Is a Spouse's Property Exempt From Debtor Judgment?

Nine of the 50 states are so-called community property states, which treat almost everything acquired during a marriage as belonging to both spouses. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Spouses in these states are thus most vulnerable to debtor judgments against the other spouse. The other 41 states are called common law or equitable distribution states, where the rights of each spouse are protected by law, though Alaska makes exceptions for prenuptial agreements.

Wages

If you live in one of the nine community property states, a creditor with a judgment against your spouse can usually garnish your wages to collect on the debt, even if the judgment arises from a debt in her name alone. This is because your wages are also her property under the laws of these states. However, some community property states, such as California, require the creditor to get a special court order before it can garnish a non-debtor spouse's wages. This gives you an opportunity to try to fight the garnishment, though you might not be successful. In the 41 non-community property states, also called common law or equitable distribution states, the wages of a non-debtor spouse are usually safe.

Tangible Property

Spouses often purchase significant items of tangible property in joint names, such as real estate or automobiles. Even in common law states, a creditor with a judgment against one spouse can usually use that judgment to place a lien against property owned in this way, especially if your spouse incurred the debt in order to benefit the entire family. However, property you own in your name alone is usually out of reach of your spouse's creditors. This isn't true in community property states, however, where everything you acquire during the marriage is joint property, even if it's in your name alone.

Marital vs. Premarital Property

Even in community property states, the law allows that some property is yours alone and not a community asset, and this property is usually safe from your spouse's creditors. For example, if you own a vintage automobile that you purchased before you got married, this is your separate property and your spouse's creditors can't impose a judgment lien against it. Inheritances are exempt, even if you receive them during the marriage, as long as the assets remain in your name alone.

Tips

No matter where you live, it's usually illegal to transfer assets out of your name to try to avoid a creditor's reach. In common law states, you cannot transfer assets out of your name or joint names and into your spouse's sole name to protect them from your separate debt. However, you have the right to do this before you get married, even in community property states. Prenuptial agreements can legally determine who is responsible for paying debts incurred in one spouse's name, and when done correctly, they trump state law. In Alaska, you can draft a prenuptial agreement to have the opposite effect. Normally a common law state, Alaska recognizes an asset as community property if your prenuptial or other agreement states that you want it to be treated as such.