Update: State of Minnesota Law on Joint Accounts Clarified, but Still in Doubt.
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This happens all the time, and not just to husband-and-wife joint accounts.
The American Bankers Association has said that the majority of accounts into which federal benefits (social security, for example) are deposited, are joint accounts. Those benefits are exempt from garnishment or levy, but are still often taken if a joint account holder (usually a family member, often a child) is garnished for a debt.
The states have a hodgepodge of rules that govern money held in joint accounts, but Minnesota has adopted the Multi-Party Accounts Act, under which the person who deposited the funds, owns the funds. In order to garnish or levy funds in a joint account, a creditor must first prove who owns those funds. This only makes sense; you do not get to take Joe’s money to pay Jimmy’s debt.
Plus, the joint account holder (the non-debtor) often has no notice of the lawsuit before their money is taken. Due process would seem to require something more than zero notice.
The case is not over yet. We won the right to sue from one judge; now, we have to win the case, and Messerli & Kramer is apparently planning a long, drawn-out fight.
Obviously, this case does not apply to other states, where debt collectors may be allowed to attach funds in a joint account due to that state’s laws.
Judge says debt collectors may be sued for levying funds in a joint account | consumerlawyer.mn
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{ 16 comments… read them below or add one }
I am in this same exact situation!! Same lawyers too!! What should I do?
Call a consumer rights lawyer. If you are not in Minnesota, the lawyer database at the National Association of Consumer Advocates is the place to start looking.
Sam deserves a huge round of applause on this issue. His recent win has probably caused more panic in the small little things debt collectors use as hearts then any other court decision in a long time. They are up in arms, screaming and pulling their hair.
But they have the money and the banks on their side, so it may be just a matter of time until the law is “fixed.”
Good work! Are you able to also collect attorneys fees if you win?
We should be able to, yes. Converting funds is also a violation of the Fair Debt Collection Practices Act, which carries statutory damages of up to $1,000 as well as actual damages, attorney fees, and costs.
Sam, What is usually the next step after discovery on both sides have been answered. Is it a good idea to try and settle before it would go to court? What % would be a good settlement figure. Thanks. Greg
@Greg: There are no neat “steps” in a lawsuit, just deadlines. If you aren’t sure what to do next, talk to a consumer lawyer.
When and for how much you should settle is a matter of strategy, and depends on the details of your case. You can do it yourself, using your best judgment. Details like how much you should settle for depend on the strength of your case, the debt collector/buyer suing you, and more. There are too many variables to give concrete advice.
25% may be a good settlement figure in one case, and 75% may be a good settlement figure in another. It just depends on the case.
I cannot afford a lawyer there garnishing my wages yet i attempted to contact them by phone and email. They are not working with me and garnished my wages also took all my $ from my bank. Now i have no $ and over draft fees. I dont know what to do
Have you talked to a consumer rights lawyer?
This article is about joint account garnishment. If you have a joint account that is being garnished, you may have a case under the FDCPA. In that case, all the consumer rights lawyers I know would take your case on contingency or with a small advance to cover the court costs and filing fees.
I am glad I found this…this has answered my major question, can they come after joint accounts. I am unemployeed, and I have debt in my name only, but the money belongs to my wife as she earns the money, we have a joint account. we have a decent amount of money saved up, and I am always wondering if a debt collector is just waiting around the corner to take
money. Is there a sure sign they will take money, or would there be a notice at all? and if ever get such a notice, should I take the money out, I sure do not want to get caught with my pants down, and they take all of the money, even though laws says they can not do this, but nothing seems to stop them anyway, and is there a limit they can seize if they do go this route?
Thank-You
The law is in flux. At the moment, joint accounts are vulnerable to garnishment or levy, although non-debtors whose accounts are garnished for someone else’s debts may be able to sue if that happens. That doesn’t help much if all the money is gone, however.
Even though the debt collector would know the current
law, would they still take whatever they could? They
do not care who the money belogs to as long as they get it.
personally, that is not right in inself. just because we have
a joint account, it is not fair to take jenn’s money to
pay for john’s debts…
is there an update to this law?
what do you think the outcome with be?
and if all the money is gone, that does not mean I will
lay down without a fight… this is why I asked
is there a limit they can take? is there any warnings
before they can take from accounts?
Sam, your blog is dated 1/7/09. Is there an update to the dispute with Messerli & Kramer?
Following a judgment, should a person move money from an individual account to a joint account if one is available?
Thanks for the reminder. I’ve been meaning to write an update. At the moment, the law is back in a state of flux due to a ruling of the Minnesota Supreme Court interpreting Minnesota law. Whatever the final outcome of the litigation—which is ongoing—joint accounts are not protected safe havens. If someone has a judgment against you, it’s best to call a consumer lawyer to find out your options.
I have read your article and I do not agree with the happy sentiment. I am a hardworking, honest mother of two. I always pay my debts and never spend money I do not have. I hired an accountant, Sheri Merkling of Dollars and Sense Accounting, to prepare and file my taxes. She turned out to be a crook and quit returning my phone calls after taking nearly $3,000.00 for work she claimed to have completed but did not. After attempting to resolve this on my own to no avail I turned to the courts. I received a judgment in my favor. That was the easy part, I have jumped through hoops trying to collect the judgment. I am attempting to garnish her bank account which is a joint account held by her and her husband. Even though she is a business owner and has the money to refund me she is not because she is claiming exemption on the joint account. This so called win will hurt the honest people struggling to recoup losses as well. It just makes me wonder why so many people think they are entitled to something for nothing. Why is it acceptable to build up debt, yet feel no obligation or responsibility to repay it. I respectfully say, this is part of what is wrong with America today! Make an effort, if you owe someone money, pay them and stop spending money you dont have.
I think you might not understand the decision. The Phillips decision says you cannot garnish a non-debtor’s funds to pay a debtor’s debts. In your case, you should not be entitled to take the husband’s money to pay the wife’s debt.
That sounds fair to me. If you are owed money, get it from the person who owes it to you.
If it makes you feel better, the Minnesota Supreme Court thinks it is perfectly fine to take a non-debtor’s funds to pay a debtor’s debts, and that is the law now. You can click the link at the beginning of the article to find out more about that decision.