Shady Practices in the Garnishment Business

Due to a change in Minnesota’s garnishment statute, the following no longer applies. Now, the burden is on the debt collector to request a hearing if it objects to the debtor’s exemption claim.

Today I discovered yet another way debt collectors use the court system to their advantage. Even though some funds—like child support payments—are exempt from garnishment, a debt collector can make it difficult for the debtor-defendant to get an exemption. In a matter I saw today, Messerli & Kramer served a complaint on the debtor, who failed to answer because she did not realize that she (effectively) had no rights unless she showed up in court to assert them. She also didn’t talk to an attorney at the outset like she should have.

So the debt collector got a default judgment and started with garnishment. But because the funds in the debtor’s account were child support payments, and therefore exempt, she filled out the exemption form and sent it back. Seeing the writing on the wall, the debt collector objected to the garnishment, assuming (probably correctly) that the debtor would not bring the necessary motion in district court. Minnesota law favors creditors and debt collectors so much that all a debt collector needs to do is object. The debtor must then file a motion in district court to grant the exemption, placing the burden on the debtor, not on the debt collector.

The debt collector in this case would surely argue that it was only asserting its right to be sure the claimed exemption was legitimate. And that is certainly the reason the law gives the debt collector a right to object to exemption claims. However, by placing the burden on the debtor to bring a motion to determine the exemption, while all the debt collector has to do is object, and get paid, the law basically rubber stamps debt collectors’ objections to exemption claims.

Instead, the burden should be on the debt collector, given the realities of debt collection. But debtors obviously don’t have the lobby that the debt collectors do, so the law favors the debt collectors.