Credit and Bankruptcy / Filing Bankruptcy

Can a Bank Account Belonging to My Spouse Be Sought by Creditors in Bankruptcy?

In many cases, assets that belong to your spouse may be off limits to creditors but it depends on the circumstances of the spouse filing for protection.  There are a few factors to review that may give clarity regarding account funds.  You need have a good idea of what assets are considered part of your bankruptcy estate, learn whether the bank account in question is considered community property, and what exemptions are you entitled to that can help protect it.

Your bankruptcy estate includes personal property or anything that you own.  Bank account funds may be considered part of your bankruptcy estate if you live in a community property state.  In this case, the bank account may have your spouse’s name with the source of the funds being considered community property.  If funds are considered separate property, creditors or the bankruptcy trustee will not be entitled to access the funds.

In some cases, the name on the account may not be the issue but the source of the funding could be reviewed.  Meaning, understanding where the money originally came from; this may include tracing the account back to when it was opened.  If it was opened before you and your spouse were married, any funds from this point may not be considered community property.  This also means such funds would not be considered part of your bankruptcy estate.

Another issue to review is the debt included in the filing; if the debt is personal or being associated with one spouse, assets considered community property cannot be used to satisfy a separate debt. Even if the account is considered community property, there may be exemptions that can be applied to protect the funds.

Reference: http://blog.nolo.com/bankruptcy/2013/04/08/can-chapter-7-bankruptcy-trustee-take-money-in-your-spouses-separate-bank-account/