Can My Jointly Owned Assets Be Taken in a Judgment?
Holding a joint asset puts both owners at risk because irresponsible actions by one party can cause both owners to lose the asset. However, states usually have laws that restrict whether a judgment creditor can take a jointly held asset. State laws vary on the subject, so you may need a lawyer to protect against illegal seizure of your property.
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Identification
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The creditor that wins a judgment against you, also called a judgment creditor, can seize your jointly held assets in some situations, but it depends on the type of asset and the agreement you have with the other owner of the asset. For example, if you have a home held by you and your brother, the creditor can only obtain a lien against your interest in the property. If you own the property with your spouse and live in a community property state -- which gives equal liability for debts and assets incurred during the marriage to both spouses -- the creditor can obtain a lien on the entire property held by you and your spouse, according to the Nolo website.
Bank Accounts
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All states allow a creditor to garnish a joint bank account, but the creditor can seize only funds owned by the debtor. You must notify the bank that the account contains exempt funds. You cannot assume that the bank knows which funds belong to you and which money belongs to other party. Most states allow you 30 days to file an exemption. After the appeals time limit passes, the bank proceeds with the garnishment, according to Steve Bucci of the website Bankrate.
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Exceptions
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If both parties to a jointly held asset or account owe money to the judgment creditor, the creditor usually can seize the property or funds. However, states exempt certain funds from seizure in any situation. For example, most states exempt retirement accounts, benefits from the federal government and Social Security payments from garnishment. If you own property through joint tenancy--property owned by two or more people with an undivided interest--your death extinguishes the creditor's lien.
Considerations
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Go to a lawyer to protect your property from seizure. If you want to protect a joint bank account, you must prove which funds come from the nondebtor, such as with paycheck stubs and a record of deposits. If you own property with your spouse, ask your lawyer to explain community property laws. Some states with community property laws do not automatically consider all marital property a communal asset. For example, Alaska allows married couples to opt into the community property system. Also, talk to the creditor. You usually can avoid a lien or garnishment by negotiating a payment plan or settlement with the creditor.
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