Minnesota AG Looks to Reform Debt Collection Garnishment Laws

The Attorney General of Minnesota said that she is pushing to reform laws that allow creditors and debt collectors to garnish the wages of debtors without court approval. But industry advocates say the process keeps debt collection cases out of clogged courts, a contention backed up by reported turmoil in the courts of another state.

Minnesota AG Lori Swanson told The Star Tribune that her state is one of only five states that allow creditors to garnish debtor wages without court action. She wants to change the laws to give consumers their day in court.

"The issue is not allowing people to evade their bills. We need to have balance and fairness in the system,” Swanson told the paper.

At particular issue is the requirement in Minnesota that consumers respond to a garnishment summons in writing. Many consumers feel that a call to the collection agency constitutes the legally-required “answer” to the summons. But if the answer is not in writing, a collection agency can begin garnishing wages.

The Star Tribune notes that creditor and accounts receivable management advocates say that the court-free garnishment process saves time for both collectors and consumers and “relieves pressure on already-backlogged courts.”

This point was underscored in a Monday article in the Atlanta Journal-Constitution. The paper noted that in Atlanta’s four most populous counties – Cobb, DeKalb, Fulton and Gwinnett – courts are so burdened with garnishment requests that payouts to creditors are being delayed.

In Fulton county, garnishment filings have been increasing at a rate of about 15 percent for each of the past five years. Cobb county officials expect a 20 percent increase in the filings for 2008.

Mark Harper, Fulton state court clerk, told the AJC that the county has fallen so far behind on processing claims that payouts required by state law to be made within 16 days are now routinely handed out in eight weeks or more. Cases with complications can wait up to a year before they are resolved and payments begin, he said.