Minnesota Supreme Court: Creditor Not Entitled to Funds Belonging to Joint Owner

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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