The home buying experience can be an overwhelming experience that can be exhilarating, fun, stressful and exhausting. The process of securing a mortgage, successfully bidding on a home and completing the transaction can be lengthy, complex and involve seemingly endless professionals. Those professionals may include a buyer’s agent, a loan officer, a home inspector, title […]
Bank Levies on Joint Accounts for Spouses & Non-Spouses
As we have previously discussed, if you have a bank levy taken out against you and you have a joint account with your spouse or non-spouse, money will be taken out regardless. However, it can differ depending on your unique situation and the state you live in.
Spouses Typically Share Debt Liability
Because you and your spouse are married, you typically share your debts with each other—especially if you took out loans together for large purchases like a house. Which means that both of you are responsible for any debt and can have your account levied. If your spouse was in debt before you were married, you are not responsible for their debt. If debtors insist that you are also responsible and try to put a bank levy on your account, talk to a lawyer to protect your funds.
If you live in a community property state, or a state that rules that spouses own everything equally regardless of who earned or bought what, it can be harder to protect the money you earned from a bank levy. For example, even if you and your spouse have separate accounts and live in a community property state, creditors can also garnish your account. The exceptions being:
- If you live in Texas, spouses can share property but not debt.
- Property or money that was received via inheritance belongs solely to you.
- Money that is federally protected, like retirement benefits, cannot be levied.
Non-Spouses Have to Prove Account Contributions
If you share an account with your non-spouse, the law assumes that each party has equal rights to whatever money is in that account. This assumption makes it easy for creditors to withdraw funds from the account if one partner has a bank levy. Understandably, this situation can be especially frustrating for the partner who did not incur the debt. After all, they are having their money taken away too.
Thankfully, non-spouses can prevent the debt-free partner’s money from being withdrawn by a creditor. All you have to do is prove that half of the funds come from the debt-free partner. To do so, you typically have to provide evidence like:
- Pay stubs
- Deposit slips
- Benefit statements
What About Joint Accounts with Parents?
If you are an adult child who has a joint account with your elderly parents, the rules above apply. However, if you have a convenience account with them or have power of attorney, the funds belong solely to your parents and cannot be levied to pay off your debt. The account can be levied if you deposited your paychecks into the account or made personal withdrawals.