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Understanding Asset Ownership With Married Couple


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Hypothetically, a CA gets a judgement against my wife for CC debt. We live in NC. I am pretty sure NC does not allow for garnishment for cc debt judgements.

Now, is there some separation between me and my wife as far as income/assets/expenses? We have separate checking accounts, her check goes into her account and my check goes into mine.

We own a home, but the home mortgage does not show up on her credit report since the mortgage is in my name.

We own two cars, one is financed and one is not. Both cars are registered in my name.

Probably hard to answer, but when a creditor looks at assets, what is the defining legal characteristic that assigns ownership to the asset?

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It very much depends on the state you live in and how title to assets are held.

I believe that NC is not a community property state... assets in her name cannot be attached for your debts and vice versa...

Cars generally cannot be attached because they are not long lasting assets (what happens if someone plows into it tomorrow?).

This is why collection agencies tend to go after real estate. If you do have a judgment against you, the judgment holder can (and probably will) file a lien against the property. So when you go to sell or refi, their lien must be paid before the transaction closes.

As far as bank accounts, her accounts cannot be levied for your debts, but joint accounts can be levied for your debts.

From what you wrote, you seem to be ok - but I'd recommend you consult with an asset protection attorney just to be sure.

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A community property state does allow the collector to go after debt made during a marriage while a common law property state does not although there is one exception:

Common Law States

In a "common law" property state, which is any state not listed above as a community property state, debts incurred by one spouse are that spouse's debts alone, and income earned by one spouse does not automatically become jointly owned.

Debts. Debts are owed by both spouses only if the debt benefits the marriage (for example, the debt was for food, clothing, child care, shelter, or necessary household items) or the debt was jointly undertaken--for example, if both spouses signed a contract requiring them to make payments on the debt, if both spouses' names were on an account or title to property, or if a creditor considered both spouse's credit information before making the sale or loan. The same rules hold true after permanent separation but before divorce.

All other debts, such as a business debt from one spouse's business or a car loan for a car whose title is in one spouse's name, are considered a spouse's separate debts.

Here is the link to the excerpt above:


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