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Information on credit cards and community property law - The Bills.com Blog
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Information on credit cards and community property law
Question: Can credit card companies levy my husband's bank account? The credit cards are solely in my name.
Answer: Generally speaking a credit card company must file a lawsuit and obtain a judgment against you before taking legal action to force payment of a debt, such as bank levies, wage garnishments, or property liens. If you are the only person listed on the credit card account, then in most cases,the creditor can only sue you, and therefore only levy your bank account once it has obtained a judgment against you. However, there are a few important exceptions to this rule which you must consider when determining the risk of not paying this debt. First, if you live in a community property state, the creditor could possibly sue both you and your husband, under the theory that this debt was incurred as a community debt. Also, if your husband was a co-signor on this account, even if he did not have a card, he may be legally liable for the debt. However, if he was only an authorized user, meaning you simply requested an additional card for him and he never signed a credit agreement, then he is likely not legally liable for this obligation.
Community property is a marital property scheme used by nine states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Alaska allows married couples to choose either community property or equitable distribution when determining ownership of marital assets. Generally speaking, if you live in a community property state, debts incurred during the marriage to benefit the community, such as credit cards used to purchase items which will benefit both spouses, are considered community property, and are therefore owed by both spouses regardless of whether or not both spouses are listed on the credit card. For example, if you lived in Washington State and incurred debt during your marriage, both you and your husband, as a marital community, could be sued to collect on the debt. If a judgment were obtained against you, both your and your husband?s bank accounts
could be levied to enforce the debt. However, even in community property states, many creditors do not go to the trouble of suing both spouses, as doing so tends to complicate the legal process involved in obtaining a judgment. For example, in California, most credit card companies only sue the spouse that actually opened the credit card account. If the creditor chooses to sue only one spouse, and thus obtains a judgment against only spouse who opened the card, the creditor can generally only levy or garnish the assets of that spouse. If you live in one of the community property states mentioned above, and have defaulted on a credit card debt in your name only, I encourage you to consult with an attorney to discuss the possible ramifications for both you and your husband. Since community property schemes vary widely from state to state, it is important to discuss your situation with a legal professional familiar with your states? marital property laws. If you would like to read more about community property in general, I encourage you to visit http://en.wikipedia.org/wiki/Community_property.
If your husband was a co-signor on this debt, meaning he signed a credit card agreement when you initially opened the account, even if that was only to use his income in obtaining the desired credit amount, then he is fully liable for the debt, and thus may be sued by the creditor to collect the debt. However, if your husband was only an authorized user on the account, meaning you simply requested a second card for him, but he never signed a credit agreement, he is probably
not legally liable for the debt. Many consumers confuse co-signors with authorized users; the key difference is that authorized users are not legally liable for the debt, and therefore cannot be sued to collect on the debt. I encourage you to check your credit card statements and both you and your husband?s credit reports to help determine if he is a co-signor or an authorized user. If he is a co-signor, both your names will likely be listed on the credit card statement. If he is an authorized user, the account will likely appear on his credit report, listing him as an authorized user, but his name will probably not appear on the account statement.
If you do not live in a community property state and your husband was not a co-signor on the credit card debt in question, then he is probably not legally liable for this debt. Therefore, the creditor should not be able to levy his bank accounts, garnish his wages, or take other action against him attempting to enforce the debt. Again, I encourage you to consult with an attorney to discuss your situation, your state laws, and what effects this debt may have on your husband?s assets.
If you are struggling to pay your credit card debts, you should explore the various options available to you to assist you in resolving these debts. I encourage you to visit the Bills.com Debt Help page at http://www.bills.com/debt-help/.
I wish you the best of luck in resolving your credit card debts, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Dennis Armstrong on Wednesday 19th December 2007 21:56
I am retired, live on teachers pension and social security. I have stupidly run up 18k with Capitalone and 8k with Washington Mutual. In addition, my grandson has defaulted on his student loan that I consigned for with Citicorp. I have been current with my credit cards until a month ago but was shocked to find that the Capitalone account interest rate has soared from 5.9% to 27% while the Washington Mutual account went from 9% to 26%. Two years ago my credit rating was 768. I suspect that my grandson's debt (which is also mine) has dragged my rating down to the point that both credit card companies increased my interst rate. In additon, the Capitalone card monthly payment increased from $500 to over $1000. I have called Capitalone and explained all of this to them. I have been a loyal customer since 2002 and was NEVER late on a payment. They would not budge and would not offer any help for me. I do not want to default on my obligations but I was struggling to make the $500 payment and now its twice as hard to pay this debt. What can I do, short of filing bankruptcy? Please help!
2. Posted by Nithin on Thursday 20th December 2007 16:17
Because you co-signed for your Grandson, and that loan is now in default gives the credit card companies reason enough to invoke what is called the Universal Default Clause. Universal default is the term for a practice in the financial services industry for a particular lender to change the terms of a loan from the normal terms to the default terms (i.e. the terms and rates given to those who have missed payments on a loan) when that lender is informed that their customer has defaulted with another lender, even though the customer has not defaulted with the first lender. My suggestion to you is to try and get current on the loan that you co-signed for your grandson because as long as that loan is in default, it will be reported so on your credit report. If possible, try and continue to make the payments on the credit cards, and call them up again to negotiate your interest rates. If that is not possible, then depending on whether you own a home, you could go in for secured debt consolidation loan, credit counseling or a negotiated debt settlement service. Each one of these options has its pros and cons. You can find out more information about each of these options on Bills.com.
3. Posted by KAREN THOMA on Sunday 31st August 2008 05:40
Hello, I have a Judgement against me for credit card debt. The county sheriff showed up with a Writ of Execution and a Levy to take my car. They took my car. Now the Attorney will not work out any payment arrangement with me for me to get my car back. It is either the full amount of the debt, $15,000.00 or I never get my car. I am now unemployed, and have no way to go get a job because of this. What can I do? My husbands name is on the Title of my car as well, but it stats my name OR his name. Will that hurt my case since it has OR, and not AND? Also, can we file a Motion to dissolve the Write and Levy, due to my car being partially his Marital asset? Thank you, Karen Thoma
4. Posted by Rajan on Wednesday 3rd September 2008 07:36
The first thing that you need to do is hire an attorney in your area to defend your rights in this situation. You may have several ways to get your vehicle back without paying the full balance of the debt which you obviously cannot afford. First, if your state offers an exemption for automobiles or general personal property, you may be able to have you attorney assert your exemptions, making it financially infeasible for the judgment creditor to proceed with the sale of the vehicle. If your attorney does not think that is a viable option, you may be able to file an emergency petition for bankruptcy protection; if you file before the vehicle is sold, the automatic stay created by the bankruptcy filing may allow you to regain possession of the vehicle while your bankruptcy case is proceeding. To read more about bankruptcy, you can visit the Bills.com Bankruptcy Resources page at http://www.bills.com/bankruptcy/. Finally, since your husband's name is also on the vehicle's title, and only your name on the credit card, the creditor should only be entitled to half of the vehicle's equity (assuming you do not live in a community property state); if your attorney thinks that your husband is entitled to compensation for his interest in the vehicle, he should be able to help you exert that claim, which may make selling the vehicle a unprofitable measure for the creditor. I am not licensed to practice law in your state, nor do I know enough about your situation to offer good advice; I strongly encourage you to consult with an attorney in your state as soon as possible. The sooner you take action, the more likely it is that you will be able to reclaim your vehicle; if the creditor sells the car before you take steps to reclaim it, it will be much more difficult to take back the property. For more information for consumer struggling with credit cards and other debt, I invite you to visit the Bills.com Debt Help page at http://www.bills.com/debt-help/.
5. Posted by Melissa on Monday 15th September 2008 09:16
My friend has a levy against his property for a credit card debt. They did not take the property but can he sell it? I am thinking he can but the $ would go to the credit card company.The levy is for $14,000. The propert is only worth about $6,000. Can he sell it?
6. Posted by Bill on Monday 15th September 2008 09:52
If the credit card has obtained a levy on the said property, that gives it the first right to the proceeds of the sale, regardless of whether the proceeds of the sale is enough to cover the levy. Therefore, you are right, the money would go the credit card company.
7. Posted by scott capman on Friday 19th September 2008 10:34
My husband was self employed for several years and developed credit card debt. He suffered an injury a year ago and has been unable to return to work. He has defaulted on several business credit cards and has closed the business. Now one credit card company is seeking a writ of execution against both my husband and his company. They are requesting our bank seize our business and personal accounts and to obtain a lien on our real property. We are unable to file for bankruptcy because we have too much equity in our home; however, we are unable to get a home equity loan to pay the debt because the credit card default has decreased out credit rating. We are residents of WI, cannot afford an attorney and are wondering exactly what the laws are in WI regarding default on an unsecured credit card debt.
8. Posted by Sam on Saturday 20th September 2008 20:33
I strongly encourage you to consult with an attorney licensed in Wisconsin who can carefully analyze the details of your situation and tell you the options available to you under your state’s laws. For example, even though you have too much home equity to file Chapter 7 bankruptcy, you may be able to file for bankruptcy protection under Chapter 13 which could help you resolve these judgments and protect your assets. To read more about bankruptcy, I invite you to visit Bills.com at http://www.bills.com/bankruptcy/. Given the possible repercussions of this creditor's efforts to enforce the judgment it has obtained against your husband, the cost of hiring an attorney will likely be well worth the expense. I can tell you that Wisconsin law does offer some protections to debtors whose creditors are attempting to execute judgments against them. For example, you may be able to claim an exemption of at least some of the money in your bank accounts; much of your personal property may also exempt from creditor execution. To read more about Wisconsin’s exemption laws, you can visit http://www.bcsalliance.com/debt1_wisconsin.html.
9. Posted by Larna on Saturday 8th November 2008 06:02
Hello, my husband lost his job months ago, his employer fought his unemployment and won, and now he is not working (just any side jobs he can find), and I am working part time. We have acquired around 50,000 in credit card debt using our cards to pay for living expenses, since his job in sales only brought in about 15k in the past year. We own a home, and have not been late yet on the mortgage. We also own 1 car, free and clear, and have one that we owe about $3800.00 on. My question is, what can I do to keep my car without the creditors assigning a lein against it. Our credit cards are just going 30-60 days, and I cannot promise the creditors anything, since every penny we scrape together needs to go towards the $1500.00 mortgage and utilities, food, etc. It is probably worth 16-18000, but if I lose it I cannot work at all. We also have 3 children, and my husband has been looking for work for months! Thank you in advance!
10. Posted by Bill on Monday 10th November 2008 10:58
I don't think the credit card companies can place a lien on your vehicle (at least, I have not heard of many instances of them doing so). Because you are already late on your credit card payments, a cash out refinance is not an option (which could have bee a feasible option if your credit was good). The best option I can think of for you is a debt settlement program. I suggest that you get a free consultation from Freedom Debt Relief (www.freedomdebtrelief.com, 1-800-544-7211). They are the leaders in this business, and after they look at your situation, they will be able to tell you what your best solution is.