Non-Spouse Joint Bank Account Levy Lawyers

A joint bank account is an account belonging to two people. Each person can withdraw or deposit money from the account without the consent of the other. The joint bank account can be considered spousal or non-spousal. A non-spousal joint bank account belongs to individuals who aren’t married.

Can a Creditor Take Money From the Account for a Debt the Other Person Owes?

Creditors may garnish a bank account or levy the funds in an account you jointly own with someone other than your spouse. Even if you don’t owe the debt, creditors can take money from your joint savings or checking accounts.

Yes. A creditor can garnish money from a joint checking or savings account even if the other person doesn’t owe the debt. In states like Ohio, West Virginia, and Michigan, creditors can take all the money in the account. In other states, creditors can only take half of the money.

What are Traceable Contributions?

A traceable contribution refers to proving money in an account was deposited by the non-debtor. If the non-debtor is successful, the creditor can’t take any of the contributions.

What Are the Rights and Limitations of My Jointly Owned Accounts?

When you open a joint bank account with another person, the law presumes that each of you has equal rights to funds held in the account. When a creditor attempts to garnish the account, it typically doesn’t have to investigate who contributed more money to the account.

Unfortunately, this could result in the money in your account being garnished to pay for a co-owner’s debt, even if the debt was one that you never owed.

What Are Traceable Conditions?

Even though creditors are allowed to garnish a joint account up to its full balance, they might not be able to do so in every situation. In many states, you can protect your funds from garnishment if you show that you, not the debtor, provided the money in the account. You must prove that the money is traceable to what you put in the account. If you successfully prove this, the creditor cannot garnish funds that you contributed.

It’s easier to protect your account if you can prove that all of the funds are traceable to your contributions. However, you may have trouble if both you and the debtor deposit money into the account together. You must provide as much proof as possible that will allow a court to trace funds back to your contributions.

How Can I Prove My Traceable Contributions?

Establishing and maintaining good record-keeping practices is important before any garnishments begin. Gather as many documents as you can from the time period leading up to the garnishment.

Documents you may use to prove traceable contributions include:

• Paystubs
• Deposit slips
• Electronic transfer receipts
• Automatic deposit receipts
• Bank statements
• Government pensions or other benefit statements
• Insurance statements
• Pension and annuity statements

How Can I Prove My Money in the Joint Account Should Not be Collected?

A non-debtor can use documentation to prove traceable contributions such as:

• Paystubs
• Government pension statements
• Insurance statements
• Annuity statements
• Electronic transfers
• Benefit statements

Is There Another Way to Show the Money was Traceable If I Made Deposits Only?

Yes. A non-debtor can show the joint account is a convenience account. A convenience account is usually a joint account where one person is added to the account so the other can bank for him. It generally happens with adult children and elderly parents.

What Is a Convenience Account?

Another way to establish traceable contributions is to show that the account was a convenience account. You may show that while the account was a joint account on paper, it was actually a convenience account. This is common 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 the child can use the bank for an elderly parent because it is a joint account.

Banks in most states don’t offer official convenience accounts. Instead, convenience accounts are created informally by agreement between the account owners.

To prove an account was a convenience account, you have to pass the “reality of ownership” test. You must show that the reality of ownership was that the account was held solely by you and not the debtor.

Factors that may help establish a convenience account include:

• You were the original sole owner of the account and later added the debtor to the account
• You added the debtor to the account out of convenience to assist with bill paying or banking
• The debtor did not deposit their own funds in the account
• The debtor did not make personal withdrawals from the account
• The debtor’s transactions benefited you

How Do I Prove My Joint Account was a Convenience Account?

The account must prove the joint account was solely owned by the non-debtor and includes:

• Debtor not depositing own money account
• Debtors not making a personal withdrawal from the account
• Debtor being added to the account later
• Non-debtor solely benefited from the account

What Are Exempt Funds?

You might protect money in your account if the money came from exempt sources. Social Security, worker’s compensation, disability, unemployment and other government benefits, retirement income, and child support are exempt from garnishment under federal and state laws. These protected assets do not lose their exemption status even when they are deposited into a joint account. As long as you can prove that the source of contributions into the account came from exempt sources, the funds are protected.

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

How Can I Protect Myself Against Garnishments?

Once a court sends garnishment papers to your bank, the bank usually freezes your account. The bank won’t turn the money over to the court or the creditor at this point. The bank will hold your money for safekeeping until the outcome of the garnishment process is determined.

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

Should I Hire a Lawyer to Help Me Get My Money Back?

A collection lawyer will assist you in proving the money in the account was yours. Use LegalMatch’s services today to find the right lawyer for you. Consultations are free, and our service is 100% confidential.