If a creditor gets a judgment against your spouse, can the creditor take money (garnish) from bank accounts that you and your spouse own jointly? Depending on where you live, the following could happen:
- Your joint account may be garnished for that debt even if you did not owe that debt.
- Your account may be garnished whether or not you own it separately from your spouse.
- Creditors may not be able to garnish your account at all.
State laws vary widely on the extent of creditor's ability to garnish accounts belonging to spouses. Your rights will depend on the laws of your state. In general, your exposure to garnishment depends upon how you legally share property and debt obligations with your spouse in your state.
(Find more articles on frozen bank accounts and bank account garnishments.)
Community Property States
If you live in a community property state, you and your spouse legally share equally in almost all property and debts incurred during your marriage. This means that all property you acquire during the marriage (except property acquired by gift or inheritance) belongs to both of you, whether or not the property is titled jointly or separately. This also means that you and your spouse share liability on debts, whether or not you signed for that debt or were included as a judgment debtor. This means that:
- 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, that creditor can also garnish your separate account to pay for your spouse's debt.
Currently, community property states and jurisdictions include: Alaska (if the spouses signed an agreement to share assets as community property), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington, and Wisconsin.
Exceptions to the Community Property Rule for Separate Accounts
Not all community property states will let a creditor garnish your separate account. That will depend on whether your state's laws make you liable for your spouse's debts.
Some community property states provide for sharing of property, but not for sharing of debts. For instance, while Texas is a community property state, creditors cannot garnish your account for your spouse's debt if you did not share the account with your spouse. That means your account is protected so long as your spouse doesn't make contributions into the account or take withdrawals from it.
In addition, if you or your spouse had separate property (such as gift, inheritance, or pre-marital property), but income is generated from that property while you are married, that income might still be subject to garnishment by a creditor if you live in what is called a civil law community property state.
For more information on your rights as a spouse in community property states, see Separate and Community Propery During Marriage: Who Owns What?
Tenants by the Entireties States
In states that recognize property ownership in the form of tenancy by the entireties, a creditor cannot garnish your account at all. It doesn't matter if you have a separate account or if you own an account jointly with your spouse. The only exception to this is if the creditor also got a judgment against you.
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, not just a half-interest. This special type of property ownership is usually only available to legally married couples. So, if you own an account jointly with another person who is not your legal spouse, that account may still be subject to full garnishment for the other person's debt.
Many states allow ownership by tenancy by the entireties, although some restrict this right to just real estate ownership only. You should research the laws of your state to determine if this right is available to you.
Common Law/Separate Property States
In common law property states, which for the most part includes any state that is not a community property state, the debt of each spouse remains his or her separate responsibility unless
- the debt benefited both spouses, or
- the spouses took out the debt jointly.
This means that spouses that separate their finances are usually not responsible for the debt of the other. However, if the spouses jointly share debts and property, then a creditor may get reach that property.
What does this mean for joint bank accounts? If you have a joint account with a spouse in a common law property state and that debt is not owned as tenants by the entirety, here's what happens:
- In some states, a creditor can garnish that account, even if you were never individually liable on that debt. However, the creditor can only garnish up to half of the funds in the account.
- In other states, if you were not individually liable on the debt, the creditor cannot garnish the joint account unless the debt was incurred for the benefit of you and the family, or to acquire joint property.
For more information on your exposure to debt liability in a common law state, see Spouse Debts in Common Law States.
Using Exemptions to Protect Funds in Joint Accounts
Notwithstanding whether you live in a community property or common law state, creditors may still be unable to garnish some or all of the funds in your joint or separate account for other reasons. If the funds maintained in your account are traceable to sources that are considered exempt under federal and/or state law, such as disability benefits, unemployment, or child support, then the creditor may not be able to garnish those funds. For example, if you maintain an account that includes SSI benefits, those benefits are exempt from garnishment under federal law. If that account is used solely to deposit federal benefits, then the creditor may not be able to touch it at all. (To learn more, see our Property Exemptions topic page.)
To learn what happens to joint accounts you own with someone other than your spouse, see Bank Levies on Joint Accounts (Nonspouse).