Garnishment - A Powerful Remedy
Imagine this scenario: you are owed $2,000.00 from an individual for goods and services you provided. For months, you are promised that payment will be made but no payments come in. At a certain point, you grow tired of the excuses and you decide that you are going to proceed with litigation. You go in to Court, you win your case and you get a judgment. However, you still receive nothing on your debt. Now what?
Many creditors often find themselves in this situation. Most of the time, the amount is written off with a great deal of frustration. However, most creditors do not know about the one weapon that can help them to recover their debt. The weapon is garnishment.
Garnishment is a quick and effective means of recovering debts. There are three types of Garnishment that can be used; one, a wage garnishment that is done through a place of employment; two, a bank garnishment done through a financial institution and three, third-party levy done through a third party such as renters or independent contractors. Any of these garnishments can be used either pre-judgment or post-judgment depending on your specific situation.
In order to use a garnishment, you must first commence a civil action (lawsuit) against the debtor. In addition, there is a need to have one of the following: place of employment for the debtor, the debtors financial institution or another source of income such as a rental property or independent contractor location. Sometimes, a debtors place of employment or bank can be found through the pulling of a credit report or some similar reporting service. If a potential place of employment is found, we suggest that you obtain verification of employment. If employment is verified, creditors attorney or sheriff can begin the process of garnishment. A pre-garnishment notice must be served on the debtor a minimum of ten (10) days prior to the service of the Garnishment Summons on the debtors employer. Quite often, a debtor will realize the gravity of the situation and make payment arrangements prior to his/her wages being garnished.
Pre-Judgment garnishments are rarely used since most creditors wrongly believe that you need to have a judgment prior to garnishing wages. However, Minnesota Statutes Section 571.71 authorizes garnishment prior to judgment in two different situations. Under Minnesota Statutes Section 571.71(1), the Court on motion of the creditors attorney can issue a garnishment summons if there is proof of service of the Summons and Complaint and if any of the grounds that are found in Minnesota Statutes Section 571.93 appear to exist. Under that section, a creditors attorney can move for an expedited garnishment summons if there is evidence that the debtor is attempting to defraud his creditors by disposing of nonexempt assets. Under this section, a creditors attorney will need to provide evidence regarding the debtors actions before a Court will issue the Garnishment Summons.
Pre-Judgment garnishment can also be used under Minnesota Statutes Section 571.71(2). Under this section, proper service of the Summons and Complaint and proof of service thereof will be required. In addition, forty (40) days will need to have passed from the date of service without any answer received to the same. If both of these conditions exist, a creditors attorney (or the sheriff) has the ability to garnish wages due without having entered judgment in the underlying action. The important part to remember is that if a judgment by default cannot be issued in the underlying action, a pre-judgment Garnishment Summons cannot be issued.
Most garnishments are done after entry of a money judgment in a civil action or post-judgment. See Minnesota Statutes Section 571.71(3). Under this section, the Garnishment Summons will need to provide the date judgment was entered and the amount that remains unpaid. See Minnesota Statutes Section 571.72 (2).
Under any of the above scenarios, service of the Garnishment Summons must be done on the debtors employer by certified mail or via personal service with a copy of the same sent to the debtor. In addition, a garnishment exemption notice must be provided to the debtor. A debtor will be exempt if they are receiving any assistance from the state such as Medical Assistance (MA), Energy Assistance, Social Security Benefits, etc. See Minnesota Statutes Section 571.72(8).
Once a Garnishment Summons is served on an employer, the employer is obligated to retain possession and control of the earnings of the debtor. In addition, the employer is required to provide a disclosure to the creditors attorney or sheriff within twenty (20) days of the date of service of the garnishment summons. The disclosure must contain the amounts due and owing the debtor within the pay period. The employer is required to calculate the amount due by use of the Earnings Disclosure Worksheet. See Minnesota Statute Section 571.75. By providing these amounts and signing the affirmation, an employer is obligated to be truthful and provide the information to the best of their ability. If an employer fails to serve the disclosure within 20 days, a court may render judgment against the employer for an amount that cannot exceed 110% of the amount claimed in Garnishment Summons. See Minnesota Statute Section 571.82. As such, employers need to be careful when providing responses and seek legal assistance when questions arise.
Garnishment, when used appropriately, can be a very powerful tool. It can be used pre-judgment or post-judgment and provides a remedy when a creditor is unable to recover their debt through working with the debtor individually. Although, there are obligations under Minnesota Statutes Chapter 571 that must be complied with, a creditor can, through an understanding of those obligations, garner greater recovery than if they waited for payment. If the day comes where you find yourself holding a debt and unsure how to collect it, please contact us so that we can proceed with a garnishment on your behalf. Garnishment is a powerful collection remedy.
