Can a Spouse in New York Be Held Liable for a Wife's Credit Card Debt?
New York is not a community property state, and a creditor cannot hold you legally responsible for credit card debts your wife incurs. Creditors can, however, pursue your wife for any unpaid credit card balance she owes. Unless she makes arrangements to pay off the debt, the collection methods available to creditors against New York residents can leave both you and your wife facing financial strain.
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Lawsuit
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The credit card company or collection agency that owns your wife’s delinquent account can file a lawsuit against her, but the time frame the company has to sue her is limited. The statute of limitations for debt collection in New York is six years. After this time, the creditor may still file a lawsuit, but the expired New York statute of limitations gives your wife an affirmative defense that she can use to have the charges dropped should the creditor sue beyond New York‘s allotted time frame.
Joint Accounts
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When the defaulted credit card in question is a joint account that you and your wife share, you are just as responsible for paying the creditor as she is even if you never made any purchases using the account. If, however, you are merely an authorized user on your wife’s credit card, the credit card company cannot hold you responsible for the debt.
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Wage Garnishment
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If the credit card company sues your wife and obtains a legal judgment against her, New York law allows the creditor to garnish 10 percent of her gross income or 25 percent of her take-home pay, whichever amount is less. While the creditor cannot garnish your wages, the reduced pay your wife receives due to the garnishment order will impact your household budget and ultimately affect both of you.
Bank Levy
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Wage garnishment is only one method a creditor can use to recover debt. Another debt collection option available to creditors with a judgment is a bank levy. In New York, a creditor must freeze the debtor’s accounts for 20 days before garnishing any nonexempt money the account contains. A joint bank account you hold with your wife is not safe from a levy. New York’s Banking Law 675 states that creditors can only levy half of the money from a joint account if the creditor only has a judgment against one of the account holders.
The amount of money within your joint bank account may protect it from seizure. New York’s Exempt Income Protection Act notes that if the bank account contains less than $1,750, creditors cannot freeze it to execute a levy.
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References
- Neighborhood Economic Development Advocacy Project; Debt Collection Basics; 2007
- Allmand Law; Credit Card Authorized User vs. Joint Account Holder; Reed Allmand; June 2010
- Fair Debt Collection: New York Garnishment Law
- U.S. Department of Labor; Wages and Hours Worked: Wage Garnishment; September 2009
- Neighborhood Economic Development Advocacy Project; Frozen Bank Accounts; 2007
