After debt becomes extremely delinquent, the creditor often chooses to sue the borrower and win the right to garnish their wages and/or bank account. But what happens when a debtor has a joint account with someone who is not responsible for the debt? Well, since the debtor's name is on the account the creditors have the legal right to seize the money in the bank account even if the money technically does not belong to the debtor, unless the creditor is informed of this fact.
Here's what you need to know:
- If a creditor plans to garnish your bank account, the court will inform you that there is a court order giving them the right to do so. Once you receive this garnishment order, you have 30 days to file for an exemption on money that is in the account which does not belong to you.
- If you decide to apply for an exemption from the garnishment order, you will need to provide proof that the money in the account is not your money if that is the case. This proof could include a direct deposit receipt or even a copy of the joint accountholder's paycheck which is deposited into the account.
- If you want to improve your chances of winning the exemption, make sure that you do not deposit any money into that account and provide proof that you have not deposited money into the account for a significant amount of time before the garnishment order was issued.
- If you want to avoid putting your loved ones through the pain of a bank account garnishment, remove your name from all accounts you hold jointly with others. You may even want to completely close those joint bank accounts and have the other person open up another account in their name only.
- If you do deposit money into a joint account, your only alternative may be to close the account if you want to avoid a bank account garnishment.