Wage garnishment is one of the most pressing concerns for most of our potential clients. Potential clients want to know if creditors can garnish their wages, and if so, when will it happen and how much can they take. Unfortunately, the answer to the first question is yes, under Minnesota state law, the creditors have the right to seize any available non-exempt property, and that includes a portion of your wages.
When you apply for a credit card, or any other form of credit, you are entering into a contractual agreement with the lender whereby you promise to repay the lender for the credit extended. When you fail to make the payments as agreed upon, the lender then has the right to pursue you for breach of contract. Typically, the creditors begin this process by sending demand letters for the past due balance. After a period of time, they usually sell the debt to a collection agency that continues the debt collection by calling or sending demand letters. The debt may be sold one or more times before finally landing with a law firm specializing in debt collection. When the debt reaches a law firm, you will receive a letter allowing thirty days to challenge the validity of the debt. If the debt was incurred fraudulently by an unauthorized user, this is when you could challenge the creditor's claim, but inability to pay is not a defense.
If there is no basis to challenge the claim, the creditor will file a complaint in state court alleging that a breach of contract has occurred
and seeking the amount owed plus attorney's fees. You will receive a summons to submit an answer to the complaint. The result of this process is usually that the judge enters a default judgment in favor of the creditor, at which time the creditor may begin the garnishment process. Though there is no set amount of time for this process to occur, it typically will take between six months and one year before the creditor actually receives a judgment, but it could take longer.
The significance of the docketing of the judgment is that is when the creditor may begin the garnishment process. Once the creditor decides to garnish your wages, they should be sending two things, one is a Request for Disclosure, the other is a Garnishment Exemption form. You have a duty to fill out the request for disclosure that asks about employment, bank accounts, etc. The garnishment exemption form, on the other hand, can be a tool to guard against wage garnishment and will be discussed in next week's blog post.
Once the creditor has the employment information, it will send a notice of intent to garnish and an execution of garnishment to your employer demanding that the employer withhold a certain amount from each paycheck. In next week's post, I will discuss how much a creditor can garnish from your wages/bank account and what can be done to stop it.
If the above process sounds familiar and you would like to speak to us about your options please contactRunning Law Firm to set up a free consultation.