Can my Wages be Garnished / Bank Accounts be Levied to Pay the Debts of my Spouse?

My bank account was just levied to pay an old judgment against my spouse. Can they do that?

As with most legal questions, the answer is: “It depends.”

In this situation, the answer is often: “Very likely they can.”

Let’s back up a bit.

California Community Property

California law presumes that any property acquired or wages earned during the marriage belong to both spouses, regardless of which spouse did the acquiring or the earning. Property subject to this presumption is called “California community property.”

California Community Debt

California law also presumes that debts (1) entered into by either spouse during the marriage and (2) used to benefit the community are something called “California community debt.”

In fact, California law goes further than some other community property states.

In California, debts that pre-date the marriage are also considered community debt. In other words, spouses “bring their debts into the marriage.”

Let’s say your spouse got a credit card in their name only. They then used it to buy groceries, furniture, gas for the cars, and other things that benefited the marital community. This credit card balance is probably “community debt.”

Who is Liable for Payment of California Community Debt?

Who or what is liable for payment of community debts?

Generally speaking, two “parties” would be liable for payment of the community debts: (1) the spouse who entered into the debt and (2) the community assets.

The wages of both spouses are usually considered community assets during a marriage. A possible exception would be if the spouses entered into a valid prenuptial or postnuptial agreement that says otherwise.

California law allows a judgment creditor to levy against most types of community assets if the judgment was for a community debt.

This would include the non-debtor spouse’s wages and bank accounts and other assets held solely in the name of the non-debtor spouse. (But this would not apply to separate property, discussed below.)

That’s crazy! Are there any exceptions?

Yes. There is a narrow exception for debts that pre-date the marriage.

Wages of the non-debtor spouse can’t be garnished to pay their spouse’s debts that pre-dated the marriage.

And, the non-debtor spouse’s wages remain immune to levy for spouse’s pre-marital debts as long as the wages are kept in a (1) SEPARATE bank account in the non-debtor spouse’s name only AND (2) the funds are not commingled with community funds AND (3) the debtor spouse has no right of withdrawal on the account. [California FAM. CODE §911.]

This is pretty tall order for most married couples, who typically either have joint bank accounts or at the very least commingle their resources in the course of paying their day-to-day bills.

California Separate Property

California law does presume some assets belong solely to one spouse.

The classic example is an inheritance, which is presumed to belong only to the spouse who inherited it. This is called “California separate property.”

But, even here you to need to be careful not to commingle the separate property with community property. Commingling can compromise the “separate” nature of the property.

As with the wages example above, a valid prenuptial or postnuptial agreement might designate certain property as “separate.” For better or worse, most people don’t have valid prenuptial or postnuptial agreements in place.

Why is This Important?

If your spouse has overwhelming debt or judgments against them, it isn’t enough to just put your paychecks into a bank account in the non-debtor spouse’s name. This won’t protect you from garnishments and levies.

It is probably only a matter of time before your spouse’s creditors come after the community assets. (Note: most creditors do have to get a judgment against the debtor spouse before they can garnish/levy.)

Give us a call at (805) 285-0760 for a free initial bankruptcy consultation. Attorney Karen Ware will help you determine if a strategic bankruptcy filing can protect you, your spouse, and your assets.