One of the first things a debtor often does in an attempt to hide his/her assets is to move cash to a spouse’s bank account thinking his money is safe from creditors. This may be true in some states, but not in California. In California, Code of Civil Procedure § 700.160 allows a creditor to levy on bank accounts in the name of the debtor’s spouse, whether alone or together with other third parties. Civil Code § 5120.110(s) goes even further. It provides that it is not even necessary to name the non-debtor spouse as a defendant in the action to enforce the judgment against the debtor’s community property.
In an attempt to get around Civil Code § 5120.110(s), debtors sometimes claim that the spouse’s bank account does not contain community property but rather the spouse’s separate property. However, the burden of proof rests with the debtor to establish that the funds are separate assets of the spouse. Debtors are very often unable to meet this burden.
In addition, very few creditors realize that they can garnish the wages of a debtor’s spouse. Civil Code § 5120.110(b) states, in part, that both spouse’s earnings during marriage are community property and, therefore, both spouses’ earnings can be reached to collect a judgment.
When effectuating bank levies and wage garnishments, do not forget about the debtor’s spouse.