Will My Bad Credit Freeze My Spouse's Bank Account?

Married couples face challenges when a spouse runs into trouble with bad credit. Every consumer has an individual credit report, a record of the person's use of credit. While there are not joint credit reports for married couples, your spouse's bad credit can affect your credit in certain situations.

Credit Reports

A credit report is a document maintained by different credit reporting companies that contains a history of your behavior as a consumer credit user. The report details, for example, how long you've had a credit card, how often you've been late with a payment or whether you've gone though bankruptcy. Your report does not contain your spouse's credit information, though it does contain information about any joint accounts you both have, such as joint credit cards or mortgages.

Lawsuits

If your spouse has fallen so far behind on a debt, his creditors may sue him in court. If they win, the court gives them a judgment stating a specific amount of money your spouse owes them. The creditors can then use this judgment to "freeze" your spouse's bank account. Known as a bank levy, a bank account freeze can only happen after the creditors win the lawsuit and take specific steps as required under state law.

Bank Accounts

If you and your spouse have a joint checking account, that account may get frozen because of either spouse's bad credit. However, a creditor cannot freeze a bank account that is solely in the name of the spouse not in trouble. For example, if a creditor wins a judgment against your spouse for $10,000 and you and your spouse have a joint checking account with $5,000 in it, the creditor can take all the money from the account to satisfy the debt. It cannot do so if the account is in your name alone.

Other Impacts

A spouse's bad credit alone cannot result in a bank levy for either spouse. However, if a spouse's bad credit behavior negatively impacts both spouses' credit histories, any loans that either spouse have can be affected. For example, if a spouse gets sued by her creditors or has judgment against her, other creditors may raise the interest rates on her other loans. If her husband is a joint holder of these loans, he too is subjected to the increased rates.