Can Joint Bank Accounts Be Garnished?
Understand if your joint bank account is at risk of garnishment. Learn about legal nuances, ownership, and protected funds.
Bank account garnishment is a significant concern for individuals, particularly those who share financial accounts. Whether a joint bank account can be garnished is complex, often depending on the account’s ownership type and state laws. Understanding these nuances helps account holders protect their assets.
Understanding Bank Account Garnishment
Bank account garnishment is a legal procedure allowing a creditor to seize funds directly from a debtor’s bank account to satisfy an unpaid debt. This process begins after a creditor obtains a court judgment against a debtor, confirming the debt and the right to collect. Once a judgment is secured, the creditor requests a “writ of garnishment” from the court.
The writ of garnishment is a formal court order compelling a third party, such as a bank, to freeze and turn over a debtor’s funds. Upon receiving this order, the bank is required to place a hold on the debtor’s account, preventing withdrawals or transfers up to the amount specified in the garnishment. This action directly targets funds held in a financial institution.
How Joint Account Ownership Affects Garnishment
Joint bank accounts can be garnished if one of the account holders is the debtor, though the extent of garnishment varies based on the account’s ownership structure and applicable state laws. When a joint account is targeted, there is often a presumption that all funds within the account are accessible to satisfy the debt of any named owner.
One common type is Joint Tenancy with Right of Survivorship (JTWROS), where all co-owners have equal rights to the entire account balance. If one joint tenant is a debtor, creditors may attempt to garnish the entire account. The burden typically falls on the non-debtor account holder to prove their sole contribution or ownership of specific funds to protect them from seizure.
Another form is Tenancy by the Entirety (TBE), available exclusively to married couples in certain states. This type of ownership offers protection from garnishment, meaning that if a judgment is only against one spouse, the account generally cannot be garnished. However, this protection does not apply if the debt is owed jointly by both spouses, or in cases involving specific creditors like the IRS.
Tenancy in Common accounts differ as each owner holds a distinct, undivided share, which may be equal or unequal. In this arrangement, a creditor of one co-owner can generally only garnish that specific owner’s share of the account. State laws vary regarding these ownership types, influencing how much of a joint account can be garnished.
Types of Funds Exempt from Garnishment
Regardless of account ownership, certain types of funds are protected from garnishment by federal and state laws. These exemptions ensure that individuals retain access to essential benefits. Common federal exemptions include Social Security benefits, Supplemental Security Income (SSI), Veterans’ benefits, and various federal retirement and disability payments.
Other protected funds often include child support payments, alimony, public assistance funds, and certain pension payments. While these funds retain their exempt status even after being deposited into a bank account, mixing them with non-exempt funds, a practice known as commingling, can complicate their protection. Banks are required to protect two months’ worth of certain directly deposited federal benefits.
Establishing Individual Ownership of Funds
If a joint bank account faces garnishment due to one owner’s debt, the non-debtor account holder can often assert their individual ownership of certain funds to prevent their seizure. This process involves demonstrating that specific money in the account belongs solely to the non-debtor, not the individual with the judgment against them. The legal burden of proof typically rests on the non-debtor account holder to provide clear evidence.
Acceptable evidence to establish individual ownership includes bank statements showing deposits from the non-debtor’s separate income sources, deposit slips identifying the origin of funds, or records of transfers from individual accounts. Affidavits or sworn statements might also be used to support the claim. Acting quickly upon notification of a garnishment is important, as delays can hinder the ability to protect legitimately owned funds.