Can a Joint Bank Account Be Garnished?

Bank account garnishment is a legal process where a creditor seizes funds directly from a debtor’s bank account to satisfy an unpaid debt. This action typically requires a court order, which legally compels the bank to freeze and transfer the specified amount. It functions as a method for creditors to collect on obligations that have not been fulfilled.

Principles of Bank Account Garnishment

This process is often referred to as a bank levy. Most creditors, such as those for medical bills or credit card debt, must first sue the debtor and obtain a court judgment before initiating a garnishment. Government agencies, however, like the Internal Revenue Service (IRS) for unpaid taxes or state child support offices, may sometimes garnish an account without a prior court order.

Once a bank receives a garnishment order, it must place a hold on the funds in the debtor’s account up to the specified amount. This prevents the account holder from accessing or transferring the money. The bank’s role is to comply with the legal directive, securing the funds for the creditor.

Garnishment of Joint Accounts

When a debt is owed by only one party on a joint bank account, the entire account may still be subject to garnishment depending on the specific state laws governing account ownership. The burden often falls on the non-debtor to prove which funds belong to them, even if a significant portion originated from them. Tracing contributions through bank statements or deposit slips can help protect their portion.

Different forms of joint ownership can affect how an account is treated during garnishment. For instance, in “joint tenancy with right of survivorship,” the law often presumes equal rights to funds, and the entire balance might be vulnerable. However, accounts held as “tenants by the entirety,” typically available only to married couples in some states, often provide significant protection, making the account exempt from garnishment for the individual debts of only one spouse. This protection usually applies unless the debt is owed by both spouses.

The specifics of how joint accounts are treated vary considerably by state law. Some states may allow garnishment of the full account, while others might limit it to a presumed percentage, such as 50%, or require the creditor to prove the debtor’s actual contribution.

Funds Exempt from Garnishment

Certain types of funds are legally protected from garnishment, regardless of whether they are in a sole or joint account. Federal law exempts various government benefits from collection by most creditors. These include:

Social Security benefits
Supplemental Security Income (SSI)
Veterans’ benefits
Federal student loan disbursements
Federal retirement and disability benefits
Child support
Unemployment benefits

Many states also provide additional exemptions for certain types of income or assets, such as a portion of wages or public assistance funds. Commingling exempt and non-exempt funds can complicate claiming exemptions. However, federal regulations require banks to protect electronically deposited federal benefits by automatically reviewing accounts within a two-month lookback period. These protected funds generally remain exempt if properly identified.

The Garnishment Process

Upon receiving a garnishment order, a bank is required to act promptly by placing a hold or “freeze” on the funds in the specified account(s) up to the amount of the judgment. This freeze prevents the account holder from accessing the funds, which can lead to bounced checks or failed automatic payments.

The bank typically sends a notice to the account holder(s) to inform them of the garnishment. This notification usually occurs within a few business days of the bank receiving the order.

The frozen funds are then held for a specific period, which is determined by state law, before being remitted to the creditor. During this holding period, the account holder can respond to the garnishment, potentially claiming exemptions for protected federal benefits. If successful, the court can order the bank to release these funds.