Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 235--S.F.No. 769
           An act relating to property exempt from attachment, 
          garnishment, or levy of execution; requiring notice to 
          judgment debtors prior to delivery of funds owed to 
          the judgment debtor by any third party to satisfy a 
          creditor's claim; providing for an exemption notice 
          within certain time limits; providing penalties for 
          failure to send the exemption notice; clarification of 
          certain exempt funds; providing for an increase in the 
          amount of household goods exempt; amending Minnesota 
          Statutes 1982, sections 548.15; 550.041; 550.14; 
          550.141, by adding a subdivision; 550.37, subdivisions 
          4, 13, 14, 19, 20, and 24, and by adding a 
          subdivision; 571.41, subdivisions 5 and 6, and by 
          adding subdivisions; 571.42; and 571.67. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 548.15, is 
amended to read:  
    548.15 [DISCHARGE OF RECORD.] 
    Upon the satisfaction of a judgment, whether wholly or in 
part, or as to all or any of several defendants, the clerk shall 
enter the satisfaction in the judgment roll, and note the same 
it, with the its date thereof, on the docket.  If the docketing 
is upon a transcript from another county, the entry on the 
docket shall be sufficient.  A judgment shall be deemed 
satisfied when there is filed with the clerk: 
    (1) An execution satisfied, to the extent stated in the 
sheriff's return thereon on it; 
    (2) A certificate of satisfaction signed and acknowledged 
by the judgment creditor; 
    (3) A like certificate signed and acknowledged by the 
attorney of the creditor, unless his authority as attorney has 
previously been revoked and an entry of the revocation made upon 
the register; but the authority of an attorney to satisfy a 
judgment shall cease ceases at the end of six years from its 
entry; 
    (4) An order of the court, made on motion, requiring the 
execution of a certificate of satisfaction, or directing 
satisfaction to be entered without it; 
    (5) Where a judgment is docketed on transcript, a copy of 
either of the foregoing documents, certified by the clerk of the 
court in which the judgment was originally entered and in which 
the originals were filed. 
    A satisfaction made in the name of a partnership shall be 
is valid if executed by a member thereof of it while the 
partnership continues.  The judgment creditor, or his attorney 
while his authority continues, may also satisfy a judgment of 
record by a brief entry on the register, signed by him and dated 
and witnessed by the clerk, who shall note the satisfaction on 
the margin of the docket.  When a judgment is satisfied 
otherwise than by return of execution, the judgment creditor or 
his attorney shall give a certificate thereof of it within ten 
days after the satisfaction. 
    Sec. 2.  Minnesota Statutes 1982, section 550.041, is 
amended to read:  
    550.041 [SUMMARY EXECUTION OF SMALL JUDGMENT DEBTS.] 
    Subdivision 1.  [COVERAGE.] When a judgment creditor 
proposes to make execution on a judgment debt of not more than 
$2,500 from money owed to the judgment debtor by a third party, 
the execution may be made by the attorney for the judgment 
creditor or sheriff, or their agents, through a registered or 
certified letter or by personal service to the third party 
containing a copy of the execution.  Upon receipt, the third 
party shall remit as much of the amount due under section 550.04 
, but not more than $5,000, as his own debt equals to the 
sheriff or attorney who shall proceed in all other respects like 
the sheriff making a similar execution.  No more than $5,000 may 
be recovered in an execution pursuant to this section.  
    Subd. 2.  [EXEMPTION NOTICE.] If this section is used to 
enforce a judgment against a debtor who is a natural person by 
executing on funds of the judgment debtor held on deposit at any 
financial institution, the judgment creditor shall serve two 
copies of an exemption notice with the copy of the execution. 
The notice shall be substantially in the form set out in section 
17.  Failure of the judgment creditor to send the exemption 
notice renders the execution void, and the financial institution 
shall take no action.  However, if this subdivision is being 
used to execute on funds which have previously been garnished in 
compliance with section 571.41, the judgment creditor is not 
required to serve an additional exemption notice.  In that 
event, the execution shall only be effective as to the funds 
which were subject to the prior garnishment.  
    Subd. 3.  [DUTY OF FINANCIAL INSTITUTION; EXEMPTION; 
OBJECTION.] Upon receipt of the execution and exemption notices, 
the financial institution shall attach and bind as much of the 
amount due under section 550.04 as his own debt equals.  Within 
two business days after receipt of the judgment creditor's 
letter, the financial institution shall serve upon the judgment 
debtor two copies of the exemption notice.  The exemption notice 
shall be served by first class mail to the last known address of 
the judgment debtor.  If no claim of exemption is received by 
the financial institution prior to the expiration of 14 days 
after the exemption notices are mailed to the judgment debtor, 
the financial institution shall remit as much of the amount due 
under section 550.04 as its own debt equals to the sheriff or 
attorney who shall proceed in all other respects like the 
sheriff making a similar execution.  If the judgment debtor 
elects to claim an exemption, he shall complete the exemption 
notice, affix his signature under penalty of perjury, and 
deliver one copy to the financial institution and one copy to 
the judgment creditor within 14 days of the date postmarked on 
the correspondence mailed to the judgment debtor containing the 
exemption notices.  Failure of the judgment debtor to serve the 
executed exemption notice does not constitute a waiver of any 
right he may have to an exemption.  Upon timely receipt of a 
claim of exemption, the financial institution shall remit as 
much of the amount due under section 550.04 as his own debt 
equals to the sheriff or attorney from funds not claimed to be 
exempt by the judgment debtor.  All money claimed to be exempt 
shall be released to the judgment debtor upon the expiration of 
seven days after the date postmarked on the correspondence 
containing the executed exemption notice mailed to the judgment 
creditor or the date of personal delivery of the executed 
exemption notice to the judgment creditor, unless within that 
time a timely objection to the exemption is interposed by the 
judgment creditor.  Objection is made by mailing or delivering 
one copy of a written objection to the claim of exemption to the 
financial institution and one copy of the objection to the 
judgment debtor.  Upon timely receipt of a written objection 
from the judgment creditor, the financial institution shall 
retain the funds claimed to be exempt.  Unless the third party 
receives a notice of motion and motion from the judgment debtor 
asserting exemption rights within ten days after receipt of the 
objection, the financial institution shall remit as much of the 
amount due under section 550.04 as his own debt equals to the 
sheriff or attorney representing the judgment creditor.  Either 
the judgment creditor or the judgment debtor may bring a motion 
to determine the validity of an exemption claim by following the 
procedure set out in section 17.  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, it shall retain the funds claimed to be exempt until 
otherwise ordered by a court.  However, at any time during the 
procedure specified in this subdivision, the judgment debtor or 
the judgment creditor may, by a writing dated subsequent to the 
service of the execution, direct the financial institution to 
release the funds in question to the other party.  Upon receipt 
of a release, the financial institution shall release the funds 
as directed.  
    Subd. 4.  [SUBSEQUENT PROCEEDINGS; BAD FAITH CLAIMS.] If in 
subsequent proceedings brought by the judgment debtor or the 
judgment creditor, the claim of exemption is not upheld, and the 
court finds that it was asserted in bad faith, the judgment 
creditor shall be awarded actual damages, costs, and reasonable 
attorney fees resulting from the additional proceedings, and an 
amount not to exceed $100.  If the claim of exemption is upheld, 
and the court finds that the judgment creditor disregarded the 
claim of exemption in bad faith, the judgment debtor shall be 
awarded costs, reasonable attorney fees, actual damages, and an 
amount not to exceed $100.  The underlying judgment shall be 
modified to reflect assessment of damages, costs, and attorney 
fees.  However, if the party in whose favor a penalty assessment 
is made is not actually indebted to his attorney for fees, the 
attorney's fee award shall be made directly to the attorney and 
an appropriate judgment in favor of the attorney shall be 
entered.  Upon motion of any party in interest, on notice, the 
court shall determine the validity of any claim of exemption and 
may make any order necessary to protect the rights of those 
interested.  No financial institution shall be liable for 
damages for complying with this section.  Both copies of an 
exemption claim or 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.  
    Subd. 5.  [COSTS; SATISFACTION.] The attorney shall be 
allowed no costs from any party other than the judgment creditor 
for execution in accordance with this section.  The attorney or 
judgment creditor making such the execution shall endorse 
thereon on it partial satisfaction by amount or the total 
satisfaction and return the original execution to the clerk of 
that court, within ten days after the satisfaction, for filing 
without charge. 
    Sec. 3.  Minnesota Statutes 1982, section 550.14, is 
amended to read:  
    550.14 [LEVY ON OTHER PERSONAL PROPERTY.] 
    Subdivision 1.  [PROPERTY COVERED.] Other personal property 
shall be levied on by leaving a certified copy of the execution, 
and a notice specifying the property levied on, with the person 
holding the same it; or, if a debt, with the debtor; or, if 
stock or an interest in stock of a corporation, with the 
president, secretary, treasurer, cashier, or managing agent 
thereof of it.  
    Subd. 2.  [EXEMPTION NOTICE.] If this section is used to 
enforce a judgment against a judgment debtor who is a natural 
person by executing on funds of the judgment debtor held on 
deposit at any financial institution, the judgment creditor 
shall cause to be served with the execution two copies of an 
exemption notice.  The notice shall be substantially in the form 
set out in section 17.  If the judgment creditor fails to supply 
the exemption notice to the sheriff, the sheriff shall take no 
action.  Failure of the sheriff to serve the exemption notice 
shall render the execution void, and the financial institution 
shall take no action.  However, if this subdivision is being 
used to execute on funds which have previously been garnished in 
compliance with section 571.41, the judgment creditor shall not 
be required to serve an additional exemption notice.  In that 
event, the execution shall only be effective as to the funds 
which were subject to the prior garnishment.  
    Subd. 3.  [DUTY OF FINANCIAL INSTITUTION; EXEMPTION; 
OBJECTION.] Upon receipt of the execution and exemption notices, 
the financial institution shall attach and bind as much of the 
amount due under section 550.04 as his own debt equals.  Within 
two business days after receipt of the judgment creditor's 
execution of the execution and exemption notices, the financial 
institution shall serve upon the judgment debtor two copies of 
the exemption notice.  The exemption notice shall be served by 
first class mail to the last known address of the judgment 
debtor.  If no claim of exemption is received by the financial 
institution within 14 days after the exemption notices are 
mailed to the judgment debtor, the financial institution shall 
remit as much of the amount due under section 550.04 as its own 
debt equals to the sheriff.  If the judgment debtor elects to 
claim an exemption, he shall complete the exemption notice, 
affix his signature under penalty of perjury, and deliver one 
copy to the financial institution and one copy to the judgment 
creditor within 14 days of the date postmarked on the 
correspondence mailed to the judgment debtor containing the 
exemption notices.  Failure of the judgment debtor to serve the 
executed exemption notice does not constitute a waiver of any 
right he may have to an exemption.  Upon timely receipt of a 
claim of exemption, the financial institution shall remit as 
much of the amount due under section 550.04 as his own debt 
equals to the sheriff from funds not claimed to be exempt by the 
judgment debtor.  All money claimed to be exempt shall be 
released to the judgment debtor upon the expiration of seven 
days after the date postmarked on the correspondence containing 
the executed exemption notice mailed to the judgment creditor, 
or the date of personal delivery of the executed exemption 
notice to the judgment creditor, unless within that time a 
written objection to the claim of exemption is interposed by the 
judgment creditor.  Objection is made by mailing or delivering 
one copy of the objection to the financial institution, and one 
copy to the judgment debtor.  Upon timely receipt of a written 
objection from the judgment creditor, the financial institution 
shall retain the funds claimed to be exempt.  Unless the 
financial institution receives a notice of motion and motion 
from the judgment debtor asserting an exemption within ten days 
after receipt of the objection, the financial institution shall 
remit as much of the amount due under section 550.04 as its own 
debt equals to the sheriff.  Either the judgment creditor or the 
judgment debtor may bring a motion to determine the validity of 
an exemption claim by following the procedure set out in section 
17.  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.  However, at any time during the procedure specified 
in this subdivision, the judgment debtor or the judgment 
creditor may, by a writing dated subsequent to the service of 
the execution, direct the financial institution to release the 
funds in question to the other party.  Upon receipt of a 
release, the financial institution shall release the funds as 
directed.  
    Subd. 4.  [SUBSEQUENT PROCEEDINGS.] If in subsequent 
proceedings brought by the judgment debtor or the judgment 
creditor, the claim of exemption is not upheld, and the court 
finds that it was asserted in bad faith, the judgment creditor 
shall be awarded actual damages, costs, and reasonable attorney 
fees resulting from the additional proceedings and an amount not 
to exceed $100.  If the claim of exemption is upheld, and the 
court finds that the judgment creditor disregarded the claim of 
exemption in bad faith, the judgment debtor shall be awarded 
costs, reasonable attorney fees, actual damages, and an amount 
not to exceed $100.  The underlying judgment shall be modified 
to reflect assessment of damages, costs, and attorney fees. 
However, if the party in whose favor a penalty assessment is 
made is not actually indebted to his attorney for fees, the 
attorney's fee award shall be made directly to the attorney and 
an appropriate judgment in favor of the attorney shall be 
entered.  Upon motion of any party in interest, on notice, the 
court shall determine the validity of any claim of exemption and 
may make any order necessary to protect the rights of those 
interested.  No financial institution shall be liable for 
damages for complying with this section.  Both copies of an 
exemption claim or 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.  
    Sec. 4.  Minnesota Statutes 1982, section 550.141, is 
amended by adding a subdivision to read:  
    Subd. 3.  [SERVICE OF EXECUTION.] If the execution has not 
been served within one year after service of the notice, the 
judgment creditor shall serve another notice upon the judgment 
debtor prior to serving the execution on his employer.  If more 
than one year has passed since the most recent execution, the 
judgment creditor shall serve another notice upon the judgment 
debtor no less than ten days prior to service of a subsequent 
execution on his employer.  
    Sec. 5.  Minnesota Statutes 1982, section 550.37, 
subdivision 4, is amended to read:  
    Subd. 4.  [PERSONAL GOODS.] (a) All wearing apparel, one 
watch, utensils, and foodstuffs of the debtor and his family; 
and (b) household furniture, household appliances, phonographs, 
radio and television receivers of the debtor and his family, not 
exceeding $3,000 $4,500 in value.  The exemption provided by 
this subdivision may not be waived except with regard to 
purchase money security interests.  Except for a pawnbroker's 
possessory lien, a nonpurchase money security interest in the 
property exempt under this subdivision is void. 
    Provided however, If a debtor has property of the type 
which would qualify for the exemption under clause (b) of this 
subdivision, of a value in excess of $3,000 $4,500 an itemized 
list of the exempt property, together with the value of each 
item listed, shall be attached to the security agreement at the 
time a security interest is taken, and a creditor may take a 
nonpurchase money security interest in the excess over $3,000 
$4,500 by requiring the debtor to select his exemption in 
writing at the time the loan is made. 
    Sec. 6.  Minnesota Statutes 1982, section 550.37, is 
amended by adding a subdivision to read:  
    Subd. 4a.  [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 
amounts in subdivision 4 shall change periodically as provided 
in this subdivision to the extent of changes in the implicit 
price deflator for the gross national product, 1972 = 100, 
compiled by the United States department of commerce, and 
hereafter referred to as the index.  The index for December, 
1982, is the reference base index.  
     (b) The designated dollar amounts shall change on July 1 of 
each-even numbered year if the percentage of change, calculated 
to the nearest whole percentage point, between the index for 
December of the preceding year and the reference base index is 
ten percent or more.  The portion of the percentage change in 
the index in excess of a multiple of ten percent shall be 
disregarded and the dollar amounts shall change only in 
multiples of ten percent of the amounts stated in subdivision 4. 
    (c) If the index is revised, the percentage of change 
pursuant to this section shall be calculated on the basis of the 
revised index.  If a revision of the index changes the reference 
base index, a revised reference base index shall be determined 
by multiplying the reference base index then applicable by the 
rebasing factor furnished by the department of commerce.  If the 
index is superseded, the index referred to in this section is 
the one represented by the department of commerce as reflecting 
most accurately changes in the purchasing power of the dollar 
for consumers.  
    (d) The commissioner of banks shall announce and publish:  
    (1) on or before April 30 of each year in which dollar 
amounts are to change, the changes in dollar amounts required by 
paragraph (b); and 
    (2) promptly after the changes occur, changes in the index 
required by paragraph (c) including, if applicable, the 
numerical equivalent of the reference base index under a revised 
reference base index and the designation or title of any index 
superseding the index.  
    (e) A person does not violate this chapter with respect to 
a transaction otherwise complying with this chapter if he relies 
on dollar amounts either determined according to paragraph (b) 
or appearing in the last publication of the commissioner 
announcing the then current dollar amounts.  
    Sec. 7.  Minnesota Statutes 1982, section 550.37, 
subdivision 13, is amended to read:  
    Subd. 13.  [WAGES.] All wages not subject to garnishment by 
the provisions of section 571.55.  A subsequent attachment, 
garnishment or levy of execution shall impound only that pay 
period's nonexempt disposable earnings not subject to a prior 
attachment, garnishment or levy of execution, but in no instance 
shall more than an individual's total nonexempt disposable 
earnings in that pay period be subject to attachment, 
garnishment or levy of execution.  Garnishments shall impound 
the nonexempt disposable earnings in the order of their service 
upon the employer.  The disposable earnings exempt from 
garnishment are exempt as a matter of right, whether claimed or 
not by the person to whom due.  Such The exemptions may not be 
waived.  Such The exempt disposable earnings are payable by the 
employer when due.  Such The exempt disposable earnings shall 
also be exempt for 20 days after deposit in any financial 
institution, whether in a single or joint account.  This 20-day 
exemption shall also apply applies to any contractual set-off or 
security interest asserted by a financial institution in which 
said the earnings are deposited by the individual.  In tracing 
said the funds, the first-in first-out method of accounting 
shall be used.  The burden of establishing that funds are exempt 
rests upon the debtor.  As used in this section, the term 
"financial institution" shall include includes credit unions. 
Nothing in this paragraph shall be construed to void or 
supersede any valid assignment of wages or transfer of funds 
held on account made prior to the attachment, garnishment, or 
levy of execution. 
    Sec. 8.  Minnesota Statutes 1982, section 550.37, 
subdivision 14, is amended to read:  
    Subd. 14.  [PUBLIC ASSISTANCE.] All relief based on need, 
and the wages or salary of a person who is a recipient of relief 
based on need, shall be exempt from all claims of creditors 
including any contractual set-off or security interest asserted 
by a financial institution.  For the purposes of this chapter, 
relief based on need shall include includes AFDC, general 
assistance medical care, supplemental security income, medical 
assistance, Minnesota supplemental assistance, and general 
assistance.  The salary or wages of any debtor who is or has 
been a recipient of relief based on need, or an inmate of a 
correctional institution shall, upon his return to private 
employment after having been a recipient of relief based on 
need, or an inmate of a correctional institution, be exempt from 
attachment, garnishment, or levy of execution for a period of 
six months after his return to employment and after all public 
assistance has been terminated.  He may take advantage of such 
six months salary or wage exemption provisions only once in 
every three years.  The exemption provisions contained in this 
subdivision shall also apply for 60 days after deposit in any 
financial institution, whether in a single or joint account.  In 
tracing said the funds, the first-in first-out method of 
accounting shall be used.  The burden of establishing that funds 
are exempt rests upon the debtor.  Agencies distributing relief 
and the correctional institutions shall, at the request of 
creditors, inform them whether or not any debtor has been a 
recipient of relief based on need, or an inmate of a 
correctional institution, within such period of the preceding 
six months. 
    Sec. 9.  Minnesota Statutes 1982, section 550.37, 
subdivision 19, is amended to read:  
    Subd. 19.  [WAIVER.] The exemption of the property listed 
in subdivisions 2, 3, and 5 to 11, and 12a may not be waived 
except by a statement in substantially the following form, in 
bold face type of a minimum size of 12 points, signed and dated 
by the debtor at the time of the execution of the contract 
surrendering the exemption, immediately adjacent to the listing 
of the property:  "I understand that some or all of the above 
property is normally protected by law from the claims of 
creditors, and I voluntarily give up my right to that protection 
for the above listed property with respect to claims arising out 
of this contract." 
    Sec. 10.  Minnesota Statutes 1982, section 550.37, 
subdivision 20, is amended to read:  
    Subd. 20.  [TRACEABLE FUNDS.] The exemption of funds from 
creditors' claims, provided by subdivisions 9, 10, 11, and 15, 
and 24, shall not be affected by the subsequent deposit of said 
the funds in a bank or any other financial institution, whether 
in a single or joint account, so long as said if the funds can 
be are traceable to their exempt source.  In tracing said the 
funds, the first-in first-out method of accounting shall be used.
The burden of establishing that funds are exempt rests upon the 
debtor.  No bank or other financial institution shall be liable 
for damages for complying with process duly issued out of any 
court for the collection of a debt even if the funds affected by 
said the process are subsequently determined to have been exempt.
    Sec. 11.  Minnesota Statutes 1982, section 550.37, 
subdivision 24, is amended to read:  
    Subd. 24.  [EMPLOYEE BENEFITS.] The debtor's right to 
receive a payment, or payments received by the debtor, under a 
stock bonus, pension, profit sharing, annuity, or similar plan 
or contract on account of illness, disability, death, age, or 
length of service, to the extent reasonably necessary for the 
support of the debtor and any dependent of the debtor.  
    Sec. 12.  Minnesota Statutes 1982, section 571.41, 
subdivision 5, is amended to read:  
    Subd. 5.  [PRIOR NOTICE REQUIRED.] If the garnishee summons 
is to be used to garnish the earnings of an individual to 
enforce a judgment, or to garnish earnings prior to entry of 
judgment pursuant to subdivision 2, clause (a), prior to the 
first garnishment on any debt, the creditor shall serve upon the 
debtor, no less than ten days prior to the service of the 
garnishee summons, a notice that such a summons may be issued.  
If the garnishee summons has not been served within one year 
after service of the notice, the judgment creditor shall serve 
another notice upon the judgment debtor prior to serving the 
garnishee summons on his employer.  If more than one year has 
passed since service of the judgment creditor's most recent 
garnishee summons, the judgment creditor shall no less than ten 
days prior to service of a subsequent garnishee summons serve 
notice that another garnishee summons may be served.  Said The 
notice shall (1) be substantially in the form set out in this 
chapter.  Said notice shall; (2) be served personally, in the 
manner of a summons and complaint, or by first class mail to the 
last known address of the debtor.  Said notice shall; (3) inform 
the debtor that a garnishee summons may be served on the 
debtor's employer in ten days, and that the debtor may, within 
that time, cause to be served on the creditor a signed statement 
under penalties of perjury asserting an entitlement to an 
exemption from garnishment.  Said notice shall further; (4) 
inform the debtor of the wage garnishment exemptions contained 
in section 550.37, subdivision 14.  Said notice shall further; 
and (5) advise the debtor of the relief set forth in this 
chapter to which he may be entitled if a creditor in bad faith 
disregards a valid claim and the fee, costs, and penalty which 
may be assessed against a debtor who in bad faith falsely claims 
an exemption or in bad faith takes action to frustrate the 
garnishment process.  If no statement of exemption is received 
by the creditor within ten days from the service of the notice, 
he may proceed with the garnishment.  Failure of the debtor to 
serve such a statement shall does not constitute a waiver of any 
right he may have to an exemption.  If said the statement of 
exemption is received by the creditor, he may still cause a 
garnishee summons to be issued; however,.  If the debtor 
subsequently asserts his claim of exemption successfully to the 
court having jurisdiction over the action, and the court finds 
that the creditor disregarded the claim of exemption in bad 
faith, the debtor shall be entitled to costs, reasonable 
attorney fees, actual damages, and an amount not to exceed $100. 
If in subsequent proceedings which may be brought by the debtor 
or creditor, the claim is not upheld, and the court finds that 
it was asserted in bad faith, or if the court finds that the 
debtor has in bad faith taken action to frustrate the 
garnishment process, the debtor shall be assessed costs and 
reasonable attorney fees resulting from said the additional 
proceedings, and an amount not to exceed $100. 
    Sec. 13.  Minnesota Statutes 1982, section 571.41, is 
amended by adding a subdivision to read:  
    Subd. 5a.  [EXEMPTION NOTICE.] If the garnishee summons is 
used to garnish funds of a judgment debtor who is a natural 
person and if the funds to be garnished are held on deposit at 
any financial institution, the judgment creditor shall serve 
with the garnishee summons two copies of an exemption notice. 
The notice shall be substantially in the form set out in section 
17.  Failure of the judgment creditor to send the exemption 
notice shall render the garnishment void, and the financial 
institution shall take no action.  
    Sec. 14.  Minnesota Statutes 1982, section 571.41, is 
amended by adding a subdivision to read:  
    Subd. 5b.  [DUTY OF FINANCIAL INSTITUTION; EXEMPTION; 
OBJECTION.] Upon receipt of the garnishee summons and exemption 
notices, the financial institution shall attach and bind as much 
of the amount due under section 571.471 as the financial 
institution has on deposit owing to the judgment debtor.  Within 
two business days after receipt of the garnishee summons and 
exemption notices, the financial institution shall serve upon 
the judgment debtor two copies of the exemption notice.  The 
financial institution shall serve the notice by first class mail 
to the last known address of the judgment debtor.  If no claim 
of exemption is received by the financial institution within 14 
days after the exemption notices are mailed to the judgment 
debtor, the funds shall remain subject to the garnishment 
summons.  If the judgment debtor elects to claim an exemption, 
he shall complete the exemption notice, affix his signature 
under penalty of perjury, and deliver one copy to the financial 
institution and one copy to the judgment creditor within 14 days 
of the date postmarked on the correspondence mailed to the 
judgment debtor containing the exemption notices.  Failure of 
the judgment debtor to serve the executed exemption notice does 
not constitute a waiver of any right he may have to an 
exemption.  Upon timely receipt of a claim of exemption, funds 
not claimed to be exempt by the judgment debtor shall remain 
subject to the garnishment summons.  All money claimed to be 
exempt shall be released to the judgment debtor upon the 
expiration of seven days after the date postmarked on the 
correspondence containing the executed exemption notice mailed 
to the judgment creditor, or the date of personal delivery of 
the executed exemption notice to the judgment creditor, unless 
within that time the judgment creditor interposes an objection 
to the exemption.  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 creditor.  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.  Unless the financial institution receives a notice of 
motion and motion from the judgment debtor asserting exemption 
rights within ten days after receipt of the written exemption, 
the funds shall remain subject to the garnishment summons as if 
no claim of exemption has been made.  Either the judgment 
creditor or the judgment debtor may bring a motion to determine 
the validity of an exemption claim by following the procedure 
set out in section 17.  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 571.69.  However, at any 
time during the procedure specified in this subdivision, the 
judgment debtor or the judgment creditor may, by a writing dated 
subsequent to the service of the execution, direct the financial 
institution to release the funds in question to the other 
party.  Upon receipt of a release, the financial institution 
shall release the funds as directed.  
    Sec. 15.  Minnesota Statutes 1982, section 571.41, is 
amended by adding a subdivision to read:  
     Subd. 5c.  [SUBSEQUENT PROCEEDINGS; BAD FAITH CLAIMS.] If 
in subsequent proceedings brought by the judgment debtor or the 
judgment creditor, the claim of exemption is not upheld, and the 
court finds that it was asserted in bad faith, the judgment 
creditor shall be awarded actual damages, costs, and reasonable 
attorney fees resulting from the additional proceedings and an 
amount not to exceed $100.  If the claim of exemption is upheld, 
and the court finds that the judgment creditor disregarded the 
claim of exemption in bad faith, the judgment debtor shall be 
awarded costs, reasonable attorney fees, actual damages, and an 
amount not to exceed $100.  The underlying judgment shall be 
modified to reflect assessment of damages, costs, and attorney 
fees.  However, if the party in whose favor a penalty assessment 
is made is not actually indebted to his attorney for fees, the 
attorney's fee award shall be made directly to the attorney and 
an appropriate judgment in favor of the attorney shall be 
entered.  Upon motion of any party in interest, on notice, the 
court shall determine the validity of any claim of exemption and 
may make any order necessary to protect the rights of those 
interested.  No garnishee shall be liable for damages for 
complying with this section.  Both copies of an exemption claim 
or 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.  
    Sec. 16.  Minnesota Statutes 1982, section 571.41, 
subdivision 6, is amended to read:  
    Subd. 6.  [FORM OF NOTICE.] The ten day notice informing a 
judgment debtor that a garnishee summons may be used to garnish 
the wages of an individual to enforce a judgment, shall be 
substantially in the following form: 
STATE OF MINNESOTA) 
                  ) ss 
County of         )                    ............ Court 
...................................... (Judgment Creditor) 
...................................... (Judgment Debtor) 
Garnishment Exemption Notice 
The State of Minnesota 
To the above named Judgment Debtor:  
    Please take notice that a Garnishment Summons may be served 
upon your employer, without any further court proceedings or 
notice to you, ten days or more from the date hereof.  Your 
wages may be exempted are completely exempt from garnishment if 
you are now a recipient of relief based on need, if you have 
been a recipient of such relief within the last six months, or 
if you have been an inmate of a correctional institution in the 
last six months.  Relief based on need includes, only AFDC, 
general assistance medical care, supplemental security income, 
medical assistance, Minnesota supplemental assistance, and 
general assistance.  It does not include Social Security, 
unemployment compensation, food stamps, or workers' compensation.
    If you wish to claim such an exemption, you should fill out 
the appropriate form below, sign it, and send it to the judgment 
creditor's attorney and the garnishee. 
    You may wish to contact the attorney for the Judgment 
Creditor in order to arrange for a settlement of the debt. 

                               PENALTIES 
    1.  Be advised that even if you claim an exemption, a 
Garnishment Summons may still be served on your employer.  If 
your wages are garnished after you claim an exemption, you may 
petition the court for a determination of your exemption.  If 
the court finds that the creditor disregarded your claim of 
exemption in bad faith, you will be entitled to costs, 
reasonable attorney fees, actual damages, and an amount not to 
exceed $100. 
    2.  HOWEVER, BE WARNED if you claim an exemption, the 
creditor can also petition the court for a determination of your 
exemption, and if the court finds that you claimed an exemption 
in bad faith, you will be assessed costs and reasonable 
attorney's fees plus an amount not to exceed $100. 
    3.  If after receipt of this notice, you in bad faith take 
action to frustrate the garnishment, thus requiring the creditor 
to petition the court to resolve the problem, you will be liable 
to the creditor for costs and reasonable attorney fees plus an 
amount not to exceed $100. 
  Dated: ..........    ................................ 
                       (Attorney for) Judgment Creditor 
                        Address                         
                        Telephone                       
    I hereby claim under penalty of perjury that my wages are 
exempt from garnishment because: 
    (1) ...... I am presently a recipient of relief based on 
need.  (Specify the program, case number, and the county from 
which relief is being received.  There is no limit to the number 
of times this exemption may be claimed.) 
 ...........    .........................    .........
   Program        Case Number (if known)       County 
    (2) ...... I am not now receiving relief based on need, but 
I have received relief based on need within the last six 
months.  (Specify the program, case number, and the county from 
which relief has been received.) I am aware that I am not 
permitted by law to use this exemption for more than one six 
month period every three years, and that I may be penalized if I 
violate this law.  
 ...........    .........................    ..........
   Program        Case Number (if known)       County  
    (3) ...... I have been an inmate of a correctional 
institution within the last six months, and I have not claimed 
this exemption within the last three years. (Specify the 
correctional institution and location.) 
 ............................    ............
   Correctional Institution        Location  
    I hereby authorize any agency that has distributed relief 
to me or any correctional institution wherein in which I was an 
inmate to disclose to the above-named creditor or his attorney 
whether or not I was a recipient of relief based on need or an 
inmate of a correctional institution within the last six months. 
                  ..................... 
                   Judgment Debtor      
                   Address              
    Sec. 17.  Minnesota Statutes 1982, section 571.41, is 
amended by adding a subdivision to read:  
    Subd. 7.  [FORM OF EXEMPTION NOTICE.] The notice informing 
a judgment debtor that a writ of attachment, garnishee summons, 
or levy of execution has been used to attach and bind funds of 
the judgment debtor to satisfy a claim shall be substantially in 
the following form:  
 EXEMPTION NOTICE 
STATE OF MINNESOTA 
COUNTY OF                          ......................Court 
............................................(Judgment Creditor)
..............................................(Judgment Debtor)
To..................(Judgment Debtor): 
    A writ of attachment, garnishee 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, 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 AFDC, Medical 
Assistance, Supplemental Security Income (SSI), Minnesota 
Supplemental Assistance, General Assistance, and General 
Assistance Medical Care.  
    (2) Social Security benefits (Old Age, Survivors, or 
Disability Insurance).  
     (3) Unemployment compensation, workers' compensation, or 
veteran's benefits.  
     (4) An accident, disability, or retirement pension or 
annuity.  
     (5) Life insurance proceeds, or the earnings of your minor 
child.  
     (6) 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:  
    (7) All wages of a person in category (1).  
     (8) All wages 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.  
     (9) Seventy-five percent of every wage earner's after tax 
earnings.  
     (10) All of a wage earner's after tax earnings below 40 
times the federal minimum wage (this equals $134 for a 40-hour 
week).  
    TIME LIMIT ON EXEMPTIONS AFTER DEPOSIT IN BANK:  
    Categories (9) and (10):  20 days.  
    Categories (7) and (8):  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 this 
exemption claim form to the institution which sent you this 
notice, and one copy to the judgment creditor.  Both copies must 
be mailed or delivered on the same day.  
     If they don't 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 frozen 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:  
     (1) The institution will hold the money until a court 
decides if your exemption claim is valid, BUT ONLY IF the 
institution gets a copy of your court motion papers asserting 
the exemption WITHIN 10 DAYS after the objection is mailed or 
given to you.  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 frozen, 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 clerk 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.  
......................        ................................ 
Date                          (Attorney for) Judgment Creditor 
                                Address 
    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 ten 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:  ................ .) 
 Dated: ...............        ........................... 
                                   Judgment Debtor 
                                   Address 
    Sec. 18.  Minnesota Statutes 1982, section 571.41, is 
amended by adding a subdivision to read: 
    Subd. 7.  [FORM OF MOTION.] (1) A motion to determine the 
validity of an exemption claim may be brought by either the 
judgment creditor or the judgment debtor by filing with the 
clerk of court out of which the attachment, garnishment, or 
execution issued a Request for Hearing which shall be in 
substantially the following form:  
STATE OF MINNESOTA                   .................. COURT
COUNTY OF ..................         ........................
..........................., 
               Plaintiff(s),               REQUEST FOR HEARING ON
v.                                         EXEMPTION CLAIM 
...........................,
               Defendant(s).
    I hereby request a hearing to resolve the exemption claim 
which has been made in this case regarding funds in the account 
of ....(Debtor)....... at the ......................(Financial 
Institution)............ .  I believe the property being held is 
(not) exempt because .......................................... 
............................................................... 
...............................................................  
DATED: ..................          .............................
                                   Judgment (Debtor, Creditor)
                                   .............................
                                   Address
                                   .............................
Hearing date: .........................  Time: .................
Place: .........................................................
    (Note to both parties:  Bring with you to the hearing all 
documents and materials relevant to the exemption claim.  Failure 
to do so could delay the court's decision.) 
    (2) The court shall provide Request for Hearing forms and 
clerical assistance to help with the writing and filing of a 
Request for Hearing by any person not represented by counsel. 
The clerk may charge a fee of $1.00 for the filing of a Request 
for Hearing.  
    (3) 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 clerk 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.  
    Sec. 19.  Minnesota Statutes 1982, section 571.42, is 
amended to read:  
    571.42 [EFFECT OF SERVICE OF SUMMONS.] 
    Subdivision 1.  [ATTACH FOR JUDGMENT.] Except as provided 
in sections 571.43 and 571.50, service of the garnishee summons 
upon the garnishee shall attach and bind, to respond to final 
judgment in the action, all personal property of the judgment 
debtor in his possession or under his control and all 
indebtedness owing by him to the judgment debtor at the time of 
such service and all nonexempt disposable earnings earned or to 
be earned within that one pay period and within 30 days 
thereafter.  
    Subd. 2.  [PROPERTY ATTACHED.] Subject to the provisions of 
sections 550.37 and 571.55 all moneys, all nonexempt disposable 
earnings earned or to be earned within that one pay period and 
within 30 days thereafter and other personal property including 
such property of any kind due from or in the hands of an 
executor, administrator, receiver or trustee and all written 
evidences of indebtedness whether negotiable or not or under or 
overdue may be attached by garnishment, and money or any other 
thing due or belonging to the judgment debtor may be attached by 
this process before it has become payable if its payment or 
delivery does not depend upon any contingency, but the garnishee 
shall not be compelled to pay or deliver the same it before the 
time appointed by the contract.  
    Sec. 20.  Minnesota Statutes 1982, section 571.67, is 
amended to read:  
    571.67 [PENALTY IN CERTAIN GARNISHMENT PROCEEDINGS.] 
    A party who serves or causes to be served a garnishment 
summons prior to judgment in the main action, except where 
garnishment prior to entry of judgment is permitted, is liable 
to the debtor named in the garnishment proceedings in the amount 
of $100 plus reasonable attorneys fees and costs.  Action by a 
judgment creditor in violation of section 550.041, 550.14, 
550.141, or 571.41, causing any third party or garnishee in 
possession of funds owing to the judgment debtor to hold or 
deliver the funds to satisfy a garnishment, attachment, or levy 
of execution shall render the garnishment, attachment, or levy 
of execution void and the judgment creditor liable to the 
judgment debtor named in the garnishment, attachment, or 
execution in the amount of $100, actual damages, and reasonable 
attorney fees and costs. 
    Approved June 1, 1983