Debtor Presumed To Own All Funds In Accounts Held Jointly With Non-Debtor

23 Apr

On April 22, 2010, the Minnesota Supreme Court held that, where a creditor seeks to garnish funds in an account the debtor holds jointly with another, the joint account holders bear the burden of establishing their respective net contributions to the account.  The debtor is presumed to own all of the funds in the joint account; however, this presumption may be rebutted.  If the presumption is not rebutted, all of the funds within the account may be garnished.

In the underlying action, judgment was entered against Mona Savig for failure to make credit card payments to defendant First National Bank of Omaha. On the bank’s behalf, defendant Messerli & Kramer served a post-judgment garnishment summons on Ms. Savig and Midwest Bank, where she held both a joint checking and a joint savings account with her spouse. Midwest Bank withheld $2,000 and remitted the money to Messerli & Kramer.

Ms. Savig and her spouse filed a complaint in the U.S. District Court alleging a violation of the Fair Debt Collection Practices Act. The complaint asserted that $842 of the funds in the joint checking account belonged to Ms. Savig’s spouse and should not have been garnished. The federal court certified questions of law to the Minnesota Supreme Court.

After examining the relationship between Minnesota’s garnishment statutes and the Multiparty Accounts Act, the Court determined that “the approach most consistent with the overall process built into the garnishment statutes is to place the burden of proof on the account holders to prove net contributions.”

The full opinion is available here: Savig v. First National bank of Omaha, et al.

This blog entry was written by Ivory Ruud, an associate at Thomsen Nybeck.  Ivory is a transactional attorney practicing business law, real estate law, estate planning and probate, and townhome and condominium law.  Ivory works with individuals and businesses, offering advice and guidance for her clients’ long-term planning and risk management.


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