Friday, October 30, 2009

Real Garnishment, Real Life: Can the Bank Really Take My Kid's Money?

Some clients were in the office and were consulting me about some business debts they'd personally guaranteed from a failed business. Facing the prospect of multiple lawsuits, they wanted to know if a bank could garnish their son's bank account.

"Can the bank really take my kid's money?"

The answer is "YES" -- any time two or more persons share a joint bank account, they both (all) own 100% of the amount in the account. Therefore, even though the kid has earned every cent in that account through a long, hot summer of mowing lawns, if Mom or Dad's name is on the account it is subject to being garnished to pay Mom or Dad's debts.

In other words, even though their teenager has spent his entire summer slaving away mowing lawns, and even though Mom and Dad have put precisely NONE of the money that currently exists in sonny boy's bank account, the mere fact that Mom or Dad's name is on the account with their son, means that the entire amount is subject to a creditor's garnishment action. This is because a joint bank account (and its contents) are owned jointly and severally -- meaning that all named account holders hold the money equally, whether they contributed to its contents, or not.

To illustrate, it's helpful to understand garnishment as a legal tool used to collect assets from a third-party (such as a bank) holding someone else's money or property. Stay tuned for a post about garnishment next week, and the landmark legal battle of Popeye vs. Wimpy.

Member, National Association of Consumer Bankruptcy Attorneys