In Minnesota, creditors can levy your bank account after they get a judgment against you. Levying a bank account means that the creditor takes the money in the account and applies it to your debt. They can do this to accounts at Credit Unions, and to accounts at traditional banks. Some banks, such as Wells Fargo, will even let creditors levy retirement accounts, like IRAs.
The best way to protect yourself against a bank levy is to make sure that you have no money in your bank accounts to be levied. Also make sure that your name or Social Security number is not associated with anyone else's bank account. Creditors can levy any account with your name on it, even if the money is not yours. Also make sure that you don't have direct deposit of your paycheck, and that you do not rely on your bank account for bill payment. You should ask your employer for a paper check, and then cash that check either at the bank where it is drawn, or at Walmart, where they charge about $3. Use cash and money orders to pay for everything.
The moment to empty your bank accounts is when a creditor gets a judgment against you. You may not get notice that your bank has been levied until your money is actually frozen. So the best way to protect yourself is to make sure that no money is in the account to be frozen.
What if a creditor does levy your account? Don't despair yet; you may still be able to protect your money. Certain types of money are protected (exempt) from levy in Minnesota. These include Social Security, IRAs and 401(ks), and 75% percentage of wages for 20 days after the wages are paid, and many others. After the creditor levies your bank, you must prove to your bank and to the creditor that the money is from one of these exempt sources. As soon as you find out about the levy, then ask your bank or Credit Union for a garnishment exemption form. Fill it out completely, and include all of the documentation required. This includes 60 days of bank statements, and other financial documents. Without these documents, you can't prove the money is exempt, and you may lose it. Many banks are willing to help you with these forms.
If you do not prove the exemption quickly, then the bank will turn your money over to the creditor, and it will be much more difficult to get the money back.
As you can see, a judgment gives creditors lots of power over you. A chapter 7 or a chapter 13 bankruptcy stops creditors from getting judgments, and voids any judgments that creditors already have. If someone is pursuing a judgment against you, then you should talk with an attorney. Good bankruptcy attorneys offer free consultations to explain how they can help you. Bankruptcy is often cheaper than other types of law because bankruptcy lawyers can specialize to bring down costs.
This article is written for informational purposes, does not create an attorney-client relationship, and is not legal advice. If you have a judgment against you, then you should speak with a lawyer about the best way to move forward.