What Happens When a Creditor Tries to Garnish a Joint Bank Account?

You and someone else may share a bank account with both your names on it. This type of account is called a joint bank account. Although a joint bank account can offer many advantages, your creditor or your co-account holder's creditor can garnish it. You both own the account equally, so your creditor does not have to differentiate between who contributed what to the account.

A joint bank account is a bank account in your name and the name of at least one other individual. You are both account owners who share equally in the account's rights and liabilities. The law views all of the account owners in your joint bank account as one owner. Any actions against any of you are made jointly as an owner, not individually as an owner. Two types of joint accounts are available: joint tenancy accounts, usually owned by a couple or related family members; and tenants-in-common accounts, usually owned by business partners.

In a joint tenancy account, either of you can make deposits or withdrawals with just that one person's signature. In a tenants-in-common account, both of your signatures are required to make any withdrawals. If you have a joint bank account that is joint tenancy, your creditors or your co-owner's creditors can garnish the bank account if they win a judgment. To garnish, the creditor must send legal documentation to your bank showing that it has the legal right to the monies in the account. When given proper documentation, the bank is required to hand over the funds.

When a creditor files a suit against you and wins and then pursues and obtains a bank account garnishment, the court must usually provide you with a 30-day notice. You have this amount of time to file for an exemption from the court before the creditor actually removes the money from your account. Your exemption can state that it is a joint account and that most of the money belongs to the other person. You can provide evidence -- for example, a direct deposit receipt or student loan proceeds and deposit slip -- to strengthen your case.

If the court denies the exemption, you still have time to notify your account co-owner that the funds will be taken. The co-owner can open up a solo account, remove her portion of the joint account amount and deposit those funds in the new account. If the money was already taken, your account may be garnished again if the amount didn't fully satisfy the judgment. This will continue until the creditor collects the entire amount.