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Should I Remove My name on a Joint Account With My Spouse if I Owe Money?

Should I Remove My name on a Joint Account With My Spouse if I Owe Money?

Full question:

I recently had a judgement filed against me. I am also a back-up signer on my wife's business account. Should I remove my name on the account?

Category: Debts and Credit
Date: 04/07/2025
State: Pennsylvania

Answer:

It is possible the entire account could be attached if your name is on it and you fail to pay the judgment. If a transfer is created with knowledge of an impending claim, it is possible the transfer could be challenged as a fraudulent conveyance. For example, creating a trust right before filing bankruptcy may throw up red flags for examination.

The elements of a fraudulent conveyance transfer are defined as follows by the Uniform Fraudulent Transfer Act:

(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Can creditors go after spouse's assets?

Yes, creditors can potentially go after a spouse's assets, especially if the debt was incurred during the marriage or if both spouses are jointly liable. However, the laws vary by state. In community property states, both spouses may share responsibility for debts incurred during the marriage. In other states, only the spouse who incurred the debt may be held liable. It's important to consult a legal professional for specific advice based on your situation and state laws.

Can a creditor garnish my wife's bank account?

Yes, a creditor can garnish your wife's bank account if they obtain a judgment against her. This means they can legally take funds from her account to satisfy the debt. However, certain protections may apply, such as exemptions for specific amounts or types of income. It's advisable to consult with a legal expert to understand the implications and any potential defenses available.

Can a judgment against me affect my spouse?

Yes, a judgment against you can affect your spouse, particularly if you live in a community property state. In such states, debts incurred during the marriage may be considered joint debts, potentially putting your spouse's assets at risk. Even in non-community property states, creditors may seek to collect from your spouse if they can prove joint liability or if your spouse's assets are involved. Consulting with a legal professional can provide clarity on your specific situation.

How do I protect my bank account from a judgment?

To protect your bank account from a judgment, consider separating your assets and accounts from those of your spouse. You may also explore exemptions under state law that protect certain funds, such as wages or government benefits. Additionally, consulting with a legal expert can help you understand strategies to safeguard your assets and navigate the complexities of debt and judgments.

Are spouse assets protected from judgments?

Spouse assets may not be fully protected from judgments, especially if the debt is joint or incurred during the marriage. In community property states, creditors can often go after both spouses' assets. In other states, the liability may depend on the ownership of the asset and the nature of the debt. It's crucial to seek legal advice to understand your specific rights and protections.

Can a debt collector come after me for my spouse's debt?

Yes, a debt collector can pursue you for your spouse's debt if you are jointly liable or if the debt was incurred during the marriage in a community property state. In non-community property states, generally, only the spouse who incurred the debt is responsible. However, if your assets are involved, creditors may seek to collect from you. Consulting a legal professional can clarify your responsibilities.