If we receive a citation or garnishment directed to two judgment debtors holding a joint account, is each debtor entitled to the $4K exemption under the Illinois Supreme Court’s COVID-19 order on post-judgment proceedings served after March 8, 2020? For example, let’s say there is a citation against a husband and wife who have a joint account with a balance of $10K. Are we required to release $8K of that balance (providing a $4K exemption for each debtor)? Similarly, let’s say there is a citation against a husband and wife who have a joint account with a balance of $6K. Are we required to release the $6K ($3K exemption for each debtor)? And would the same principles apply to an account held by unmarried joint owners?

We believe the Illinois Supreme Court’s order requires garnishees and citation respondents to release $4,000 of property back to each judgment debtor, up to a total of $8,000. In your first hypothetical, the order would require the financial institution to release $8,000 back to the debtors, and in your second hypothetical, the order would require the financial institution to release the entire account balance of $6,000 back to the debtors.

As stated in the Illinois Supreme Court’s order, Illinois law provides judgment debtors with a $4,000 personal property exemption. The $4,000 exemption applies to each judgment debtor, each of whom can separately claim their own exemption in property held in joint tenancy. Consequently, if your bank receives a citation to discover assets or nonwage garnishment based on a judgment against two spouses holding an account in joint tenancy, we believe that each judgment debtor would be entitled to a $4,000 exemption, for a total of up to $8,000 in exempt funds.

There also may be cases where a citation to discover assets or nonwage garnishment is based on a judgment against just one of two spouses holding a joint account. In such a case, we believe that the result would be the same — both spouses would be entitled to the $4,000 personal property exemption. In one of the few court decisions to address this issue, an Illinois bankruptcy court held that both spouses on a joint account could claim a personal property exemption in the account — even if only one of the spouses was the judgment debtor. The court adopted an expansive definition of “debtor” as including a spouse holding an interest in a joint account subject to a judgment lien, although that spouse was “not personally obligated on the judgment.”

Consequently, we believe the Illinois Supreme Court’s order requires your institution to release $4,000 to both spouses holding a joint account that is subject to a nonwage garnishment or citation to discover assets, whether the underlying judgment applies to both spouses or just one spouse on the account. We believe this logic also would apply to unmarried joint tenants, both of which would be eligible for their own $4,000 personal property exemptions. While the case discussed above deals with married joint tenants, the court’s reasoning was based on the property being held in joint tenancy and was not dependent on the parties being married.

For resources related to our guidance, please see:

Illinois Supreme Court, M.R. 30370, In re: Illinois Courts Response to COVID-19 Emergency – Impact on Post-Judgment Proceedings (April 24, 2020) (“With respect to all Covered Supplemental Proceedings in which a summons or citation directed to a depository financial institution was served after March 8, 2020, or had an original return date between March 8, 2020, and the date of termination of the Gubernatorial Disaster Proclamations:
a. If the Garnishee or Citation Respondent holds personal property of a judgment debtor who is a natural person, other than in a business account, and the value of that property exceeded $4,000 (the amount of the personal property exemption contained in 735 ILCS 5/12-705 and 735 ILCS 5/2-1402(b)(1)) when a garnishment summons was served, or any time after a citation was served, the lien imposed by 735 ILCS 5/12-707 or 735 5/2-1402(m), respectively, shall not apply to $4,000 of the judgment debtor’s property held by the Garnishee or Citation Respondent, and the Garnishee or Citation Respondent shall release to the judgment debtor property valued at $4,000 that the Garnishee or Citation Respondent may have frozen, withheld, or seized.

b. If the Garnishee or Citation Respondent holds personal property of a judgment debtor who is a natural person, other than in a business account, and subparagraph (a) is inapplicable, the Garnishee or Citation Respondent shall release to the judgment debtor any property of the judgment debtor that the Garnishee or Citation Respondent may have frozen, withheld, or seized.”)

Illinois Code of Civil Procedure, 735 ILCS 5/12-1001(b) (“Personal property exempt. The following personal property, owned by the debtor, is exempt from judgment, attachment, or distress for rent: . . . (b) The debtor’s equity interest, not to exceed $4,000 in value, in any other property; . . .”)

In re Browning, 2010 Bankr. LEXIS 969 at *4 (Bankr. C.D.Ill. April 19, 2010) (“Because each Debtor here has an undivided interest in the whole and the asset in question cannot be divided, it is reasonable to allow one Debtor to claim an exemption in the whole.”)

In re Tucker, 430 B.R. 499, 502 (Bankr. N.D.Ill. 2010) (“Under Illinois law, there is a presumption that each owner of a joint account owns all funds in that account, and therefore a movant establishes a prima facie case that any money in an account belongs to a debtor when he shows that the money was in a joint account for which the debtor is one of the joint owners.”)

In re Tucker, 430 B.R. 499, 505–506 (Bankr. N.D.Ill. 2010) (“Given the ambiguity in the statutory language, the Court finds that the term ‘debtor’ as used in 735 ILCS § 5/12-1001 should be broadly interpreted, as in Article 9 of the UCC, to include any person having an interest in the collateral. . . . the Court finds that Mrs. Tucker’s valid exemption under 735 ILCS § 5/12-1001 makes the remainder of the funds in the account ‘exempt’ for purposes of 735 ILCS § 5/2-1402.”)

In re Tucker, 430 B.R. 499, 505 (Bankr. N.D.Ill. 2010) (“Since both spouses had ownership interests in the full account, this broader definition would pick up the wife’s exemption, even though she was not personally obligated on the judgment.”)

In re Tucker, 430 B.R. 499, note 5 (Bankr. N.D.Ill. 2010) (“The Court emphasizes that this ruling only affects joint tenants, who share a uniform interest, and would not give rights to parties to assert an exemption in an interest in property they do not have.”)

Illinois Code of Civil Procedure, 735 ILCS 5/12-707(a) (Non-Wage Garnishment) (“Duties of garnishee. (a) To the extent of the amount due upon the judgment and costs, the garnishee shall hold, subject to the order of the court any non-exempt indebtedness or other non-exempt property in his or her possession, custody or control belonging to the judgment debtor or in which the judgment debtor has any interest. The judgment or balance due thereon becomes a lien on the indebtedness and other property held by the garnishee at the time of the service of garnishment summons and remains a lien thereon pending the garnishment proceeding.”)

Illinois Code of Civil Procedure, 735 ILCS 5/2-1402(m)(2) (Citation to Discover Assets) (A citation to discover assets “becomes a lien . . . (2) When the citation is directed against a third party, upon all personal property belonging to the judgment debtor in the possession or control of the third party or which thereafter may be acquired or come due the judgment debtor and comes into the possession or control of the third party to the time of the disposition of the citation.”)

Illinois Code of Civil Procedure, 735 ILCS 5/2-1402(f)(1) (“The citation may prohibit the party to whom it is directed from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from the enforcement of a judgment therefrom, a deduction order or garnishment, belonging to the judgment debtor or to which he or she may be entitled or which may thereafter be acquired by or become due to him or her, and from paying over or otherwise disposing of any moneys not so exempt which are due or to become due to the judgment debtor, until the further order of the court or the termination of the proceeding, whichever occurs first. . . .”)
Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank . . . transacting business in this State has been made or shall hereafter be made in the names of 2 or more persons payable to them when the account is opened or thereafter, the deposit or any part thereof or any interest or dividend thereon may be paid to any one of those persons whether the other or others be living or not, and when an agreement permitting such payment is signed by all those persons at the time the account is opened or thereafter the receipt or acquittance of the person so paid shall be valid and sufficient discharge from all parties to the bank for any payments so made.”)