State of Minnesota Law on Joint Accounts Clarified, but Still in Doubt

About a year and a half ago, I wrote about Judge Frank’s decision that Minnesotans may sue when a debt collector garnishes funds in a joint bank account. After a lot more litigation, pieces of that question were certified to the Minnesota Supreme Court. The Minnesota Supreme Court decided that, under Minnesota law,

  1. A judgment creditor may serve a garnishment summons on a garnishee, attaching funds in a joint account to satisfy the debt of an account holder, even though not all of the account holders are judgment creditors.
  2. Account holders bear the burden of establishing net contributions to a joint account during a garnishment proceeding.
  3. A judgment debtor is initially, but rebuttably, presumed to own all of the funds in a joint account, and if the presumption is not rebutted, all of the funds in a joint account are subject to garnishment.

What that means, in English, is that a creditor may take funds that belong to a non-debtor without notice or an opportunity to respond. This would seem to directly conflict with the due process requirements of the U.S. Constitution (and the Minnesota Constitution, for that matter), but the Minnesota Supreme Court ignored that conflict in reaching its conclusion.

The lawsuit is not over, but the law has shifted back in favor of creditors and debt collectors. For now, it looks like keeping money in a joint account is probably a bad idea if the other account holder owes anyone money.

Savig v. FNB Omaha and Messerli & Kramer, P.A. | Minnesota Supreme Court