Minnesota Bankruptcy: Avoiding Creditors Does More Harm than Good

If you owe a debt you have failed to pay, despite a court order to do so, and you have money held at a financial institution, your creditor may garnish your bank account.

If you can pay your debt, you should. If you cannot pay your debt, do not hide from it. Consider bankruptcy. Talk to an attorney to determine whether bankruptcy will help you.

It may be the case that if you ignore the debt, your bank account will be garnished.

Or, you may be able to file bankruptcy and obtain several different forms of relief. One form of relief is the reorganization of debt and a reasonable payment plan in which to repay debt over a number of years, generally three to five. Some debt ultimately may be discharged.

This is a much better solution than a surprise garnishment of the bank account you use to pay for your necessities, such as food and clothing for you and your family.

The Alternative – Steps a Creditor Will Take to Garnish Bank Accounts

In order to understand the risk of garnishment, it is important to understand the steps a creditor takes and how simple they are. Once you understand that, you may begin to realize why bankruptcy may be a much better option for you.

Your bank may be served with a Garnishment Summons and Disclosure Form along with the following documents:

  • Important Notice,
  • Instructions, and
  • two copies of an Exemption Form.

Minnesota Statues set forth the required content for these forms. These statutes also contain examples of these forms which a creditor may simply copy. These statutes are online at:

The financial institution must retain as much of the amount owed as the financial institution has on deposit owing to the debtor, but not more than 110% of the creditor’s claim. Therefore, that necessary heating bill you were about to pay from this account may become frozen.

The creditor must mail to the debtor a copy of the Garnishment Summons and anything else that the creditor served on the debtor’s bank, within 5 days of service on the bank. The creditor must also serve the debtor with a Notice to Debtor in no less than 14-point font. A form example may be found online at https://www.revisor.mn.gov/statutes/?id=571.74.

The debtor has 14 days to notify the financial institution and the creditor of any claim for exempt property he or she wishes to assert. If the financial institution does not receive any such notification within 14 days, the debtor’s funds at the financial institution remain subject to garnishment.