Information on credit cards and community property law

Can credit card companies levy my spouse's bank account? The credit cards are solely in my name.

Can credit card companies levy my spouse's bank account? The credit cards are solely in my name.

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Bill's Answer
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Updated: Sep 18, 2014

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Highlights

  • Examine who is responsible for a debt held in one spouse's name.
  • Review how living in a Community Property State affects debt collection.
  • Consult with an attorney, if threatened with collection.

Thank you for your question about your debt and whether or not your spouse can be subject to collection efforts to collect on your debt.

The Cardholder is Usually Solely Responsible for the Debt

A credit card issuer must file a lawsuit and obtain a judgment against a debtor 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 sue you alone, and if as a result of the lawsuit receives a judgment, the judgment-creditor has the right to levy your bank account and so on.

Consider a few important exceptions to this rule when you determine the risk of not paying this debt. First, if you live in a community property state, the creditor may sue both you and your spouse, under the theory that this debt was incurred as a community debt. Also, if your spouse was a co-signor on this account, even if he or she did not use a card, he or she may will have contractual liability for the debt. However, if your spouse was an authorized user, meaning you simply requested an additional card and he or she never signed a credit agreement, then your spouse has no contractual liability for the debt, but due to your state's community property laws, your spouse may have statutory liability.

Community Property States

Community property is a marital property scheme used in nine states:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

Alaska allows married couples to choose either community property or equitable distribution when determining ownership of marital assets. For that reason, Alaska is often considered a community property state.

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 that benefit both spouses, are considered community property, and are therefore owed by both spouses regardless of whether both spouses signed the credit card agreement. For example, if you lived in Washington State and incurred debt during your marriage, both you and your spouse, as a marital community, could be sued to collect on the debt. If a judgment were obtained against you, the bank accounts in both your name and your spouse's name could be levied to enforce the debt.

Many creditors do not go to the trouble of suing both spouses in community property states, as doing so tends to complicate the legal process involved in obtaining a judgment. For example, in California, credit card issuers sue the spouse who opened the account. If the creditor chooses to sue only one spouse, and thus obtains a judgment against only the spouse who opened the card, the creditor may levy or garnish the assets of that spouse alone.

If you live in a community property state, and have defaulted on a credit card debt in your name only, consult with an attorney to discuss the liability for you and your spouse. Since community property schemes vary from state to state, it is important to discuss your situation with a legal professional familiar with your state's marital property laws.

Financial Responsibility of a Co-signers and Authorized Users

If your spouse was a co-signer on this debt, meaning he or she signed a credit card agreement when you opened the account, even if that was only to use his or her income in obtaining the desired credit amount, then your spouse is liable for the debt, and thus may be sued by the creditor to collect the debt.

If your spouse was only an authorized user on the account, meaning you simply requested a second card for him or her, but your spouse never signed a credit agreement, he or she is almost certainly not legally liable for the debt. Many consumers confuse co-signers with authorized users. The key difference is  authorized users are not legally liable for the debt, and therefore cannot be sued to collect on the debt.

Review the credit card statements and the credit reports for you and your spouse to help determine if your spouse is a co-signer or an authorized user. If your spouse is a co-signer, both your names will likely be listed on the credit card statement. If he or she is an authorized user, the account will likely appear on your spouse's credit report, listing him or her as an authorized user, but your spouse's name will probably not appear on the account statement.

If you do not live in a community property state and your spouse was not a co-signer on the credit card debt in question, then your spouse is probably not legally liable for this debt. Therefore, the creditor should not be able to levy your spouse's bank accounts, garnish his or her wages, or take other action against your spouse in an attempt to enforce the debt.

However, if you reside in a community property state, being an authorized user does not insulate a spouse from community debt liability.

Consult with an Attorney 

Consult with an attorney to discuss your situation, your state's laws, and what effects this debt may have on your spouse's assets. Also, be aware of potential tax implications. For instance, if you file a joint return, it is possible to have an expected tax refund diverted to pay off a debt that only one party owes. 

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 page.

I wish you the best of luck in resolving your credit card debts. I hope this information helps you Find. Learn & Save.

Best,

Bill

42 Comments

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  • BC
    May, 2013
    Braxton
    I ended a relationship with a guy I dated but never had intimate relations with. He pursued me for years before with no response on my end. As a gift he took out a credit card with my name on it under his account. I never verbally nor in writing agreed to any responsibility as the card was presented to me as a gift. He first kept trying to contact me and pursue a relationship with me. After being told I wanted nothing to do with him, he fed ex-ed me a copy of the credit card statement with prestamped envelopes he made out to his address. Am I liable for this debt by law of NYS?
    0 Votes

    • BA
      May, 2013
      Bill
      I can't give you legal advice, as only an attorney can properly do so.

      My guess is that you're not financially responsible for charges made on an account on which you were an authorized user, but I suggest you speak with an attorney who can review all the facts and offer an authoritative opinion.
      0 Votes

  • TW
    May, 2011
    Tony
    after divorce ex wife used / increased an unsecured loan that was in both our names and now defaulted. I didn't authorize this and now I am on the hook for over $100,000.00. Is this legal and what can I do?
    0 Votes

    • BA
      May, 2011
      Bill
      You need to consult with an attorney who can review the original agreement and determine what recourse you have. It may have been improper for the lender to have increased the joint line of credit without your permission,Your situation is a good reminder that all common debts, loans, and lines of credit should be closed out, when a marriage dissolves.

      The terms of your divorce decree will also have bearing on the issue. If you used an attorney in your divorce, consult with him or her to see if your ex's actions were a violation of the decree. If not, review the decree and seek a consultation with an attorney experienced in family law.
      0 Votes

  • BA
    Sep, 2010
    Bill
    I do not have good news for you. As you suspect, community property law, generally speaking, obligates both spouses to pay the debts one spouse incurs. However, I hasten to add that I have not studied Washington family law, and Washington may have exceptions for spouses who are not living together and intend to divorce. Consult with your divorce attorney about this matter. If you do not have a divorce attorney, get one immediately.
    0 Votes

  • BW
    Sep, 2010
    Bob
    My wife walked out over a year ago. Before doing so she acquired a Capitol One credit card and gave me a second to use because she said the interest rate was lower than my own Bank of America card. I don't recall if my name was on the Capitol One card, but do not think so. I never signed any document regarding it. So on the day she walks out she wants the card back and I gave it to her. Over a year later she decides she wants a divorce and since we live in Washington State (community property state) I am concerned she will run up a huge balance, leave the country (she's a resident foreign national) and I'll be stuck with the bill. I contacted Capitol One and they said they can't help me if I'm not associated with the account. They didn't care about community property and the like. I should also mention my wife's name was on my Bank of America card and when she contacted them to remove her name the bank immediately closed my line of credit that I'd had for over 20 years and had never missed a payment. My question is am I liable for the debt on the Capitol One card if she runs up a huge tab and leaves the country? She is capable of doing so out of spite. Thank you.
    0 Votes

  • BA
    May, 2010
    Bill
    You mentioned the title of the house is in her name and your name. Because you titled the property in both of your names, any judgment-creditors for either spouse can attach a lien to that property. The debt being incurred before your marriage is irrelevant under these circumstances.
    0 Votes