A friend of mine is 100% disabled his only income is the checks he receives from ss and the va.He has no savings.His home has very little equity which is in both he and his wifes name.He owes more on his car than its worth.He lives in ny and all the bills he owes on are only in his name.His wife does work and has some savings plus a 401k only in her name.If a default judgment is granted against him what could the ca do to try to collect on this judgment?He cashes his disability checks by depositing them in a checking account which is only in his wifes and mother in laws name.Is he a 100% judgment proof?At least for now?
He might be judgment proof as far as his disability pay goes, but he should have a separate account for that and not co-mingle it in his wife's/mother in law"s account. Creditors & their collection goons can levy any bank account, in essence levying his wife's/mil's account. And getting that overturned/rectified is a major pain in the a.., and could take forever. He should open his own account and have the disability payments go there. While that account can be levied too, it will be easier for him to prove that that account only consists of untouchable disability pay, and the thieves would have to return it.
Slight correction to Greg's post. Creditors can levy any account that is in the OPs name, either as the primary or as a secondary holder (owner) of the account. If he is not a named holder on the wife's/MIL's account, then that account cannot generally be levied against. Having signature authority on the account, say as with a power of attorney, does not make the one holding POA on such account an owner.
Do you know if your friend lives in a "community property" state? This could have an impact on what they can go after.
The community property issue could be an exception in those states where applicable. The likelihood of a judgment creditor finding the account on his own, however, would be an unknown; it would depend on how aggressive the judgment creditor might be in following the trails. One caveat, though: Banks tend to follow a Court's levy orders without much question as to whether it is legal or not; they will contend that a Court order is always legal. They let the account owner fight it out with the Court. Back to the PITA issue, unfortunately.
NY definitely is NOT a Community Property State. The Community property States are: ID, WA, CA,NV, AZ, NM, TX, LA and WI
you are safe.. I found out the hard way when serving a bank levy, ssi, ssa, pension, va are not levied on a bank garnishment. There is actually a statuatory limit on the funds in the bank account, I believe it was somewheres about $3200. If the bank is following the law, they will inform the plaintiff that the levy cannot be honored due to the nature of the money. I know for a fact that this is true in Ca, check and see if this is true for NY.
Collector - the exemptions to levy you mention are all based on Federal law and therefore apply in all states.
Collector2 is correct. Here in California SSI, SSA, pension payments in an individual's bank account are untouchable up to $3200. Some individual states" laws vary greatly from federal statutes/laws - and this is one of them. Drives the Feds crazy. Just look at the illegal immigrants issues.
