With her father's name on the joint savings account, the money in it was fair game for any debt collector who was after him for funds.
When Gloria James, 17, received a $500 scholarship and a few checks at her high-school graduation party in June, she deposited them in her savings account.
Ten days later, when James went to her Brooklyn Center credit union to make a withdrawal, she was told she couldn't.
The funds had been garnished to pay a debt.
"I was confused at first; I don't owe anybody money," said James, who moved with her family to the United States from Liberia when she was 9 and is now a University of Minnesota freshman.
It turns out the debt is her father's. Citibank of South Dakota obtained a judgment against him in January 2011 for $4,304.
When James opened her savings account at 16, banking rules required that she to do so with an adult. With her father's name on the account, the money in it was fair game for any debt collector after him for funds.
In the past few years, state courts have favored creditors with decisions that make it easier to garnish funds from joint bank accounts, with no obligation to give non-debtors a heads-up.
A 2010 Minnesota Supreme Court decision interpreted state law to say a creditor may assume that the entire amount in a joint account belongs to the debtor unless someone can prove otherwise.
Due process takes a back seat
Due process is a constitutional principle that says a person has the right to be given sufficient notice of the taking of their property by legal means.
The collection agency, Rausch, Sturm, Israel, Enerson & Hornik, LLC, a Wisconsin firm with an office in Minneapolis, didn't notify James of the garnishment or her right to argue that the money was hers. Nor did her credit union.
But they weren't required to. Recent court rulings have supported the view that a non-debtor is given sufficient notice of a garnishment if the joint account's debtor is notified.
According to James, her father, Emmanuel James, of Brooklyn Center, failed to share the notification with her.
"My dad doesn't communicate with me. So I would have gone to the store, picked up my school supplies, swiped my card and found nothing there," James said.
Emmanuel James did not respond to Whistleblower's request for comment.
To make matters worse, officials of the collection agency refused to speak to James, she said.
They wanted to talk to her father instead, "despite the fact that I'm the primary holder of the account," James wrote in a letter to the firm.
"[James'] name isn't on the judgment, so if the creditor has a policy of not discussing a debt with a non-debtor, it is understandable they wouldn't talk to her," said Randall Ryder, a Minneapolis lawyer who represents consumers in collections cases.
Jason A. Adams, an attorney for the collection agency, declined to speak to Whistleblower about the company's policies.
Determination pays off
James hopes to pursue either biology or law at the U and is paying college expenses with grants, scholarships and loans.
While in high school, James was enrolled in Upward Bound, a federal program with the stated purpose of providing "fundamental support to participants in their preparation for college entrance." The program serves students from low-income families or families in which neither parent has a college degree.
As part of the program, James interned over the summer in the office of Hennepin County District Judge William R. Howard. He encouraged her to write to the debt collector, describing the situation and how she felt about it, James said.
She spent weeks researching garnishment law, crafted a two-page letter and sent it to Adams on Aug. 17.
James then obtained documentation of what happened and contacted the Volunteer Lawyers Network, a Minneapolis-based nonprofit that serves low-income clients.
James was assigned to attorney Ryder. On Sept. 6, Ryder sent a letter to Adams saying, "We have a problem here."
Adams responded that he had ordered the release of James' funds on Aug. 22, five days after James mailed her letter to him, Ryder said.
"So I really didn't do anything," Ryder said. "[James] took the initiative. She took charge of it and solved it on her own."
In the end, James is out $20, the amount the bank charged to freeze her account and send her father a notice.
She's also on the hook for a bit extra in interest payments from increasing one of her student loans to pay for supplies, not realizing her funds had been released.
James said her credit union told her that when it released her funds, it sent out a notice -- to her father.