Bank Levies on Joint Accounts (Nonspouse) (2024)

Creditors can garnish jointly owned savings and checking accounts. Learn about your rights.

Creditors might be able to garnish a bank account (also referred to as "levying" the funds in a bank account) that you own jointly with someone else who isn't your spouse. A creditor can take money from your joint savings or checking account even if you don't owe the debt. What follows is a description of when a creditor may be able to attach the account and what you can do to protect yourself.

Jointly Owned Accounts: Rights and Limitations

When you own an account jointly with another individual, the law usually presumes that you each have equal rights to funds held in that account. So, when a creditor attempts to garnish that account, it typically doesn't have to investigate whether you contributed more money to the account than the co-owner. Unfortunately, this could mean that the money in your account could be garnished to pay for the co-owner's debt, a debt that you never owed.

Laws vary on the extent to which creditors can garnish joint accounts. In some states, creditors can't take more than half of the funds in a joint account. However, in other states, creditors may be able to garnish the entire joint account.

Traceable Contributions

Even though creditors are often allowed to garnish a joint account up to the full balance, it might not be able to do so in every situation. In many states, you can protect funds from garnishment if you can show that the money in the account came from you, not the debtor. You must be able to prove that the money is traceable to what you put into that account. If you are successful, then the creditor cannot garnish funds to the extent of your contributions.

It is much easier to protect the account if you can prove that all of the funds are traceable solely to your contributions. You may have difficulty, however, if both you and the debtor put money into the account together. In that case, you must provide as much proof as possible that will allow a court to clearly trace those funds back to you.

How Do I Prove My Traceable Contributions?

The most important thing to do is establish and maintain good record-keeping practices before any garnishments happen. Barring that, gather as many documents as you can, covering the period leading up to the garnishment. Acceptable documents you can use to prove traceable contributions include:

  • paystubs
  • deposit slips, electronic transfer/automatic deposit receipts, and bank statements
  • government pension or benefits statements
  • insurance statements, and
  • pension and annuity statements.

Convenience Accounts

Another way of establishing traceable contributions is to show that while the account was a joint account on paper, it was, in reality, a convenience account. This is a common scenario with joint account owners such as elderly parents and adult children who are added to the parents' account for convenience—the money belongs to the parent, but because it is a joint account, the child can go to the bank for an elderly parent.

Most banks in most states don't offer official "convenience accounts." Instead, they are created informally and by agreement between the account owners.

To prove a convenience account, you have to pass what is called the "reality of ownership" test. You must show that the reality of ownership was that the account was held solely by you, not the debtor. Some factors that may help establish a convenience account include the following:

  • you were the original sole owner and later added the debtor to the account
  • you added the debtor out of convenience, for example, assist with bill paying or banking when you were or are unable to do so
  • the debtor did not deposit his or her own funds in the account
  • the debtor did not make personal withdraws from the account or
  • the debtor's transactions benefited you, such as writing checks for your gas bills.

Exempt Funds

You may protect certain money in the account if it came from exempt sources. Social Security, worker's compensation, disability, unemployment, other government benefits, retirement income, child support, and even a portion of your wages (sometimes 25% or more) are exempt from garnishment under federal and state laws. They do not lose their exemption status once they are deposited into the joint account. So long as you are able to prove that the source of contributions into the account came from exempt sources, then those funds are protected.

Federal rules prohibit banks from freezing certain amounts in your account if the contributions came from certain federal benefits. If you received federal benefits and they were deposited in the account, you may have some relief. The bank must allow you access to money equal to at least two months' worth of federal benefit payments that were last deposited into your account prior to the garnishment. This may mean your entire account is exempt, even if jointly held.

(To learn more, see the articles in our Property Exemptions topic area.)

How Can I Protect Against the Garnishment?

Once a court sends garnishment papers to your bank, the bank usually freezes your account. It won't turn the money over to the court or the creditor yet. Instead, it will hold your money for safekeeping pending the outcome of the garnishment process.

When you are served with the notice of garnishment, you must act immediately. Included with your garnishment papers is a notice of hearing. This hearing is your opportunity to prove to the court that you made traceable contributions and/or that some or all of the funds deposited in the joint account are exempt. You should request the hearing in writing, stating your reasons, within the deadline specified on the notice. If you do not attend the hearing, then the court may rule in the creditor's favor, and the bank will then pay the proceeds of the garnishment to the court and/or the creditor.

Bank Levies on Joint Accounts (Nonspouse) (2024)


Bank Levies on Joint Accounts (Nonspouse)? ›

Creditors might be able to garnish a bank account (also referred to as "levying" the funds in a bank account) that you own jointly with someone else who isn't your spouse. A creditor can take money from your joint savings or checking account even if you don't owe the debt.

Can a levy be placed on a joint bank account? ›

Joint Bank Account Levies

It doesn't matter whose funds were placed into the account. Under the Internal Revenue Manual, the IRS levy can attach to a bank account for which the taxpayer has an unrestricted right to withdraw funds, regardless of who deposited those funds.

Can debt collectors take money out of a joint account? ›

Yes. When you have a joint account, each account holder is responsible for the full amount of the balance. The credit card company can seek to collect the amount due from either account holder.

Do joint bank accounts have fees? ›

Generally, any account holder who can write checks on the account can close it, which means you're not always in full control of your joint assets. You're equally liable for any banking fees that are incurred, regardless of which party is responsible.

Can I sue someone for taking money from a joint account? ›

If your ex-partner takes money from your joint account or runs up debt on your joint credit card without your permission, you may be able to sue them in court. However, it can be difficult to win these cases. You should consult with an attorney to discuss your legal options.

Can a bank account be garnished if it is a joint account? ›

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.

What type of bank account cannot be levied? ›

About bank levies

Some kinds of deposits can't be taken (they're exempt), like Social Security or Supplemental Security Income. Exemptions From the Enforcement of Judgments (form EJ-155) has a complete list. Enough money to meet basic needs must be left in the account. The exact amount changes every year.

What states do not allow bank levy? ›

Bank garnishment is legal in all 50 states. However, four states prohibit wage garnishment for consumer debts. According to, those states are Texas, South Carolina, Pennsylvania, and North Carolina.

What type of bank account cannot be garnished? ›

Some sources of income are considered protected in account garnishment, including: Social Security, and other government benefits or payments. Funds received for child support or alimony (spousal support) Workers' compensation payments.

Can a creditor garnish my husband's bank account? ›

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.

What are the pitfalls of joint bank accounts? ›

You cannot control how the other party spends your money. If your partner decides to spend frivolously, you will both feel the blow. This sort of problem can lead to many fights about what is necessary to spend on and what isn't. More of these issues may arise if one party brings in more income than the other.

What is the disadvantage of joint bank account? ›

Cons of joint bank accounts:

Lack of privacy: While keeping secrets is never a great idea in relationships, you and your partner may want some degree of privacy in how you spend your money, which you won't get from having joint accounts.

What are the rules for joint bank accounts? ›

The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren't the one to deposit the funds. The bank makes no distinction between money deposited by one person or the other, making a joint account useful for handling shared expenses.

Can a poa withdraw money from a joint bank account? ›

Each person on the account has the legal authority to use the entire account balance for any reason. In contrast, a person holding a power of attorney also has access to the grantor's bank account, but he or she is legally required to use those funds for the benefit of the grantor.

Is it stealing if you take money from a joint account? ›

If an account is under both names, either party has the right to ALL of the funds in that account at any time. Therefore there is no theft if the person is removing something that they are entitled to have.

How to close a joint bank account without the other person? ›

Can one party with a joint bank account close the account? Generally, no. Banks require that both account holders consent to closing the account. It may be possible in some cases for one account holder to remove themselves from the account, though, without the explicit consent of both parties.

Can the IRS levy my wife's bank account? ›

For example, California permits the IRS to collect from 100 percent of the community property for premarital or post-marital tax obligations. The IRS can levy your spouse's separate bank account to satisfy tax debt you are solely responsible for.

Can a debt collector freeze a joint bank account? ›

A frozen bank account is a sure sign that a creditor or debt collector has obtained a court judgment against you (or your joint account holder, if you have a joint bank account). A creditor or debt collector cannot freeze your bank account unless it has a judgment.

How do I protect my bank account from levy? ›

Depending on the lender, your options may include a modified payment, a lower interest rate, or a hardship program. If the creditor plans to levy more funds, negotiations may prevent it. Plus, negotiating gives you some control over the situation.

Top Articles
Latest Posts
Article information

Author: Terence Hammes MD

Last Updated:

Views: 5948

Rating: 4.9 / 5 (49 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Terence Hammes MD

Birthday: 1992-04-11

Address: Suite 408 9446 Mercy Mews, West Roxie, CT 04904

Phone: +50312511349175

Job: Product Consulting Liaison

Hobby: Jogging, Motor sports, Nordic skating, Jigsaw puzzles, Bird watching, Nordic skating, Sculpting

Introduction: My name is Terence Hammes MD, I am a inexpensive, energetic, jolly, faithful, cheerful, proud, rich person who loves writing and wants to share my knowledge and understanding with you.