Parent's debt puts minor child's bank account at risk - KCTV5

CBS 5 Advocate

Parent's debt puts minor child's bank account at risk

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GLENDALE, AZ (CBS5) -

A Glendale teenager says a creditor emptied her bank account to pay an overdue debt belonging solely to her parents. This court action is an unfortunate consequence of parents and their children having jointly-owned accounts.

Every teenager remembers their first paycheck - the first time they earn their own cash. But if you're under the age of 18 and you want to put your employment wages in the bank, you need your parents to open the account. Unfortunately, this can put a minor's hard-earned money at risk.

"I can't believe they could do something like this," Kaitlyn Kabel said.

Kabel is a high school senior.  She has been working up to 35 hours a week for two years - trying to earn money to pay for college. Her hard work was paying off.

"It's been difficult to save money, and I've put in all this time and I ended up with almost $8,000," Kabel said.

At the time she started working, Kabel was a minor, so she had to open her bank accounts jointly with her dad Kirk Kabel. Kirk Kabel recently fell on hard times, losing his job of 40 years.

"I had to start all over again, my whole life was turned upside down because of the economy," Kirk Kabel said.

When Kirk Kabel couldn't pay his Discover Card bills, the creditor filed suit against his assets. Discover found the joint Wells Fargo accounts Kirk Kabel had with Kaitlyn Kabel. Without warning, the accounts were garnished and drained of every penny.

"I was devastated when my kid brought it to my attention that all their money was gone," Kirk Kabel said.

Wells Fargo explained why it was obligated to turn over the money; now Kaitlyn Kabel is scrambling.

"I was recently accepted to Arizona State University for the fall of 2013 and I was planning on using that $8,000 to go to school," Kaitlyn Kabel said.

She will need to make other arrangements now. Father and daughter both learned a valuable lesson about joint accounts.

"If you're name is connected to somebody else's account, their money is your money," Kirk Kabel said.

"It's sad to say, but if your parents are having any financial issues, it's better to just keep their name away from your name - especially when it comes to money," Kaitlyn Kabel said.

Minors can, legally, have their own bank accounts, but as a matter of practice, most banks don't allow it.  So since your parent will be on the account with you, it's good practice for any teen to take their parent's name off the account the moment they turn 18.

In the meantime, while you're a minor, your money in that account is essentially your parent's money, and if your parent runs into financial trouble, that money is at risk.

However, if a minor can prove to the court that the funds in a joint account are their wages, then that money should be exempt from a garnishment.

CBS 5 News brought this fact to Discover's attention and helped Kaitlyn Kabel provide the necessary proof. Discover now says it's releasing the funds and Kaitlyn Kabel is getting back every penny of her money. Discover says it was working on returning the money before CBS 5 News contacted them.  In addition to Kaitlyn Kabel, the company also decided to return money garnished from two additional minor children of the Kabels and as an added gesture of goodwill, Discover returned a portion of the funds it garnished from Kirk Kabel.  CBS 5 News would like to thank Discover for helping resolve this matter in a timely and fair manner.

Copyright 2013 CBS 5 (KPHO Broadcasting Corporation). All rights reserved.

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