Married Couples and Bank Garnishment – Can Your Spouse’s Bank Be Garnished for Your Debt? - The Law Offices of Paul Y. Lee (2024)

FAQs

Can my husband's bank account be garnished for my debt? ›

California is a Community Property State

As a result, it is possible for a creditor to garnish a spouse's bank account if their spouse owes a debt. It is difficult enough to have any bank account garnished, but when it is for your spouse's debt, it can be even more difficult to accept.

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.

A debt collector can contact your spouse. A debt collector can contact your parents or guardian if you are under 18 years old or live with them. A debt collector can also contact your attorney and, if otherwise allowed by law, credit reporting companies (Equifax, Experian, and TransUnion) about your debt.

Creditors can take money from any account that has your name on it. Creditors cannot take money from your joint accounts if the money belongs to another owner of the account (like your spouse or business partner). Exempt income. Certain types of income are exempt, meaning that the creditor isn't allowed to take it.

Retirement accounts like 401ks and IRAs have special protection from creditors and debt collectors. Under federal law, 401ks and other ERISA-qualified plans cannot be garnished by creditors. IRAs also receive protection up to $1 million (adjusted for inflation) under federal bankruptcy law.

You can protect yourself from your spouse's debt by signing a prenuptial agreement before you get married and avoid taking out joint credit. It's especially important to protect equity in your home during a divorce to ensure you get your fair share, since this is likely the largest asset you have.

There are four ways to open a bank account that no creditor can touch: (1) use an exempt bank account, (2) establish a bank account in a state that prohibits garnishments, (3) open an offshore bank account, or (4) maintain a wage or government benefits account.

What States Prohibit Bank Garnishment? Bank garnishment is legal in all 50 states. However, four states prohibit wage garnishment for consumer debts. According to Debt.org, those states are Texas, South Carolina, Pennsylvania, and North Carolina.

Yes, a debt collector can take money that you owe them directly from your bank account, but they have to win a lawsuit first. This is known as garnishing. The debt collector would warn you before they begin a lawsuit.

You are generally not responsible for someone else's debt. When someone dies with an unpaid debt, if the debt needs to be paid, it should be paid from any money or property they left behind according to state law. This is called their estate.

What states are you responsible for your spouse's debt? ›

If you live in a community property state, you probably will be responsible for debts accumulated by your spouse during the marriage. (These states are California, Texas, Arizona, New Mexico, Nevada, Washington, Idaho, Wisconsin, and Louisiana, while Alaska, South Dakota, and Tennessee make it optional.)

Most states use common law (also known as equitable distribution), which dictates that married couples don't automatically share personal property legally. In other words, you aren't responsible for your spouse's debt unless you took it out together as a joint account, or you cosigned on it.

Exemptions to Bank Garnishment

An automatic $400 exemption applies to a debtor's bank account, so only funds in excess of that amount may be garnished. Social security benefits. Workers' compensation benefits. Unemployment compensation.

Community property states allow wage garnishment of joint bank 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.

Ohio law allows debtors to protect $425 in their account from garnishment (and $900 for joint account owners). This means that up to $425 in the account cannot be touched by the creditor. Once the garnishment has taken place, the tenant will most likely close the account or not deposit further monies into it.

Under community property laws, the husband and the wife equally own all income and property acquired in marriage. Unfortunately, that means they equally own the debts, too. So if a default happens, you could get your wages garnished even if your spouse is the one at fault.

First, it's important to understand the difference between individual debt and joint debt. If your spouse has debt in their name only, then the creditor cannot garnish your wages. If the debt is in both of your names, both of your wages are at risk of being garnished to pay off the debt.