The Fair Debt Collection Practices Act forbids debt collectors from taking action that they cannot legally take. This includes situations where a debt collector illegally garnishes a bank account or paycheck. I have seen a number of wrongful garnishment situations over the years. Here are a couple of the common scenarios.
Improper pre-judgment garnishment
Under Minnesota law, a collector can garnish a person’s bank account or paycheck without first obtaining a court judgment. To do so, the collector first has to serve the person with a collection lawsuit. If the defendant does not answer the lawsuit within 20 days, the collector then has to send the defendant a Notice of Intent to Garnish. If the person doesn’t respond to the Notice of Intent to Garnish within another 25 days, then the debt collector may start a garnishment. No court permission or oversight is required.
Debt collectors occasionally foul up this process. I’ve seen cases where they do a pre-judgment garnishment even though the defendant has answered the lawsuit. I’ve also seen cases where they garnish without sending the Notice of Intent to Garnish. In both situations, they haven’t followed the pre-judgment garnishment requirements they’ve probably done a wrongful garnishment and violated the FDCPA.
Court judgement was vacated
Although pre-judgment garnishment is allowed in Minnesota, most garnishments happen after a court judgment has been entered. What if the court judgment is vacated, though? If the collection judgment is wiped out, then the collector’s power to conduct a garnishment is wiped out. If the collector garnishes the consumer after the judgment is vacated, it almost certainly will be a wrongful garnishment and a violation of the FDCPA.
Debt was settled
A similar type of wrongful garnishment happens when the consumer negotiates a settlement or payment plan and the collector garnishes them anyways. Many settlement agreements state that as long as the consumer follows through on the settlement, no further collection action will be taken. So as long as the person honors the settlement agreement, any further garnishment will probably violate the FDCPA. You have to be careful with this, though, because occasionally collectors won’t give up their right to garnish by agreeing to a settlement.
Wrongful garnishment of exempt funds
Another possible type of wrongful garnishment is when the collector knowingly garnishes exempt money in a bank account. Minnesota law protects–or exempts–certain forms of money from garnishment. Common exemptions include social security payments, disability payments, and many other forms of government assistance granted based on financial need. But just because a debt collector garnishes a bank account that contains exempt funds, doesn’t mean that they’ve done anything illegal. You will probably have to show that the collector knew that the bank account only contained exempt funds before they did the garnishment.
There may be other illegal garnishments that don’t fall into any of these categories. If you believe a collector has wrongfully garnished you, consider talking to an attorney who is knowledgeable in garnishments and the FDCPA.