SF 1606

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/21/2025 09:21 a.m.

A bill for an act
relating to commerce; modifying exemptions for garnishment and bankruptcy;
amending Minnesota Statutes 2024, sections 550.37, by adding a subdivision;
571.73, subdivision 4; 571.78; 571.911; 571.913.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 550.37, is amended by adding a subdivision
to read:

new text begin Subd. 29. new text end

new text begin Funds in a depository account. new text end

new text begin An amount of up to $1,000 in one or more
of a debtor's depository accounts held in a financial institution, regardless of the money's
source, is exempt from garnishment under sections 571.91 to 571.915. The exemption under
this section is in addition to any other exemptions for which the debtor is eligible under this
section, except that a debtor is prohibited from claiming the exemption under this subdivision
in conjunction with the exemption under subdivision 28. A financial institution that receives
a garnishment summons under section 571.72 must leave in the debtor accounts the lesser
of the total of the debtor accounts or $1,000. Except as provided in subdivisions 13 and 14,
the exemption under this subdivision does not apply to a contractual setoff or security interest
asserted by a financial institution.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025, and applies to causes
of action commenced on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2024, section 571.73, subdivision 4, is amended to read:

Subd. 4.

Property not attachable.

The following property is not subject to attachment
by garnishment:

(1) any indebtedness, money, or other property due to the debtor, unless at the time of
the garnishment summons the same is due absolutely or does not depend upon any
contingency;

(2) any judgment in favor of the debtor against the garnishee, if the garnishee or the
garnishee's property is liable on an execution levy upon the judgment;

(3) any debt owed by the garnishee to the debtor for which any negotiable instrument
has been issued or endorsed by the garnishee;

(4) any indebtedness, money, or other property due to the debtor where the debtor is a
bank, savings bank, trust company, credit union, savings association, or industrial loan and
thrift companies with deposit liabilities;

(5) any indebtedness, money, or other property due to the debtor with a cumulative value
of less than $10; deleted text begin and
deleted text end

(6) any disposable earnings, indebtedness, money, or property that is exempt under
Minnesota or federal law deleted text begin . deleted text end new text begin ; and
new text end

new text begin (7) except as provided under section 550.37, subdivision 29, money in one or more
depository accounts held in a financial institution totaling $1,000 or less.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025, and applies to causes
of action commenced on or after that date.
new text end

Sec. 3.

Minnesota Statutes 2024, section 571.78, is amended to read:

571.78 DUTIES OF A GARNISHEE.

A garnishee shall:

(1) complete the garnishment disclosure form and return it to the creditor, and serve a
copy on the debtor as required by section 571.75;

(2) retain nonexempt disposable earnings, indebtedness, money, or other property
belonging to the debtor up to 110 percent of the amount claimed in the garnishment summons,
as required by section 571.73, except as limited by deleted text begin section deleted text end new text begin sections 550.37, subdivision 29,
and new text end 571.922;

(3)(a) remit and deliver the garnished nonexempt disposable earnings, indebtedness,
money, or other property to the creditor upon levy, written authorization of the debtor, court
order, or operation of law. However, the garnishee shall not be compelled to deliver the
nonexempt earnings, indebtedness, money, or other property at any time or place other than
as stipulated in the contract between the garnishee and the debtor; or

(b) return the garnished nonexempt disposable earnings, indebtedness, money, or other
property to the debtor when the garnishment retention period expires as set forth in section
571.79.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025, and applies to causes
of action commenced on or after that date.
new text end

Sec. 4.

Minnesota Statutes 2024, section 571.911, is amended to read:

571.911 EXEMPTION NOTICE; DUTY OF FINANCIAL INSTITUTION.

new text begin (a) new text end If the garnishment summons is used to garnish funds of a debtor who is a natural
person and if the funds to be garnished are held on deposit at a financial institution, the
creditor shall serve with the garnishee summons a notice, instructions, and two copies of
an exemption notice. The notice, instructions, and exemption notices must be substantially
in the forms set forth in section 571.912. Failure of the creditor to send the exemption notice
renders the garnishment void, and the financial institution shall take no action.

new text begin (b) Except as provided under section 550.37, subdivision 29, new text end upon receipt of the
garnishment summons and exemption notices, the financial institution shall retain as much
of the amount under section 571.73 as the financial institution has on deposit owing to the
debtor, but not more than 110 percent of the creditor's claim.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025, and applies to causes
of action commenced on or after that date.
new text end

Sec. 5.

Minnesota Statutes 2024, section 571.913, is amended to read:

571.913 EFFECT OF EXEMPTION NOTICE.

new text begin Subject to section 550.37, subdivision 29, new text end within two business days after receipt of the
garnishment summons, the notice, instructions, and two copies of the exemption notice, the
financial institution shall serve upon the debtor the notice, instructions, and two copies of
the exemption notice. The financial institution shall serve these forms by first class mail to
the last known address of the debtor. If no claim of exemption is received by the financial
institution within 14 days after the exemption notices are mailed to the debtor, the funds
remain subject to the garnishment summons. If the debtor elects to claim an exemption, the
debtor shall complete the exemption notices, sign them under penalty of perjury, and deliver
one copy to the financial institution and one copy to the attorney for the creditor within 14
days of the date postmarked on the correspondence mailed to the debtor containing the
exemption notices. The debtor is also required to include copies of bank statements for the
prior 60 days with the exemption notice delivered to the attorney for the creditor. In the
event that there is no attorney for the creditor, then the notice and the bank statements must
be sent directly to the creditor. Failure of the debtor to deliver the executed exemption notice
or copies of the required bank statements for the prior 60 days does not constitute a waiver
of a claimed right to an exemption. Upon timely receipt of a claim of exemption, funds not
claimed to be exempt by the debtor remain subject to the garnishment summons. All money
claimed to be exempt shall be released to the debtor upon the expiration of six business
days after the date postmarked on the envelope containing the executed exemption notice
mailed to the financial institution, or the date of personal delivery of the executed exemption
notice to the financial institution, unless within that time the creditor interposes an objection
to the exemption.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025, and applies to causes
of action commenced on or after that date.
new text end