SF 1010

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to creditors remedies; requiring creditors to
arrange for hearings on exemption claims; amending
Minnesota Statutes 2004, sections 551.05, subdivisions
1a, 3, 4, by adding a subdivision; 571.912; 571.914,
subdivisions 1, 2, 4; repealing Minnesota Statutes
2004, sections 551.05, subdivisions 5, 6; 571.914,
subdivision 3.

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

Section 1.

Minnesota Statutes 2004, section 551.05,
subdivision 1a, is amended to read:

Subd. 1a.

Exemption notice.

If the writ of execution is
being used by the attorney to levy funds of a judgment debtor
who is a natural person and if the funds to be levied are held
on deposit at any financial institution, the attorney for the
judgment creditor shall serve with the writ of execution two
copies of an exemption notice. The notice must be substantially
in the form set forth below. Failure of the attorney for the
judgment creditor to send the exemption notice renders the
execution levy void, and the financial institution shall take no
action. However, if this subdivision is being used to execute
on funds that have previously been garnished in compliance with
section 571.71, the attorney for judgment creditor is not
required to serve an additional exemption notice. In that
event, the execution levy shall only be effective as to the
funds that were subject to the prior garnishment. Upon receipt
of the writ of execution and exemption notices, the financial
institution shall retain as much of the amount due under section
550.04 as the financial institution has on deposit owing to the
judgment debtor, but not more than 100 percent of the amount
remaining due on the judgment, or $10,000, whichever is less.

The notice informing a judgment debtor that an execution
levy has been used to attach funds of the judgment debtor to
satisfy a claim must be substantially in the following form:

STATE OF MINNESOTA DISTRICT COURT
County of ................ .........JUDICIAL DISTRICT
................(Judgment Creditor)
................(Judgment Debtor)
TO: Judgment Debtor EXEMPTION NOTICE

An order for attachment, garnishment summons, or levy of
execution (strike inapplicable language) has been served on
............. (bank or other financial institution where you
have an account).

Your account balance is $........

The amount being held is $........

However, all or a portion of the funds in your account will
normally be exempt from creditors' claims if they are in one of
the following categories:

(1) relief based on need. This includes the Minnesota
Family Investment Program (MFIP), Work First Program, Medical
Assistance (MA), General Assistance (GA), General Assistance
Medical Care (GAMC), Emergency General Assistance (EGA),
Minnesota Supplemental Aid (MSA), MSA Emergency Assistance
(MSA-EA), Supplemental Security Income (SSI), and Energy
Assistance;

(2) Social Security benefits (Old Age, Survivors, or
Disability Insurance);

(3) unemployment benefits, workers' compensation, or
veterans' benefits;

(4) an accident, disability, or retirement pension or
annuity;

(5) life insurance proceeds;

(6) the earnings of your minor child and any child support
paid to you; or

(7) money from a claim for damage or destruction of exempt
property (such as household goods, farm tools, business
equipment, a mobile home, or a car).

The following funds are also exempt:

(8) all earnings of a person in category (1);

(9) all earnings of a person who has received relief based
on need, or who has been an inmate of a correctional
institution, within the last six months;

(10) 75 percent of every judgment debtor's after tax
earnings; or

(11) all of a judgment debtor's after tax earnings below 40
times the federal minimum wage.

TIME LIMIT ON EXEMPTIONS AFTER DEPOSIT IN BANK:

Categories (10) and (11): 20 days

Categories (8) and (9): 60 days

All others: no time limit, as long as funds are traceable
to the exempt source. (In tracing funds, the first-in,
first-out method is used. This means money deposited first is
spent first.) The money being sought by the judgment creditor
is being held in your account to give you a chance to claim an
exemption.

TO CLAIM AN EXEMPTION:

Fill out, sign, and mail or deliver one copy of the
attached exemption claim form to the institution which sent you
this notice and mail or deliver one copy to the judgment
creditor's attorney. The address for the judgment creditor's
attorney is set forth below.Both copies must be mailed or
delivered on the same day.

NOTE: You may help resolve your claim faster if you send
to the creditor's attorney written proof or documents that
show why your money is exempt. If you have questions
regarding the documents to send as proof of an exemption,
call the creditor's attorney. If you do not send written
proof and the creditor's attorney has questions about your
exemption claim, the creditor's attorney may object to your
claim which may result in a further delay in releasing your
exempt funds.

If they do not get the exemption claim back from you within
14 days of the date they mailed or gave it to you, they will be
free to turn the money over to the attorney for the judgment
creditor. If you are going to claim an exemption, do so as soon
as possible, because your money may be held until it is decided.

IF YOU CLAIM AN EXEMPTION:

(1) nonexempt money can be turned over to the judgment
creditor or sheriff;

(2) the financial institution will keep holding the money
claimed to be exempt; and

(3) seven days after receiving your exemption claim, the
financial institution will release the money to you unless
before then it receives an objection to your exemption claim.

IF THE JUDGMENT CREDITOR OBJECTS TO YOUR EXEMPTION CLAIM:

The institution will hold the money until a court decides
if your exemption claim is valid deleted text begin , BUT ONLY IF the institution
gets a copy of your court motion papers asserting the exemption
WITHIN TEN DAYS after the objection is personally served on you,
or within 13 days from the date the objection is mailed to you deleted text end .
You may wish to consult an attorney at once if the judgment
creditor objects to your exemption claim.

MOTION TO DETERMINE EXEMPTION:

At any time after your funds have been held, you may ask
for a court decision on the validity of your exemption claim by
filing a request for hearing which may be obtained at the office
of the court administrator of the above court.

PENALTIES:

If you claim an exemption in bad faith, or if the judgment
creditor wrongly objects to an exemption in bad faith, the court
may order the person who acted in bad faith to pay costs, actual
damages, attorney fees, and an additional amount of up to $100.

.............................
.............................
.............................
.............................
Name and address of (Attorney
for) Judgment Creditor

EXEMPTION:

(a) Amount of exemption claim.

/ / I claim ALL the funds being held are exempt.

/ / I claim SOME of the funds being held are exempt.

The exempt amount is $............

(b) Basis for exemption.

Of the 11 categories listed above, I am in category number
............ (If more than one category applies, you may fill
in as many as apply.) The source of the exempt funds is the
following:

.............................................................
.............................................................
.............................................................

(If the source is a type of relief based on need, list the
case number and county:

case number: ...............;

county: ....................)

I hereby authorize any agency that has distributed relief
to me or any correctional institution in which I was an inmate
to disclose to the above named judgment creditor's attorney only
whether or not I am or have been a recipient of relief based on
need or an inmate of a correctional institute within the last
six months.

I have mailed or delivered a copy of the exemption notice
to the judgment creditor's attorney at the address indicated
above.

.............................
DEBTOR

DATED: ............. .............................
.............................
.............................
DEBTOR ADDRESS
.............................
DEBTOR TELEPHONE NUMBER

Sec. 2.

Minnesota Statutes 2004, section 551.05,
subdivision 3, is amended to read:

Subd. 3.

Objection to exemption claim.

deleted text begin Objection shall
be interposed by mailing or delivering one copy of the written
objection to the financial institution and one copy of the
written objection to the judgment debtor along with a copy of
the judgment debtor's claimed exemption form. Both copies of an
objection to an exemption claim shall be mailed or delivered on
the same date. The financial institution may rely on the date
of mailing or delivery of a notice to it in computing any time
periods in this section. The written objection must be
substantially in the form specified in subdivision 5. deleted text end new text begin If a
judgment creditor objects to a judgment debtor's exemption
claim, the judgment creditor shall obtain from the court
administrator or a designated motion calendar deputy a date and
time for an evidentiary hearing on its objection. The judgment
creditor shall serve on the judgment debtor and financial
institution, personally or by first class mail, a notice of
hearing on creditor's objection to debtor's exemption claim in
the form specified in subdivision 3a, on the same day that it
obtains the hearing date. The hearing date obtained by the
judgment creditor must be no earlier than five business days and
no later than ten business days from the date the judgment
creditor requests and obtains the hearing date. An order
stating whether the judgment debtor's funds are exempt must be
issued by the court within three days of the date of the hearing.
new text end

Sec. 3.

Minnesota Statutes 2004, section 551.05, is
amended by adding a subdivision to read:

new text begin Subd. 3a. new text end

new text begin Notice of hearing on judgment creditor's
objection to judgment debtor's exemption claim. new text end

new text begin The judgment
creditor's notice of hearing on its objection to the judgment
debtor's exemption claim must be in substantially the following
form:
new text end

new text begin STATE OF MINNESOTA new text end new text begin DISTRICT COURT
County of ............... new text end new text begin ..........JUDICIAL DISTRICT
.................(Judgment Creditor) new text end new text begin NOTICE OF
.................(Judgment Debtor) new text end new text begin HEARING ON
.................(Garnishee) (Third Party) new text end new text begin JUDGMENT CREDITOR'S
OBJECTION TO
JUDGMENT DEBTOR'S
EXEMPTION CLAIM
new text end

new text begin The judgment creditor objects to your claim for exemption
from garnishment, levy of execution, order for attachment
(strike inapplicable language) for the following reason(s):
new text end

new text begin .................................
new text end

new text begin .................................
new text end

new text begin .................................
new text end

new text begin A hearing will be held in this case on (Date) at (Time) at
(Place) to resolve whether your funds at (Financial Institution)
are exempt. You have claimed that such funds are exempt because
.................................................................
.................................................................
.................................................................
..............................................................
new text end

new text begin At the hearing, you will have to prove that your funds are
exempt. If you do not attend the hearing, the judge may order
that your funds be released to the judgment creditor. The judge
will issue an order within three days of the hearing regarding
whether your funds are exempt.
new text end

new text begin Because the judgment creditor objected to your exemption
claim, your financial institution will retain the funds you
claim to be exempt until it receives: (1) a written release
from either the judgment creditor or you; or (2) an order from
the court regarding whether your funds are exempt.
new text end

new text begin Dated: .......
new text end

new text begin ........................................
Judgment Creditor or Creditor's Attorney
........................................
.................................Address
new text end

new text begin (Note to both parties: Bring with you to the hearing all
documents and materials relevant to the exemption claim and
objection. Failure to do so could delay the court's decision.)
new text end

Sec. 4.

Minnesota Statutes 2004, section 551.05,
subdivision 4, is amended to read:

Subd. 4.

Duties of financial institution if objection is
made to exemption claim.

Upon receipt of a written objection
from the judgment creditor within the specified seven-day
period, the financial institution shall retain the funds claimed
to be exempt. deleted text begin Unless the financial institution receives a
request for hearing and notice of hearing from the judgment
debtor asserting exemption rights within ten days after receipt
of a written objection to the exemption, deleted text end The funds remain
subject to the execution levy as if no claim of exemption had
been made deleted text begin and shall be remitted to the judgment creditor's
attorney within seven days. If a request for hearing and notice
of hearing to determine the validity of a claim of exemption is
received by the financial institution within the period
provided, it shall retain the funds claimed to be exempt until
otherwise ordered by the court deleted text end . new text begin The financial institution shall
retain the funds claimed to be exempt until it receives: (1) a
written release from either the judgment creditor or judgment
debtor; or (2) an order stating whether the funds are exempt.
new text end

Sec. 5.

Minnesota Statutes 2004, section 571.912, is
amended to read:

571.912 FORM OF EXEMPTION NOTICE.

The notice informing a debtor that an order for attachment,
garnishment summons, or levy by execution has been used to
attach funds of the debtor to satisfy a claim must be
substantially in the following form:

STATE OF MINNESOTA DISTRICT COURT
COUNTY OF ................ ........JUDICIAL DISTRICT
........................(Creditor)
........................(Debtor)
TO: Debtor EXEMPTION NOTICE

An order for attachment, garnishment summons, or levy of
execution (strike inapplicable language) has been served on
............ (bank or other financial institution)
............... where you have an account.

Your account balance is $.............

The amount being held is $............

However, all or a portion of the funds in your account will
normally be exempt from creditors' claims if they are in one of
the following categories:

(1) relief based on need. This includes the Minnesota
Family Investment Program (MFIP), Emergency Assistance (EA),
Work First Program, Medical Assistance (MA), General Assistance
(GA), General Assistance Medical Care (GAMC), Emergency General
Assistance (EGA), Minnesota Supplemental Aid (MSA), MSA
Emergency Assistance (MSA-EA), Supplemental Security Income
(SSI), and Energy Assistance;

(2) Social Security benefits (Old Age, Survivors, or
Disability Insurance);

(3) unemployment benefits, workers' compensation, or
veterans' benefits;

(4) an accident, disability, or retirement pension or
annuity;

(5) life insurance proceeds;

(6) the earnings of your minor child and any child support
paid to you; or

(7) money from a claim for damage or destruction of exempt
property (such as household goods, farm tools, business
equipment, a mobile home, or a car).

The following funds are also exempt:

(8) all earnings of a person in category (1);

(9) all earnings of a person who has received relief based
on need, or who has been an inmate of a correctional
institution, within the last six months;

(10) 75 percent of every debtor's after tax earnings; and

(11) all of a debtor's after tax earnings below 40 times
the federal minimum wage.

TIME LIMIT ON EXEMPTIONS AFTER DEPOSIT IN BANK:

Categories (10) and (11): 20 days

Categories (8) and (9): 60 days

All others: no time limit, as long as funds are traceable
to the exempt source. (In tracing funds, the first-in,
first-out method is used. This means money deposited first is
spent first.) The money being sought by the creditor is being
held in your account to give you a chance to claim an exemption.

TO CLAIM AN EXEMPTION:

Fill out, sign, and mail or deliver one copy of the
attached exemption claim form to the institution which sent you
this notice and mail or deliver one copy to the creditor's
attorney. In the event that there is no attorney for the
creditor, then such notice shall be sent directly to the
creditor. The address for the creditor's attorney or the
creditor is set forth below.Both copies must be mailed or
delivered on the same day.

NOTE: You may help resolve your claim faster if you send
to the creditor's attorney written proof or documents that
show why your money is exempt. If you have questions
regarding the documents to send as proof of an exemption,
call the creditor's attorney. If you do not send written
proof and the creditor's attorney has questions about your
exemption claim, the creditor's attorney may object to your
claim which may result in a further delay in releasing your
exempt funds.

If they do not get the exemption claim back from you within
14 days of the date they mailed or gave it to you, they will be
free to turn the money over to the sheriff or the creditor. If
you are going to claim an exemption, do so as soon as possible,
because your money may be held until it is decided.

IF YOU CLAIM AN EXEMPTION:

(1) nonexempt money can be turned over to the creditor or
sheriff;

(2) the financial institution will keep holding the money
claimed to be exempt; and

(3) seven days after receiving your exemption claim, the
financial institution will release the money to you unless
before then it receives an objection to your exemption claim.

IF THE CREDITOR OBJECTS TO YOUR EXEMPTION CLAIM:

The institution will hold the money until a court decides
if your exemption claim is valid deleted text begin , BUT ONLY IF the institution
gets a copy of your court motion papers asserting the exemption
WITHIN TEN DAYS after the objection is personally served on you,
or within 13 days from the date the objection is mailed to you deleted text end .
You may wish to consult an attorney at once if the creditor
objects to your exemption claim.

MOTION TO DETERMINE EXEMPTION:

At any time after your funds have been held, you may ask
for a court decision on the validity of your exemption claim by
filing a request for hearing which may be obtained at the office
of the court administrator of the above court.

PENALTIES:

If you claim an exemption in bad faith, or if the creditor
wrongly objects to an exemption in bad faith, the court may
order the person who acted in bad faith to pay costs, actual
damages, attorney fees, and an additional amount of up to $100.

.............................
.............................
.............................
.............................
Name and address of (Attorney
for) Judgment Creditor

EXEMPTION:

(If you claim an exemption complete the following):

(a) Amount of exemption claim.

/ / I claim ALL the funds being held are exempt.

/ / I claim SOME of the funds being held are exempt.

The exempt amount is $............

(b) Basis for exemption.

Of the eleven categories listed above, I am in category
number ............ (If more than one category applies, you may
fill in as many as apply.) The source of the exempt funds is
the following:

.............................................................
.............................................................
.............................................................

(If the source is a type of relief based on need, list the
case number and county:

case number: ...............;

county: ....................)

I hereby authorize any agency that has distributed relief
to me or any correctional institution in which I was an inmate
to disclose to the above named creditor or its attorney only
whether or not I am or have been a recipient of relief based on
need or an inmate of a correctional institute within the last
six months.

I have mailed or delivered a copy of the exemption notice
to the creditor's attorney at the address indicated above.

DATED: ............. .............................
DEBTOR
.............................
DEBTOR ADDRESS
.............................
DEBTOR TELEPHONE NUMBER

Sec. 6.

Minnesota Statutes 2004, section 571.914,
subdivision 1, is amended to read:

Subdivision 1.

Objections.

deleted text begin An objection shall be
interposed by mailing or delivering one copy of the written
objection to the financial institution and one copy of the
written objection to the debtor. A Request for Hearing and
Notice of Hearing form must accompany each copy of the written
objection.
deleted text end

deleted text begin Both copies of an objection to an exemption claim must be
mailed or delivered on the same date. The financial institution
may rely on the date of mailing or delivery of a notice to it in
computing any time periods in this section.
deleted text end

deleted text begin The written objection, and Request for Hearing and Notice
of Hearing, must be substantially in the forms set out in
subdivisions 2 and 3.
deleted text end

deleted text begin The court shall provide clerical assistance to help with
the writing and filing of a Request for Hearing by any person
not represented by counsel. The court administrator may charge
a fee of $1 for the filing of a Request for Hearing. Upon the
filing of a Request for Hearing, the court administrator shall
schedule the matter for hearing no later than five business days
from the date of filing. The court administrator shall
immediately send a completed copy of the request, including the
hearing date, time, and place to the adverse party and to the
financial institution by first class mail.
deleted text end

deleted text begin An order stating whether the debtor's funds are exempt
shall be issued by the court within three days of the date of
the hearing.
deleted text end

new text begin If a creditor objects to a debtor's exemption claim, the
creditor shall obtain from the court administrator or a
designated motion calendar deputy a date and time for an
evidentiary hearing on its objection. The creditor shall serve
on the debtor and garnishee, personally or by first class mail,
a notice of hearing on creditor's objection to debtor's
exemption claim in the form specified in subdivision 2, on the
same day that it obtains the hearing date. The hearing date
obtained by the creditor must be no earlier than five business
days and no later than ten business days from the date the
creditor requests and obtains the hearing date. An order
stating whether the debtor's funds are exempt must be issued by
the court within three days of the date of the hearing.
new text end

Sec. 7.

Minnesota Statutes 2004, section 571.914,
subdivision 2, is amended to read:

Subd. 2.

Notice of new text begin hearing on creditor's new text end objection new text begin to
debtor's exemption claim new text end .

deleted text begin (a) The written objection to the
debtor must be in substantially the following form:
deleted text end

deleted text begin STATE OF MINNESOTA DISTRICT COURT
COUNTY OF .................... ..........JUDICIAL DISTRICT
....................(Creditor)
....................(Debtor) CREDITOR'S OBJECTION
....................(Garnishee) TO EXEMPTION CLAIM
deleted text end

deleted text begin The creditor objects to your claim for exemption from
garnishment, levy of execution, order for attachment (strike
inapplicable language) for the following reason(s):
.................................................................
.................................................................
.................................................................
deleted text end

deleted text begin Because of this objection, your financial institution will
retain the funds you claimed to be exempt for an additional ten
days. If you wish to request a hearing on your exemption claim,
you need to do so within ten days from the date the objection
was personally served on you, or within 13 days of the date the
objection was mailed to you. You may request a hearing by
completing the attached form and filing it with the court
administrator.
deleted text end

deleted text begin 1. The court shall provide clerical assistance to help
with the writing and filing of a Request for Hearing by any
person not represented by counsel. The court administrator may
charge a fee of $1 for the filing of a Request for Hearing.
deleted text end

deleted text begin 2. Upon the filing of a Request for Hearing, the clerk
shall schedule the matter for a hearing no later than five
business days from the date of filing. The court administrator
shall forthwith send a completed copy of the request, including
the hearing date, time, and place to the adverse party and to
the financial institution by first class mail.
deleted text end

deleted text begin 3. If it is possible that the financial institution might
not receive the request mailed from the court administrator
within ten days, then you may want to personally deliver a copy
of the request to the financial institution after you have filed
your request with the court.
deleted text end

deleted text begin 4. An order stating whether your funds are exempt shall be
issued by the court within three days of the date of the hearing.
deleted text end

deleted text begin If you do not file a Request for Hearing within ten days of
the date the objection was personally served on you, or within
13 days from the date the objection was mailed to you, your
financial institution may turn your funds over to your creditor.
deleted text end

deleted text begin If you file a Request for Hearing and your financial
institution receives it within ten days of the date it received
this objection, your financial institution will retain your
funds claimed to be exempt until otherwise ordered by the court,
or until the garnishment lapses pursuant to Minnesota Statutes,
section 571.79.
deleted text end

deleted text begin ..................................
(CREDITOR OR CREDITOR'S ATTORNEY.)
deleted text end

new text begin The creditor's notice of hearing on its objection to the
debtor's exemption claim must be in substantially the following
form:
new text end

new text begin STATE OF MINNESOTA new text end new text begin DISTRICT COURT
COUNTY OF .................... new text end new text begin ..........JUDICIAL DISTRICT
....................(Creditor) new text end new text begin NOTICE OF HEARING ON
....................(Debtor) new text end new text begin CREDITOR'S OBJECTION
....................(Garnishee)(Third Party) new text end new text begin TO DEBTOR'S
EXEMPTION CLAIM
new text end

new text begin The creditor objects to your claim for exemption from
garnishment, levy of execution, order for attachment (strike
inapplicable language) for the following reason(s):
.................................................................
.................................................................
.................................................................
new text end

new text begin A hearing will be held in this case on (Date) at (Time) at
(Place) to resolve whether your funds at (Financial Institution)
are exempt. You have claimed that such funds are exempt
because..........................................................
.................................................................
.................................................................
new text end

new text begin At the hearing, you will have to prove that your funds are
exempt. If you do not attend the hearing, the judge may order
that your funds be released to the judgment creditor. The judge
will issue an order within three days of the hearing regarding
whether your funds are exempt.
new text end

new text begin Because the creditor objected to your exemption claim, your
financial institution will retain the funds you claim to be
exempt until it receives: (1) a written release from either the
creditor or you; or (2) an order from the court regarding
whether your funds are exempt.
new text end

new text begin Dated:................
new text end

new text begin ........................................
Judgment Creditor or Creditor's Attorney
........................................
.................................Address
new text end

new text begin (Note to both parties: Bring with you to the hearing all
documents and materials relevant to the exemption claim and
objection. Failure to do so could delay the court's decision.)
new text end

Sec. 8.

Minnesota Statutes 2004, section 571.914,
subdivision 4, is amended to read:

Subd. 4.

Duties of financial institution if objection is
made to exemption claim.

Upon receipt of a written objection
from the creditor within the specified seven-day period, the
financial institution shall retain the funds claimed to be
exempt. deleted text begin Unless the financial institution receives a request for
hearing from the debtor asserting exemption rights within ten
days after receipt of the written objection to the exemption,
deleted text end The funds remain subject to the garnishment summons as if no
claim of exemption had been made. deleted text begin If a notice of motion and
motion to determine the validity of a claim of exemption is
received by the financial institution within the period
provided, the financial institution shall retain the funds
claimed to be exempt until otherwise ordered by the court, or
until the garnishment lapses pursuant to section 571.79. deleted text end new text begin The
financial institution shall retain the funds claimed to be
exempt until it receives: (1) a written release from either the
creditor or debtor; or (2) an order stating whether the funds
are exempt.
new text end

Sec. 9. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 551.05, subdivisions 5
and 6, and 571.914, subdivision 3, are repealed.
new text end