Can a Spouse's Assets Be Taken in a Civil Judgment?

Obtaining a civil judgment against you in court is usually a creditor's last resort to force repayment of a debt. If you have fallen behind on your bills because of a job loss, medical condition or other unforeseen reason, you may find that you can no longer pay your creditors. Your creditors may pursue you in court and receive the right to collect the debts you owe in other ways. This can make your spouse's assets vulnerable in some situations.

Civil Judgment

As soon as you realize that you do not have enough money to pay your bills, contact your creditors to attempt a modification or other resolution. If you are not successful, you will receive collections calls and letters. Late fees and penalties may increase existing debt. If creditors remain unsuccessful in collection attempts, they can sue you in court. If they prove that the debts are yours, you will receive a civil judgment against you and the creditors can use it to attach your assets or other property.

Liens and Garnishments

After a creditor wins a civil court judgment against you, the company may attempt to collect from you in any way possible. A lien may be placed on your house so that when you sell it, you will have to pay the creditor before you receive any proceeds. In addition, your creditor may collect your debt by giving the judgment to your employer, who will garnish your wages until full repayment is made. If you have a bank account with your name on it, your bank can freeze your account and give all of the money in it to your creditors up to the amount that you owe.

Spouse's Assets

All assets that you and your spouse own in both names are vulnerable to your creditor judgments. Your spouse's assets may be not be taken if they are in your spouse's name alone. However, in community property states such as California and Texas, a lien can be placed on your house even if it's owned solely by your spouse, if the civil judgment debt was acquired after the marriage. In states that are not community property, your house may be protected from civil judgments. The same rules apply to other assets, such as automobiles and bank accounts. Property owned jointly by you and your spouse is at risk for repayment of debt that you accumulated yourself.

Asset Protection

Protect your assets legally before you owe creditors more than you can repay. Apply for a home equity line of credit (HELOC). You do not need to use it. However, if a civil judgment is made against you, the creditor will know that there is very little, if any, money that will be left over if you sell your house because the first and second mortgages must be paid first. With your ability to remove equity at will with a HELOC, your house becomes a less attractive option for a lien. Protect your business or rental properties by forming one or more limited-liability companies and transferring your assets into them. Learn your state's laws for asset exemption rules that apply to other property that you own, such as retirement accounts and vehicles.