Editor’s note: this post only discusses garnishment in Minnesota. Although the laws and procedures may be similar in other states, you should consult with an attorney in your area for specific advice about your state’s garnishment laws.
In Minnesota, debt collectors are allowed to garnish a consumer’s bank account and wages to recover unpaid debts. Although Minnesota law permits garnishment before the entry of judgment in limited circumstances, the majority of garnishments occur after a court judgment has been entered.
To initiate a bank garnishment, a debt collector first sends a garnishment summons to the bank. The bank is required to seize all funds in the consumer’s bank account on the day they process the garnishment summons. Consumers do not get notice of the garnishment until after the funds have been seized, which unfortunately can result in bounced checks and overdraft fees. In contrast, a wage garnishment is initiated by first sending a notice of intent to garnish to the consumer. The debt collector must then wait 10 days before sending a garnishment summons to the consumer’s employer. Upon receipt of the garnishment summons, an employer must seize 25% of the consumer’s after tax earnings for each pay period until the debt is satisfied.
What should you do if your bank account or wages are being garnished? First, determine if any portion of the funds that were seized are exempt. Minnesota law provides that certain sources of funds are exempt from garnishment. For example, a debt collector may not keep most forms of need-based government aid, such as social security or energy assistance. In addition, a debt collector can only keep up to 25% of your wages, even after you deposited them in your bank account. Minnesota law also provides that child support, some insurance settlement proceeds, and many pension plans are exempt from garnishment. This is not an exhaustive list of exemptions and you should consult with a consumer lawyer to determine what, if any, exemptions you may claim. A consumer lawyer can also help you navigate the process to claim an exemption and get your exempt funds back. It is critical to act quickly because Minnesota law provides very stringent deadlines for claiming an exemption and if you fail to act in the required time, you may lose your ability to claim an exemption. 6/30/09 update: for more information on garnishment exemptions in Minnesota, see this post.
Another thing to consider if your bank account has been garnished is whether any of the funds that were seized belong to a joint account holder, such as a spouse or child, who has nothing to do with your underlying debt. Under current Minnesota case law, a debt collector may not keep funds in a bank account that were contributed by a joint account holder who is not responsible for the debt. And there is at least one Minnesota court that has ruled that a debt collector that seizes a joint account holder’s funds to satisfy a debt they aren’t responsible for may have violated the Fair Debt Collection Practices Act, or FDCPA, and other Minnesota laws.
Finally, you should consider whether its possible to get the underlying court judgment vacated, or removed. If the judgment was obtained by default and you were never served with the lawsuit, you may be able to have a court vacate the judgment and return the garnished funds to you. Its also possible, under certain circumstances, to get a default judgment vacated even when you were properly served with the lawsuit. Consult with a consumer lawyer to determine whether you have a viable motion to vacate the default judgment.
If you still have questions about garnishment, feel free to download my free guide How to Survive Garnishment. It’s packed with information and tips for handling garnishment and will answer most of your questions about the garnishment process. If the guide doesn’t answer all of your questions, I offer 30 minute consultations for $150.
And if you’re being garnished and were never served with a lawsuit, I may be able to help you stop the garnishment by vacating the underlying judgment. Feel free to use the contact form in the upper right corner of this page to contact me to discuss the possibility of getting the judgment vacated.
(photo: stuart pilbrow)