If you fall behind on your credit card or loan payments, your creditors may pursue you through collections agencies. If they fail to collect after trying for a while, the agency may file suit against you. If it wins, it gets a judgment against you and can take actions to eliminate that judgment. This includes going after any and all of your bank accounts, including joint accounts.
A joint bank account is held in your name and that of at least one other person, usually a parent, spouse, sibling or significant other. Every account owner has equal access to the money in it and equal rights and liabilities. Legally, this means that all the owners of your joint bank account behave as one owner.
Let's say you deposited $500 into your joint bank account but there's a total of $1,500 in it. You can legally withdraw the entire $1,500 with just your signature. Your fellow account owners might get mad, but legally there’s nothing they can do about it.
When a creditor decides to force you to repay the money you owe, she files suit and asks the court for a judgment. If you don't dispute the suit -- or you do and you still lose -- the court issues a judgment in the creditor’s favor. That legal document states that you owe the creditor a specific amount of money. It also enables the creditor to pursue legal action to collect it.
Taking action to collect includes recording the judgment and levying personal property, including any and all bank accounts. Recording the judgment means it appears on your credit report as a public records filing. Levying your bank account means the court or the creditor will search for every bank account in your name, which of course includes joint accounts.
The court will typically send you a 30-day notice of intent to levy your bank account. It later sends a notice of judgment to your bank demanding an immediate submission of enough money to satisfy the judgment. If your personal account holds more than you owe, your bank will send the amount demanded. If there's not enough in the account to cover that amount, your bank turns over money from your joint account. The court can repeatedly pull money out of your accounts until the creditor collects the entire amount you owe.
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