What you need to know about garnishment of joint accounts in Minnesota
The garnishment of joint bank accounts in Minnesota has generated considerable controversy–and litigation–over the last few years. Here’s what you need to know if your joint bank account has been garnished by a debt collector:
In the 2007 case of Enright v. Lehman, the Minnesota Supreme Court ruled that a creditor can only garnish money from a joint bank account that belongs to the judgment debtor. So, for example, imagine that two people, let’s call them Rocco and Ani, have a joint bank account. Rocco has a judgment against him and a debt collector garnishes the joint account. Under the Court’s ruling, the debt collector could only garnish money from the account that belonged to Rocco. The debt collector wouldn’t be able to garnish any money in the account that belonged to Ani.
Unfortunately, the Enright decision left a number of questions unanswered. First, and most importantly, could a debt collector ever garnish a joint account when not all the account holders were judgment debtors? And if so, who was responsible for establishing what money in the account belonged to the judgment debtor–the creditor or the debtor? In a 2010 decision, the Minnesota Supreme Court answered these questions, and the answers weren’t favorable to Minnesota consumers. The Court ruled that a creditor could garnish a joint account, but could only keep the money that belonged to the judgment debtor. The Court also ruled that all of the money in a joint account was presumed to belong to the judgment debtor unless he and the joint account holders showed otherwise.
But what about the non-judgment debtor account holder? Is it really fair to her to have her money frozen while the garnishment process plays out and the ownership of the money in the joint account is established? Most of you have heard of the concept of “due process”. What that generally means is that before the government can deprive a person of rights or property, the person has to be given notice and an opportunity to be heard on the issue. But when a debt collector garnishes a joint bank account, the non-judgment debtor account holder doesn’t get any notice about the garnishment. Only the judgment debtor gets such a notice, and the notice doesn’t come until after the money has been frozen. And although Minnesota law allows non-judgment debtor account holders to be involved in the Court process, the debt collector isn’t required to notify the non-judgment debtor of her right to do so. So is depriving the non-judgment debtor account holder of her money without any notice or opportunity to be heard a violation of her Consitutional right to due process? That’s the issue that will be before the Federal District Court of Minnesota this spring.
If the Court agrees that the current garnishment process violates the Constitution, it could have far-reaching implications on how debt collectors can collect money. Stay tuned.
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 $175.
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.