Minnesota Debt Collection Laws
In addition to being regulated by the Fair Debt Collection Practices Act (FDCPA), Minnesota collection agencies are also regulated by Minnesota debt collection laws. Discover: Minnesota collection requirements, bad check laws (NSF), statutes of limitations for both debts and judgments, garnishments plus Minnesota collection agency license and bonding information.
Summary of the Minnesota fair debt collection practices laws:
MINNESOTA INTEREST RATE
Judgment: 5% |Changes Yearly|
Business or Agricultural Loan: 4.5% over federal discount rate
MINNESOTA STATUTE OF LIMITATIONS |in years|
Goods Sold & Delivered |UCC|: 4
Open Accounts: 6
Written Contract: 6
Transportation Service: 3
Domestic Judgment: 10
Foreign Judgment: 10
MINNESOTA BAD CHECK LAWS |NSF|
$100 or up to 100% of the value of the check, whichever is greater, plus interest at the rate payable on judgments on the face amount of check, plus reasonable attorney fees if aggregate amount of checks within 6 month period is over $1250.
MINNESOTA WAGE GARNISHMENT EXEMPTIONS
Greater of 75% or amount = to 40 x fed. min. hourly wage
MINNESOTA COLLECTION AGENCY BONDING and LICENSING REQUIREMENTS
Bond: $5,000 to $20,000
$1,000 – Initial
$400 – Annual
$10 – Per Collector
Below is the Minnesota debt collection statute:
§ 332.31 DEFINITIONS.
Subdivision 1. Terms. The terms in this section for the purposes of sections 332.31 to 332.45 shall have the meanings given them.
Subd. 2. Person. “Person” means and includes individuals, partnerships, associations or corporations.
Subd. 3. Collection agency. “Collection agency” means and includes any person engaged in the business of collection for others any account, bill or other indebtedness except as hereinafter provided. It includes persons who furnish collection systems carrying a name which simulates the name of a collection agency and who supply forms or form letters to be used by the creditor, even though such forms direct the debtor to make payments directly to the creditor rather than to
such fictitious agency.
Subd. 4.[Repealed, 1979 c 144 s 7]
Subd. 5.[Repealed, 1979 c 144 s 7]
Subd. 6. Collector. “Collector” is a person acting under the authority of a collection agency under subdivision 3, and on its behalf in the business of collection for others an account, bill, or other indebtedness except as otherwise provided in this chapter.
Subd. 7. Exempt out-of-state collection agency. “Exempt out-of-state collection agency” means a collection agency that has no physical presence in this state, that is engaged in the business of collecting claims on behalf of creditors that have no physical presence in this state, and that only conducts business within this state by means of interstate communications including telephone, mail, and facsimile transmission.
§ 332.311 TRANSFER OF ADMINISTRATIVE FUNCTIONS.
The powers, duties, and responsibilities of the consumer services section under sections 332.31 to 332.45 relating to collection agencies are hereby transferred to and imposed upon the commissioner of commerce.
§ 332.32 EXCLUSIONS.
The term “collection agency” shall not include persons whose collection activities are confined to and are directly related to the operation of a business other than that of a collection agency such as, but not limited to banks when collecting accounts owed to the banks and when the bank will sustain any loss arising from uncollectible accounts, abstract companies doing an escrow business, real estate brokers, public officers, persons acting under order of a court, lawyers, trust companies, insurance companies, credit unions, savings associations, loan or finance companies unless they are engaged in asserting, enforcing or prosecuting unsecured claims which have been purchased from any person, firm, or association when there is recourse to the seller for all or part of the claim if the claim is not collected.
§ 332.33 LICENSING AND REGISTRATION.
Subdivision 1. Requirement. Except as otherwise provided in this chapter, no person shall conduct within this state a collection agency or engage within this state in the business of collecting claims for others as defined in sections 332.31 to 332.45, without having first applied for and obtained a collection agency license. A person acting under the authority of a collection agency, as a collector, must first register with the commissioner under this section. A registered collector may use one additional assumed name only if the assumed name is registered with and approved by the commissioner.
Subd. 2. Penalty. A person who carries on business as a collection agency without first having obtained a license or acts as a collector without first having registered with the commissioner pursuant to sections 332.31 to 332.45, or who carries on this business after the revocation, suspension, or expiration of a license or registration is guilty of a misdemeanor.
Subd. 3. Term. Licenses issued or renewed and registrations received by the commissioner of commerce under sections 332.31 to 332.45 shall expire on June 30. Each collection agency license shall plainly state the name and business address of the licensee, and shall be posted in
a conspicuous place in the office where the business is transacted. The fee for each collection agency license is $500, and renewal is $400. The fee for each collector registration and renewal is $10. A collection agency licensee who desires to carry on business in more than one place shall procure a license for each place where the business is to be conducted.
Subd. 4. Investigations. The commissioner may require financial statements and references of all applicants for a license or registration as the commissioner considers necessary. The commissioner may make or cause to be made an independent investigation concerning the applicant’s reputation, integrity, competence, and net worth, at the expense of the applicant for the initial investigation, not to exceed $500, and for that purpose may require a deposit against the cost of the investigation as the commissioner considers adequate. The investigation may cover all
managerial personnel employed by or associated with the applicant.
Subd. 5. Collection agency license issuance. Every application for a collection agency license or renewal shall be acted upon promptly by the commissioner but in no event more than 45 days after receipt of the application. Each applicant may be issued a temporary license after submitting a complete application which meets all requirements for licensure. This license shall be effective until a permanent license is issued by the commissioner. If the application complies in form and substance with sections 332.31 to 332.45 and the rules adopted under those sections and the commissioner finds that the applicant is qualified under sections 332.31 to 332.45, the commissioner shall issue a license immediately. If the application is not sufficient in form or substance, the commissioner shall reject it and notify the applicant of the manner in which it is deficient. The rejection is without prejudice to the filing of a new application. On finding that the applicant is not qualified under sections 332.31 to 332.45, the commissioner shall reject the application and shall give the applicant written notice of the rejection and the reasons for the rejection.
Subd. 5a. Individual collector registration. A licensed collection agency, on behalf of
an individual collector, must register with the state all individuals in the collection agency’s employ who are performing the duties of a collector as defined in sections 332.31 to 332.45. The collection agency must apply for an individual collection registration on a form provided by the commissioner, or electronically when available. The collection agency shall verify on the form that the applicant has confirmed that the applicant meets the requirements to perform the duties of a collector as defined in sections 332.31 to 332.45. Upon submission of the form to the department,
the individual may begin to perform the duties of a collector and may continue to do so unless the licensed collection agency is informed by the commissioner that the individual is ineligible.
Subd. 6. Deposit of fees. All money received by the commissioner under this section shall be deposited in the general fund of the state treasury.
Subd. 7. Notice. A licensed collection agency or registered individual collector must give the commissioner written notice of a change in personal name, company name, address, or ownership not later than 15 days after the change occurs.
Subd. 8. Screening process requirement. Each licensed collection agency must establish procedures to follow when screening an individual collector applicant prior to submitting an applicant to the commissioner for registration. The commissioner may review the procedures to ensure the integrity of the screening process. Failure to establish these procedures is subject to action under section 332.40.
§ 332.335 EXEMPTION FROM LICENSURE.
Subdivision 1. Requirements. An exempt out-of-state collection agency, as defined by section 332.31, subdivision 7, that has obtained a certificate of exemption under subdivision 2 is exempt from the collector registration requirements and collection agency licensing requirements of this chapter, but is subject to all other provisions of sections 45.027 and 332.31 to 332.45.
Subd. 2. Certificate of exemption. To qualify as an exempt out-of-state collection agency, a person, except for those excluded from the definition of collection agency under section 332.32, must, before initiating collection activity, obtain a certificate of exemption from the commissioner. A certificate of exemption must be issued upon the applicant’s filing an application on a form approved by the commissioner if the applicant is found to be qualified under this chapter. The form must include:
(1) a signed statement that the exempt out-of-state collection agency holds a valid license to do business as a collection agency in another state whose requirements for licensing are similar to the requirements imposed under this chapter along with a copy of the licensing document from the other state;
(2) certification that the exempt out-of-state collection agency will not solicit or collect claims for any creditor who has a business presence in this state. A creditor has a business presence in this state if either the creditor or an affiliate or subsidiary of the creditor has an office in this state;
(3) certification that the exempt out-of-state collection agency will not establish a physical presence in this state and that all collection activity in this state will be conducted exclusively by means of interstate communications including telephone, mail, or facsimile transmission;
(4) evidence of a corporate surety bond substantially similar, as determined by the commissioner, to the bond required under section 332.34;
(5) appointment of the commissioner as the exempt out-of-state collection agency’s agent for service of process in this state; and
(6) written acknowledgment that the exempt out-of-state collection agency agrees to be subject to the jurisdiction of Minnesota courts and the Minnesota Administrative Procedure Act, chapter 14, in connection with the commissioner’s enforcement of Minnesota law pertaining to
collection activities in Minnesota, including compliance with this chapter and chapter 45.
Subd. 3. Notice. An exempt out-of-state collection agency must advise the commissioner of any material changes to the information submitted in the most recent application within ten days of the change.
Subd. 4. Loss of exemption. In addition to fines and other authorized sanctions, a certificate of exemption is considered revoked if the exempt out-of-state collection agency is found to be in violation of any provision of chapter 45 or 332, or the Fair Debt Collection Practices Act of 1977,
United States Code, title 15, sections 1691 to 1693r.
§ 332.34 BOND.
The commissioner of commerce shall require each collection agency licensee to annually file and maintain in force a corporate surety bond, in a form to be prescribed by, and acceptable to, the commissioner, and in a sum of at least $20,000. A collection agency may deposit cash in and with a depository acceptable to the commissioner in an amount and in the manner prescribed and approved by the commissioner in lieu of a bond.
§ 332.35 PRIOR CONVICTION OR JUDGMENT AS DISQUALIFICATION.
No registration shall be accepted for, and no license shall be issued to, any person, firm, corporation or association who or which, or any of the officers of which have, within the past five years, been convicted in any court of fraud or any felony or have been convicted of or had judgment entered against them in any court for failure to account to a client or customer for money or property collected by them for the client or customer. No registration shall be accepted for, and no license shall be issued to, any attorney whose license to practice law has been suspended or revoked, for a period of five years after the date of such suspension or revocation.
§ 332.355 AGENCY RESPONSIBILITY FOR COLLECTORS.
The commissioner may take action against a collection agency for any violations of debt collection laws by its debt collectors. The commissioner may also take action against the debt collectors themselves for these same violations.
§ 332.37 PROHIBITED PRACTICES.
No collection agency or collector shall:
(1) in collection letters or publications, or in any communication, oral or written threaten wage garnishment or legal suit by a particular lawyer, unless it has actually retained the lawyer;
(2) use or employ sheriffs or any other officer authorized to serve legal papers in connection with the collection of a claim, except when performing their legally authorized duties;
(3) use or threaten to use methods of collection which violate Minnesota law;
(4) furnish legal advice or otherwise engage in the practice of law or represent that it is competent to do so;
(5) communicate with debtors in a misleading or deceptive manner by using the stationery of a lawyer, forms or instruments which only lawyers are authorized to prepare, or instruments which simulate the form and appearance of judicial process;
(6) exercise authority on behalf of a creditor to employ the services of lawyers unless the creditor has specifically authorized the agency in writing to do so and the agency’s course of conduct is at all times consistent with a true relationship of attorney and client between the lawyer and the creditor;
(7) publish or cause to be published any list of debtors except for credit reporting purposes, use shame cards or shame automobiles, advertise or threaten to advertise for sale any claim as a means of forcing payment thereof, or use similar devices or methods of intimidation;
(8) refuse to return any claim or claims and all valuable papers deposited with a claim or claims upon written request of the creditor, claimant or forwarder after tender of the amounts due and owing to the agency within 30 days after the request; refuse or intentionally fail to account to its clients for all money collected within 30 days from the last day of the month in which the same is collected; or, refuse or fail to furnish at intervals of not less than 90 days upon written request of the claimant or forwarder, a written report upon claims received from the claimant or forwarder;
(9) operate under a name or in a manner which implies that the agency is a branch of or associated with any department of federal, state, county or local government or an agency thereof;
(10) commingle money collected for a customer with the agency’s operating funds or use any part of a customer’s money in the conduct of the agency’s business;
(11) transact business or hold itself out as a debt prorater, debt adjuster, or any person who settles, adjusts, prorates, pools, liquidates or pays the indebtedness of a debtor, unless there is no charge to the debtor, or the pooling or liquidation is done pursuant to court order or under the supervision of a creditor’s committee;
(12) violate any of the provisions of the Fair Debt Collection Practices Act of 1977 while attempting to collect on any account, bill or other indebtedness;
(13) communicate with a debtor by use of a recorded message utilizing an automatic dialing announcing device unless the recorded message is immediately preceded by a live operator who discloses prior to the message the name of the collection agency and the fact the message intends to solicit payment and the operator obtains the consent of the debtor to hearing the message;
(14) in collection letters or publications, or in any communication, oral or written, imply or suggest that health care services will be withheld in an emergency situation;
(15) when a debtor has a listed telephone number, enlist the aid of a neighbor or third party to request that the debtor contact the licensee or collector, except a person who resides with the debtor or a third party with whom the debtor has authorized the licensee or collector to place the request. This clause does not apply to a call back message left at the debtor’s place of employment which is limited to the licensee’s or collector’s telephone number and name;
(16) when attempting to collect a debt, fail to provide the debtor with the full name of the collection agency as it appears on its license;
(17) collect any money from a debtor that is not reported to a creditor or fail to return any amount of overpayment from a debtor to the debtor or to the state of Minnesota pursuant to the requirements of chapter 345;
(18) accept currency or coin as payment for a debt without issuing an original receipt to the debtor and maintaining a duplicate receipt in the debtor’s payment records;
(19) attempt to collect any amount of money from a debtor or charge a fee to a creditor that is not authorized by agreement with the client;
(20) falsify any collection agency documents with the intent to deceive a debtor, creditor,
or governmental agency; or
(21) when initially contacting a Minnesota debtor by mail, fail to include a disclosure on the contact notice, in a type size or font which is equal to or larger than the largest other type of type size or font used in the text of the notice. The disclosure must state: “This collection agency is licensed by the Minnesota Department of Commerce.”
§ 332.38 APPLICATION IN CASE OF PRETENDED PURCHASE, ASSIGNMENT OR USE OF A FICTITIOUS NAME.
The provisions of sections 332.31 to 332.45 shall apply to any person who, by any device, subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts from another for the purpose of evading provisions of sections 332.31 to 332.45, or, uses a fictitious name or any name other than the person’s own name which would indicate to the debtor that a third person is collecting or attempting to collect such account or claim.
§ 332.385 NOTIFICATION TO COMMISSIONER.
The collection agency licensee shall notify the commissioner of any employee termination within ten days of the termination if it is in whole or in part based on a violation of this chapter.
§ 332.39 INJUNCTIONS.
The attorney general or the county attorney of any county may apply for an injunction in district court to enjoin any violations of sections 332.31 to 332.45, or any practices prohibited in section 332.37, and any such court may issue temporary or permanent injunctions as the circumstances shall require. Such injunctive proceedings shall be in addition to and not in lieu of penalties and remedies otherwise provided in sections 332.31 to 332.45.
§ 332.395 COMMISSIONER’S POWER OVER INEFFECTIVE LICENSES AND REGISTRATIONS.
If a license or registration lapses, is surrendered, withdrawn, terminated, or otherwise becomes ineffective, the commissioner of commerce may do either or both of the following:
(1) institute a proceeding under section 45.027 within two years after the license or registration was last effective and enter a revocation or suspension order as of the last date on which the license or registration was in effect; (2) impose a civil penalty as provided for in section 45.027, subdivision 6 .
§ 332.40 INVESTIGATION, SUSPENSION, AND REVOCATION OF LICENSES OR REGISTRATIONS.
Subdivision 1. Examination of licensee’s or registered individual collector’s records. The commissioner of commerce may make examinations of the collection records of a licensee or registered individual collector at a reasonable time and in a scope as is necessary to enforce the provisions of sections 332.31 to 332.45, and for that purpose the commissioner shall have free access to the books and records of a licensee or registered individual collector relating thereto. If a licensee or registered individual collector violates any provision of sections 332.31 to 332.45, or any administrative rules issued pursuant to sections 332.31 to 332.45, fails to maintain its financial condition sufficient to qualify for licensure or registration on an original application, or, fails to maintain its registration or comply with all of the requirements of chapter 303, the commissioner may, after notice and hearing in accordance with the provisions of the laws of this state governing proceedings before administrative agencies, revoke a license or registration, or suspend a license or registration for a period as the commissioner deems proper.
Subd. 2. Other examinations. The commissioner may investigate within or without this state as the commissioner deems necessary to determine whether any person has violated any provision of the Fair Debt Collection Practices Act of 1977, or of sections 332.31 to 332.45, or any rule or order thereunder; to determine whether a license or registration should be issued, renewed, or revoked; to aid in the enforcement of sections 332.31 to 332.45; or in prescribing rules and forms thereunder. The commissioner may publish information concerning any violation of sections 332.31 to 332.45 or any rule or order thereunder.
Subd. 3. Commissioner’s powers. For the purpose of any investigation or proceeding under sections 332.31 to 332.45, the commissioner or any person designated by the commissioner may administer oaths and affirmations, subpoena collection agencies or collectors and compel their attendance, take evidence and require the production of any books, papers, correspondence, memoranda, agreements or other documents or records which the commissioner deems relevant or material to the inquiry. The subpoena shall contain a written statement setting forth the circumstances which have reasonably caused the commissioner to believe that a violation of sections 332.31 to 332.45 may have occurred.
In the event that the collection agency or collector refuses to obey the subpoena, or should the commissioner, upon completion of the examination of the collection agency or collector, reasonably conclude that a violation has occurred, the commissioner may examine additional witnesses, including third parties, as may be necessary to complete the investigation.
Any subpoena issued pursuant to this section shall be served by certified mail or by personal service. Service shall be made at least 15 days prior to the date of appearance.
Subd. 4. Court order to compel disclosures. In case of contumacy by or refusal to obey a subpoena by any person the district court upon application by the commissioner may issue to the person an order directing the person to appear before the commissioner or commissioner’s designee to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court.
§ 332.41 APPEALS.
Appeal from a denial, suspension
§ 332.42 REPORTS AND RECORDS.
Subdivision 1. Verified financial statement. The commissioner of commerce may at any time require a collection agency licensee to submit a verified financial statement for examination by the commissioner to determine whether the collection agency licensee is financially
responsible to carry on a collection agency business within the intents and purposes of sections 332.31 to 332.45.
Subd. 2. Record keeping. The commissioner shall require the collection agency licensee to keep such books and records in the licensee’s place of business in this state as will enable the commissioner to determine whether there has been compliance with the provisions of sections 332.31 to 332.45, unless the agency is a foreign corporation duly authorized, admitted, and licensed to do business in this state and complies with all the requirements of chapter 303 and with all other requirements of sections 332.31 to 332.45. Every collection agency licensee shall preserve the records of final entry used in such business for a period of five years after final remittance is made on any amount placed with the licensee for collection or after any account has been returned to the claimant on which one or more payments have been made.
§ 332.43 DELINQUENT COLLECTION AGENCIES.
Subdivision 1. Appointment of receiver. If the commissioner shall determine that a collection agency licensee is insolvent or has collected accounts but has failed to remit money due to any claimant within 45 days from the end of the month in which collection was made, or when the license of a collection agency has expired or terminated for any reason whatsoever, the commissioner, on determining such action necessary to protect the public interest, may apply to the district court for the county in which the main office of such agency is located for appointment of a receiver to receive the assets of the collection agency licensee for the purpose of liquidating or rehabilitating its business and or for such other relief as the nature of the case and the interest of the claimants may require. The reasonable and necessary expenses of the receivership shall constitute the first claim on the bond.
§ 332.44 RULEMAKING POWER.
The commissioner of commerce shall make and file in accordance with the provisions of chapter 14, all reasonable rules as shall be necessary for the administration of sections 332.31 to 332.45.
§ 332.45 LIABILITY OF SURETIES.
Sureties for collection agencies who have executed bonds pursuant to Minnesota Statutes 1967, sections 332.01 to 332.03 shall not be liable for any new liabilities incurred by the collection agency after the commissioner of commerce has approved that agency’s bond as required by section 332.34.
Minnesota Debt Collection Laws
Knowing and abiding to the proper Minnesota debt collection laws is important for both creditors and collection agencies alike. There are debtor’s rights attorneys who are just waiting for creditors or collection agencies to slip up. If you mistakenly violate the Minnesota debt collection laws, you could create a liability for your business and even open yourself up to a expensive lawsuit.
Please note: Minnesota debt collection laws can change over time, and you need to consult with an attorney before you use this information.
Minnesota Debt Collection Laws
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