Garnishment and Levy of Assets in Minnesota
Under Minnesota law, a judgment debtor’s assets may be recovered by a judgment creditor through a sheriff or an attorney and used to satisfy a judgment. This includes both cash assets, such as bank accounts, and tangible property, such as vehicles or equipment.
Garnishment is essentially an order instructing a party to hold any property it may possess that belongs to the judgment debtor. A garnishment can generally be used at any time after a judgment is entered. It can also be used before a judgment is entered, but after a defendant fails to answer the complaint served upon it within the time allowed and at least 45 days have passed since the complaint was served. In the context of a bank account, garnishment will freeze funds that the bank is holding in the debtor’s name, even if the funds are in a jointly held account, for up to 180 days. The party in possession of the asset (called a “garnishee”) is required to hold assets totaling up to 110% of the judgment value. Garnishments are governed by Minnesota Statutes Sections 571.71 et. seq.
Levies are used to collect assets that are being held pursuant to a garnishment or are otherwise in the possession of the garnishee. In the bank account context, levies can be used to recover garnished funds or can be used independently. Levies require a court order called a Writ of Execution to be obtained from the court that issued the judgment and served on the garnishee with the levy. In Minnesota, levies can be performed by the sheriff for assets of any value. Bank account levies can also be performed by attorneys, though attorney levies are limited to amounts of up to $10,000.00. For larger sums, attorneys can use multiple levies.
If tangible assets are recovered, they are generally sold at a sheriff’s auction and the proceeds are used to satisfy the judgment. Funds remaining from the sale after the satisfaction of the judgment are generally returned to the debtor.
Levies are governed by Minnesota Statutes Chapters 550 and 551.
For individual debtors, Minnesota law exempts a variety of assets from garnishment and levy. Examples include funds provided for social security benefits, food support, Minnesota Care benefits, or veteran’s benefits. An exemption form must be provided to the debtor to provide opportunity to declare exempt funds. Exempt funds are released to the debtor once the exemption has been established.