Minnesota updates garnishment laws effective August 2025

On February 20, 2025, the Minnesota State Legislature introduced Senate Bill 1606, a significant piece of legislation aimed at reforming the garnishment process for debtors in the state. The bill seeks to enhance protections for individuals facing garnishment by amending existing statutes related to the handling of nonexempt earnings and property.

One of the key provisions of Senate Bill 1606 is the requirement for creditors to provide an exemption notice when garnishing funds from a debtor's account at a financial institution. This notice must include instructions and two copies of the exemption notice, which must be served alongside the garnishment summons. Failure to provide this notice renders the garnishment void, ensuring that debtors are informed of their rights and options.

Additionally, the bill stipulates that financial institutions must retain a specified amount of funds—up to 110 percent of the creditor's claim—while also ensuring that debtors are notified within two business days of the garnishment summons. If a debtor wishes to claim an exemption, they must do so within 14 days of receiving the notice, thereby allowing them a fair opportunity to protect their assets.

Senate Bill 1606 is set to take effect on August 1, 2025, and will apply to all causes of action commenced on or after that date. The introduction of this bill has sparked discussions among lawmakers, with proponents arguing that it provides essential protections for vulnerable debtors, while opponents raise concerns about the potential impact on creditors' ability to collect debts.

The economic implications of this bill could be significant, as it may alter the landscape of debt collection in Minnesota. Advocates for the bill suggest that by safeguarding debtors' rights, it could lead to a more equitable financial environment, potentially reducing the cycle of debt and financial instability for many individuals.

As the legislative process unfolds, stakeholders from various sectors, including consumer advocacy groups and financial institutions, are expected to weigh in on the bill's provisions. The outcome of Senate Bill 1606 could set a precedent for future debt collection practices in Minnesota, highlighting the ongoing balance between creditor rights and debtor protections in the state's legal framework.