If you and your wife reside in a community property state, then there is a legitimate risk that a creditor will garnish wages from a joint bank account to pay a debt that only you owe. In general, your spouse’s wages cannot be garnished for a debt you owe if they have a separate checking account held solely in their name. You can prevent wage garnishment by fighting off debt collectors in court.
Community Property States Allow Garnishment of Joint Accounts
If you and your wife reside in a community property state, then there is a legitimate risk that a creditor will be able to access a joint bank account to garnish funds to pay a debt only you owe This is because community property states have laws on the books that treat the property of one spouse in a marriage as the property of the other spouse.
For example, Texas Family Code Sec. 3.202(c)(d) states:
“(c) The community property subject to a spouse’s sole or joint management, control, and disposition is subject to the liabilities incurred by the spouse before or during marriage.
(d) All community property is subject to tortious liability of either spouse incurred during marriage.”
In other words, any property that was accumulated during a marriage may be subject to wage garnishment or other liabilities as a result of only one of the spouse’s debts.
Fortunately, most states do not adhere to community property laws. There are currently only nine community property states in America:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
Let’s consider an example. Jeff and Suzie live in Arizona, and when Jeff gets sued by LVNV Funding for a debt he owes, he fails to respond before the state deadline. As a result, the court orders a default judgment against him. LVNV Funding is able to access Jeff and Suzie’s join bank account and garnish their wages, including Suzie’s hard-earned cash. This all could have been avoided if Jeff had responded to the lawsuit and fought back in court.
How to Protect Your Wife’s Assets from Garnishment
If you reside in a community property state, there are steps you can take to protect your wife and her funds from a garnishment effort sought by your creditors. Specifically, you should maintain separate, independent bank accounts instead of having all your funds in a joint bank account.
Though, it is important to note simply maintaining funds in separate accounts is not a foolproof method to protect your wife’s funds. This is because, in many community property states, there are laws on the books that enable a creditor to enforce a judgment by accessing a spouse’s bank account since the debt was incurred when you were married and, as a result, the funds in your wife’s account are deemed “community debts.”
The most surefire way to prevent creditors from garnishing your spouse’s wages for your debt is to respond to any collection lawsuits filed against you and actively fight the case in court. If you ignore a lawsuit, you risk the court ordering a default judgment against you. This opens the door for creditors to pursue legal remedies like wage garnishment against your assets and accounts.
Instead of ignoring a debt collection lawsuit, take action and respond before the deadline. Drafting a strong legal Answer will allow you to present defenses and force the creditor to prove their case. This makes it much less likely the court will order judgments against you that put your wages and accounts at risk of garnishment.
Taking the proper legal steps to respond to a lawsuit allows you to protect yourself and your spouse’s hard-earned assets. Don’t allow creditors to garnish your spouse’s accounts for your debts. Fight back in court and keep both of your finances safe from unfair garnishment.
Jointly Owned Accounts: Rights and Limitations
When you own an account jointly with another individual, the law usually presumes that you each have equal rights to funds held in that account. So, when a creditor attempts to garnish that account, it typically doesnt have to investigate whether you contributed more money to the account than the co-owner. Unfortunately, this could mean that the money in your account could be garnished to pay for the co-owners debt, a debt that you never owed.
Laws vary on the extent to which creditors can garnish joint accounts. In some states, creditors cant take more than half of the funds in a joint account. However, in other states, creditors may be able to garnish the entire joint account.
Even though creditors are often allowed to garnish a joint account up to the full balance, it might not be able to do so in every situation. In many states, you can protect funds from garnishment if you can show that the money in the account came from you, not the debtor. You must be able to prove that the money is traceable to what you put into that account. If you are successful, then the creditor cannot garnish funds to the extent of your contributions.
It is much easier to protect the account if you can prove that all of the funds are traceable solely to your contributions. You may have difficulty, however, if both you and the debtor put money into the account together. In that case, you must provide as much proof as possible that will allow a court to clearly trace those funds back to you.
Creditors can garnish jointly owned savings and checking accounts. Learn about your rights. By
Creditors might be able to garnish a bank account (also referred to as “levying” the funds in a bank account) that you own jointly with someone else who isnt your spouse. A creditor can take money from your joint savings or checking account even if you dont owe the debt.
What follows is a description of when a creditor may be able to attach the account and what you can do to protect yourself.
Can my bank CDs be garnished by a debt collector?
FAQ
Can a creditor garnish my wife’s bank account?
A creditor can collect the money they owe from you by garnishing your income directly from your employer or by serving a levy against a bank account in your …
Can creditors go after my spouse for my debt?
Creditors: – Creditors typically cannot pursue you for your spouse’s individual debts unless you co-signed or guaranteed those debts. Legal Advice: – It’s always a good idea to consult with a legal professional who can provide advice based on your specific situation and local laws.
What type of accounts cannot be garnished?
Some sources of income are considered protected in account garnishment, including: Social Security, and other government benefits or payments. Funds received for child support or alimony (spousal support) Workers’ compensation payments.
How can I protect my bank account from garnishment?