Unemployment Insurance & Wage Garnishment in Minnesota
According to the Bureau of Labor Statistics, Minnesota had an unemployment rate of 6.7 percent as of August 2011. Of the unemployed in the state, many owe debts to creditors, who can pursue a court judgment and wage garnishment. Minnesota's laws on debt collecting are very specific about the situations in which a creditor can pursue garnishing a debtor's pay, including unemployment.
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Wage Garnishment
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Wage garnishment is a process in which a creditor takes a portion of a debtor's wages to recoup money it is owed. It's often a last-ditch effort employed after other collections methods have failed. To start garnishing a debtor's pay, a creditor must get a court order and have a law-enforcement agency serve it to the debtor's employer.
Minnesota Wage Garnishment Regulations
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Under Minnesota law, there is a six-year statute of limitations for both written contracts and open accounts. Creditors can only pursue debt collections six years after the date the agreement was made. Minnesota creditors are allowed to garnish the lesser of 25 percent of net pay or the amount by which the paycheck exceeds 40 times the current minimum wage.
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Minnesota Unemployment Regulations
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Minnesota's unemployment insurance program distributes benefit payments to those who have lost their jobs through no fault of their own. The benefits don't replace the lost salary but provide a portion of the average weekly salary the applicant earned in the 15 to 18 months before becoming unemployed. As of August 2011, the most a claimant can receive is $578 per week in Minnesota unemployment benefits.
Garnishing Minnesota Unemployment
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While a creditor can garnish most forms of income, it can't garnish unemployment payments. The idea behind the exception is that wage garnishment is meant to take a portion of the disposable income a debtor has to pay off debt. Since unemployment income is a limited benefit, most claimants don't have any disposable income. Instead Minnesota state law requires creditors to wait until the debtor is working again to begin garnishing his wages.
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