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Limitations on Consumer Collections Could Modify Garnishment Priority
Written by Scott Manthei on June 17th, 2020

On May 4, 2020, Governor Walz’s Emergency Executive Order 20-50 (“Order 20-50”)[1] suspended the right of judgment creditors in consumer collection matters to serve a garnishment summons on the employers of their judgment debtor.  Wage garnishments previously served and in effect prior to the issuance of Order 20-50 remained active but without the ability to be renewed. 
 
Employers are obligated to respond to wage garnishments on a first come, all or nothing, basis.  Each garnishment is effective for a 70-day period. If an employer receives multiple wage garnishments from various creditors regarding the same employee, the employer must hold and pay all funds to the first creditor who served a garnishment summons.  While the first garnishment is in place, other creditors receive nothing and, to their frustration, must continue to wait for payment if the first creditor renews their garnishment at the end of each 70-day period. This system of giving the first garnishing creditor priority leaves the debtor’s other creditors in limbo until the first creditor’s judgment is fully satisfied.   
 
On June 12, 2020, Governor Walz extended the protections of Order 20-50 through at least July 13, 2020.  Coincidentally, this is exactly 70 days from the date the protections started.  Unless the restrictions are lifted early, this ensures the expiration of all consumer wage garnishments.  Accordingly, creditors who were previously first in line to garnish a debtor’s wages could lose their place to another creditor.  Conversely, well-prepared creditors who were previously behind another creditor may now have an opportunity to reorder the line.  
 
The government’s response to COVID-19 is evolving quickly and unpredictably.  At this writing, the Minnesota Legislature is in special session considering, among other things, whether to extend the governor’s authority to issue emergency executive orders.  Depending on the outcome of the special session and on Governor Walz’s handling of the issue, the peacetime emergency may be extended beyond July 13. It is also possible that Governor Walz could announce rules relating to garnishment priority when the peacetime emergency ends.  Based on what we know today, however, creditors with active collection matters in competition with other creditors should connect with their legal counsel ASAP to be prepared to act quickly to protect their rights when the peacetime emergency expires. 
 
If you have questions or would like to discuss potential collection actions, please contact attorney Scott Manthei or another Bridge Law Group, Ltd. attorney to schedule a consultation.

 

[1] https://www.leg.state.mn.us/archive/execorders/20-50.pdf

Scott R. Manthei | Attorney at Law
Direct: (763) 201-1207
Cell: (651) 491-7334
Scott@BridgeAttorneys.com
www.BridgeAttorneys.com
2900 Washington Avenue North
Minneapolis, MN 55411-1630

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