Minnesota Supreme
Court: Creditor Not Entitled to Funds Belonging to Joint Owner
But Account Owners
Must Prove Who Contributed How Much
Not long after I posted "Collection Agency Tries to Take 71
year old Woman's Bank Accounts to Pay her Son's Debt,"
a gentleman came to see me who had just had a judgment
entered against him for a business debt, and the creditor
was taking all of the money out of two joint bank accounts
he held with his wife.
All of the money in both accounts had come from his wife's
earnings, because he had been disabled for some time.
He asked me whether the creditor could take his wife's money
to pay his business debt. I said "no."
We asked the district court to rule that the creditor could
not take the wife's money to pay the husband's debt.
We lost.
We appealed to the Minnesota Court of Appeals. We
lost again.
Still believing that Minnesota law should have prevented
what was happening, we asked the Minnesota Supreme Court to
take the case and rule on the question of whether a creditor
can take money from a joint account that was contributed by
someone other than the debtor. We
won.
Warning: this case does not mean that nobody can ever
lose money in a joint account because of a debt owed by a
joint owner.
A subsequent,
more recent case sheds more light on what a creditor
can and cannot do when dealing with a joint account where
one or more of the owners does not owe the debt being
collected:
- A
creditor can serve garnishment papers for a joint
account even when not all of the owners owe the debt;
- It's
up to the account owners to prove who contributed what
amounts to the account; and
- The
debtor is initially presumed to own all of the money in
the joint account.
Conclusion:
It's
still a bad idea to add your children as owners of your
accounts for convenience.
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