Now that we have established that a creditor may look to a non-debtor spouse and community property to collect a judgment, we will discuss the various legal opportunities for doing so.
Non-Debtor Spouse Wages
One of the easiest community property assets to look towards satisfying a judgment is wages. Since wages are generally community property, a non-debtor spouse’s wages are subject to garnishment. The one exception is that if the debt existed before the non-debtor spouse married the debtor, then the wages cannot be garnished as long as the earnings are placed into a bank account standing solely in the name of the non-debtor spouse and are not commingled with other community property. California Family Code §911. The procedure for garnishing the wages of a non-debtor spouse is by moving for a court order under California Code of Civil Procedure §706.109. But judgment debtors can fight back toouth and nail by tring to show that they need every penny that they earn to durvive. It then becomes the creditor lawyer’s job to disprove these claims of exemption or needed income. As an aside, you are likely not going to know about the existence of this exception in advance of your motion unless you conduct a debtor examination first.
If the debtor and non-debtor spouse own real property and hold title in the name of the community, the judgment may be enforced against the entire real property after an abstract has been recorded through a writ of execution sale. However, if the property is held in joint tenancy it is presumed to be separate property. This means that you can only attach the debtor’s interest in the property and you cannot force a sale of that half interest unless its value covers the entire homestead and all liens ahead of the judgment (hard to do). Keep in mind that the way the title is held is only a presumption. If you have evidence that the spouse and non-debtor spouse intended for the property to be community, you can try and overcome that presumption in connection with your motion for an order to sell the dwelling.
Most personal property purchased during a marriage is community property. Money in bank accounts held jointly between spouses is presumptively community property. California Financial Code §6852(b). Another great tool is that a creditor can levy on a bank account held in the name of a non-debtor spouse, whether alone or with any third person simply by preparing an affidavit attesting that the person holding the bank account is the spouse of the judgment debtor and sending the affidavit together with the appropriate sheriff’s instructions and fees to levy on accounts in the name of the non-debtor spouse. California Code of Civil Procedure §700.160(b)(2).
Non-Debtor Spouse’s Separate Property
A non-debtor spouse’s separate property is generally not subject to liability for the debtor spouse’s debts. Community property typically terminates upon the filing of a dissolution. However, whether the community has terminated is a question of fact. Debtors have been known to file sham divorces in order to protect earnings or property and continue to live together after filing a divorce so a smart creditor’s attorney should pay careful attention to a dissolution proceeding especially if it is filed after collection efforts have been commenced against a non-debtor spouse.
For more information on how to collect a judgment against a non-debtor spouse, contact Los Angeles commercial collections attorney Ronalnd P. Slates today.
