your spouse. The only exception to this rule is if the creditor also got a judgment against you.
Can I Use Exemptions to Protect Funds in Joint Accounts?
Regardless of whether you live in a community property or common law state, creditors may be unable to garnish some or all funds in your joint or separate account for other reasons. If the funds in your account are traceable to sources that are considered exempt under federal or state law, the creditor may not be able to reach those funds. Disability benefits and Social Security benefits are exempt from garnishment under federal law. If the account is solely used to deposit federal benefits, the creditor may not be able to touch the account at all.
Are There Monies My Spouse’s Creditors Can’t Touch in Our Joint Account?
Yes, exempted funds aren’t available for a creditor to garnish. Exempted funds include:
- Child support
- Unemployment benefits
- Disability benefits
- Retirement plans
- Some proceeds from student loans
- Personal injury payments
- Worker’s compensation
How Will I Know the Money Has Been Deducted From Our Joint Account?
The bank generally sends a notice to the joint bank account holders. The bank will “freeze” the account, preventing anyone from accessing money. If some money is considered exempt, the individual will have to show documentation to obtain it.
Do I Need a Lawyer For Help With My Account Levy?
Contact a collection lawyer to determine the best way to obtain or keep your money. If you are experiencing a garnishment on your joint or separate bank account by a creditor, use LegalMatch’s services today to select the specific issues in your case and find an experienced finance lawyer in your area. Our services are 100% confidential, and there is never a fee to schedule a consultation. Consider using LegalMatch’s services today.