How do you protect joint bank accounts from a judgment creditor?

Answer

It depends on the laws of your state. What usually happens is the judgment order is served on the bank. The bank puts a hold on the entire account. Then it is decided by the court, which funds will be exempt from the account. The other account holder has to file papers claiming the amount that belongs to them. In a community property state the entire account can be garnished. In some states, (like Florida) marital accounts are considered "entireties" and cannot be attached unless there are joint debtors.

In states that do not assume marital accounts are held "by the entireties," you can add those words to the account contract (in the case of bank accounts, usually the signature card or the form opening the account). I just went to my bank and said I wanted to change our joint account to "by the entireties" and the bank told me what to do. Only husbands and wives can hold a joint accounts by the entireties. Generally, debtors cannot seize accounts or other property held by the entireties (including houses) if only one of the account holders owes the debt. I believe ALL non-community property states recognize accounts held by the entireties. As to real property, you only need to deed the property from yourselves as joint tenants to yourselves as joint tenants by the entirety.

You need to change the account before you fall behind on any debt or the debtor could use your state fraudulent conveyance/transfer act to void the transfer. There are many defenses to these acts, so check your local law to see if you can protect your property even if you currently behind on a debt.

First answer by Jason. Last edit by Robaldrich. Contributor trust: 251 [recommend contributor]. Question popularity: 163 [recommend question]