Can a Joint Bank Account Be Garnished?

Finding that your bank account is frozen is never fun, especially if you share an account. A frozen bank account is often the first sign that your funds are about to be garnished.

Funds in your account might be garnished, or withheld to pay what's owed, If you've recently lost a debt lawsuit or owe debt to a government agency. Creditors and debt collectors can do this—usually, but not always with a court order—even if the account has more than one person's name on it. State laws determine how much money they can take from joint accounts. 

Debt relief might help if you're worried about a joint bank account garnishment, or you've already been hit with garnishment. Here’s how to protect yourself. 

Can a Joint Bank Account Be Garnished?

A creditor or debt collector can, under some circumstances, garnish a joint bank account for unpaid debts, even if the debts are owed by only one account owner. Legally, joint accounts are considered equally owned. If a creditor attempts to garnish a joint bank account for a debt, it doesn't have to prove who contributed what toward the funds held in the account. 

Most of the time, a creditor or debt collector needs to win a debt lawsuit against you and get a court order to garnish your bank accounts. This is generally the case if you owe:

• Credit card debt

• Medical bills

• Personal loans

• Private student loans

Court orders are not necessary to garnish bank accounts for debts owed to the government. For example, if you owe back taxes, federal student loans, court-ordered child support, or court-ordered spousal support, the government agency responsible for collecting those debts could freeze your bank account without going to court. 

Can All of the Money in a Joint Bank Account Be Garnished?

State law dictates how much money creditors or collectors can garnish from a joint bank account. Some states limit garnishment to half of the funds; others allow garnishing up to the full balance. Money in a joint bank account could be garnished to pay debts even if only one account owner owes them. That's true whether the account owners are married or not. 

If your joint bank account is garnished for a debt that isn't yours, you have a couple of options to recover your money.

• Traceable contributions: State law may shield funds in joint accounts from garnishment if one owner can prove traceable contributions. Essentially, if you can show that the money in the account came from you and not the joint owner, the creditor might not be able to garnish those funds. 

• Exemptions: Some deposits can't be touched by creditors. They include Social Security benefits, Supplemental Security Income (SSI) benefits, Veterans benefits, Federal Railroad Retirement benefits, Civil Service Retirement System benefits, and Federal Employee Retirement System benefits. If you can prove that any of the deposits in a joint account are exempt, they generally can't be frozen to pay a debt. 

State laws put the burden of proving traceable contributions and/or exemptions on the account owners. If you claim these protections, a solid paper trail could help you prove your case. Some of the documents you may need include pay stubs, deposit slips, direct deposit receipts, bank statements, and benefit account statements. There may be a time limit on claiming traceable contributions or exemptions. 

You may also get your money back if you can show that the shared account was a convenience account. This means that while there are two account owners, only one person actually owns the account. For example, your elderly mother might add you to her bank account solely to allow you to schedule bill payments on her behalf. 

Debt Relief for Joint Bank Account Garnishment

If you have unpaid debts, any bank accounts you own individually or jointly could be at risk of garnishment if your creditors sue and win. Debt relief could offer solutions if financial hardship prevents you from paying your bills. Debt settlement and bankruptcy are two options you might consider. 

• Debt settlement is a legal way to pay less than what you owe. You negotiate (on your own or with professional help) a debt settlement agreement with your creditors to accept less than the full amount. Once you pay the agreed amount, the rest of the debt is forgiven. 

• Bankruptcy is a court process to discharge debts. Chapter 7 bankruptcy is designed for people who mostly owe unsecured debts like credit cards or medical bills, and don't have enough income or assets to pay them off. 

Does debt relief hurt your credit? It can, but most of the damage to your credit may already be done if you've fallen behind on debt payments. Payment history accounts for the largest share of your credit score calculations. 

Can debt relief stop a bank account garnishment? Yes, if you file for bankruptcy protection. When you file a bankruptcy petition, the court issues an automatic stay against your creditors. That stay prevents creditors from suing you, garnishing your bank accounts, or garnishing your wages until your bankruptcy case is discharged or dismissed.  

Do both joint bank account owners have to agree to debt relief? No. Only the person who owes the debt needs to seek relief. The other account owner, however, still has to take steps to get their garnished account funds back. 

How to Settle Bank Account Garnishment Debts

Debt settlement could help you resolve what you owe and get your finances back on track. You can settle debts yourself, or with the help of a professional debt relief company. Each has its pros and cons.

If you want to settle debts yourself:

• Send a debt validation letter to verify the amount owed with the creditor or debt collector. 

• Review your finances to estimate how much you can offer for a settlement.

• Send your settlement offer via certified mail or email.

• Get the settlement agreement in writing.

• Pay the agreed amount, if the creditor accepts your offer.

• If the creditor doesn’t agree, you can present a counteroffer. 

There's a certain amount of back and forth that may go on, and it can take time to work out the details. If you'd rather have an expert's help, you could hire a debt settlement company to handle negotiations.

If you settle debts with a debt settlement company:

• You make one monthly payment into a secure dedicated account you own and control.

• A debt specialist negotiates with your creditors on your behalf.

• Once a settlement is reached, the debt specialist sends it to you for approval.

• If you approve, the debt settlement company pulls money from your secure account to pay the creditor.

• Once the agreed-upon payment is received, the rest of the debt is canceled. 

Debt settlement companies charge for their services, but the best debt relief companies are transparent about their costs, and never charge debt settlement fees until a settlement is finalized and you agree and pay the settlement. 

You can talk to a certified debt consultant with Freedom Debt Relief to learn more about how the process works. Call 1-800-910-0065 to discuss your options.