Wage Garnishment in Indiana: How to Protect Your Paycheck
Indiana creditors need a court judgment to garnish your wages, with few exceptions like IRS tax debts and child support. They can take up to 25% of your disposable earnings, but you can request a reduction to 10% by showing good cause. You can stop garnishment by paying the debt, negotiating a payment plan, or filing bankruptcy.
Answer Your LawsuitA creditor can take money directly from your paycheck through wage garnishment. Most creditors need a court judgment first. Indiana law limits how much they can take and protects certain income.
What Is Wage Garnishment?
Wage garnishment is a legal debt collection method. Creditors take money directly from your paycheck before you receive it. You’ll see the garnishment as a deduction on your pay stub.
Facing a Debt Lawsuit in Indiana?
Creditors must sue you and win a judgment before garnishing wages. Respond to the lawsuit properly to protect your paycheck and your rights.
Respond to Lawsuit NowMost creditors need a money judgment against you first. Once they have that judgment, they can request a garnishment order. The court then determines how much can be taken from each paycheck.
Creditors must follow strict rules about garnishment amounts. Indiana and federal laws protect you from excessive wage garnishment. Certain types of income are completely protected from collection.
Who Can Garnish Your Wages in Indiana?
Original creditors, debt collectors, and debt buyers can garnish your wages. They must have a valid court judgment for the debt you owe. Without a judgment, most creditors cannot touch your paycheck.
Some creditors don’t need a judgment to garnish wages. The IRS can garnish for unpaid taxes without going to court. Federal student loan servicers can garnish for defaulted federal loans.
Child support is another exception to the judgment requirement. Parents owed child support can request wage garnishment directly from the court. They can take up to 50% of your disposable wages. If you don’t support another child or spouse, they can take 60%.
Private student loan servicers must obtain a judgment first. The same applies to credit card companies and medical debt collectors. Our partner Solo can help you respond if you’re facing a debt lawsuit.
The Indiana Wage Garnishment Process
Creditors must sue you in court to collect the debt. If you don’t appear to contest the lawsuit, the court issues a default judgment. With a judgment in hand, the creditor can start the garnishment process.
The creditor requests a proceeding supplemental hearing. You’ll receive notice about when and where this hearing takes place. The court needs information about your employment and income to calculate the garnishment.
You must answer questions about your financial situation at this hearing. The creditor may also send interrogatories to you, your bank, or your employer. These are written questions that gather details about your income and assets.
After collecting this information, the creditor asks for a garnishment order. The court calculates the maximum amount that can be taken. Your employer then withholds that amount from each paycheck.
Reducing the Garnishment Amount
You can ask the court to reduce the garnishment amount. You must show good cause for the reduction request. Good cause means a valid reason that justifies the court’s intervention.
Examples of good cause include inability to pay essential bills. If the garnishment prevents you from buying food for your children, that’s good cause. The court may reduce the garnishment to as low as 10% of disposable earnings.
How Much Can Be Garnished From Your Paycheck?
Federal and Indiana law limit garnishment amounts. Creditors can only take the total judgment amount plus fees, costs, and interest. Indiana follows federal garnishment limits for most debts.
Creditors can garnish the lesser of these two amounts per paycheck:
- 25% of your disposable earnings for that week
- The amount by which your weekly disposable earnings exceed 30 times the federal minimum wage ($7.25)
Disposable earnings means your income minus legally required deductions. These deductions include payroll taxes and Social Security contributions. Voluntary deductions like retirement contributions don’t count.
With court approval for good cause, the garnishment can drop to 10%. This minimum protects you from losing too much of your paycheck. You need enough money left to cover basic living expenses.
Protected Income Sources
Certain types of income cannot be garnished at all. Social Security benefits are completely exempt from garnishment. Veterans benefits also enjoy full protection under federal law.
Other protected income sources include:
- Unemployment compensation
- Workers’ compensation benefits
- Disability payments
- Public assistance benefits
Indiana provides additional exemptions for certain assets. These protections ensure you can maintain basic necessities during collection efforts.
How to Stop a Wage Garnishment in Indiana
You have three main options to stop a wage garnishment. Each option works differently depending on your financial situation.
Pay the Full Amount
Paying the judgment in full immediately stops the garnishment. You can pay with a lump sum or continue the garnishment until paid off. A lump sum payment saves you money on fees and interest.
Contact the creditor to discuss payment options. They may accept less than the full amount as a settlement. Get any settlement agreement in writing before making payment.
Negotiate a Payment Plan
Some creditors will accept a payment plan instead of garnishment. You make monthly payments directly to the creditor. The garnishment stops once the creditor agrees to the plan.
Payment plans work best if you can afford reasonable monthly payments. The creditor must agree to stop the garnishment voluntarily. Without their agreement, the garnishment continues.
File for Bankruptcy
Bankruptcy immediately stops most wage garnishments through the automatic stay. Chapter 7 bankruptcy can discharge the underlying debt entirely. Chapter 13 bankruptcy allows you to repay debts through a manageable payment plan.
Bankruptcy provides a fresh financial start for many people. You can speak with a bankruptcy attorney for free to explore your options. An attorney helps you understand which chapter fits your situation best.
Resources for Indiana Residents Facing Wage Garnishment
Indiana offers several resources for people dealing with wage garnishment. Many provide free or low-cost legal assistance.
Indiana Legal Services (ILS)
ILS provides free legal representation to qualifying low-income residents. You can apply online through their screening tool. They handle various civil legal matters including debt collection defense.
Indianapolis Legal Aid Society (ILAS)
ILAS serves Indianapolis and surrounding counties with free legal help. They offer both advice and full representation for eligible clients. Their services cover debt collection and consumer protection issues.
Indiana Legal Help
Indiana Legal Help connects you with legal assistance by county. The website provides resources, forms, and referrals to local help. You can find information specific to your geographic area.
Self-Service Legal Center
The Indiana court system operates a self-service legal center online. You’ll find forms, instructions, and guidance for representing yourself. The center offers resources for various civil legal issues.