Indiana court judgments or other legal orders to pay money are not toothless; the court system has mechanisms to help creditors collect from debtors who won’t pay. Whenever someone owes money pursuant to a court judgment or order, that debtor can be forced to pay through the process of garnishment. That is when money belonging to the debtor which is in the possession of a third party (called a “garnishee”), or otherwise owed to the debtor by the garnishee, is instead ordered to be paid to the creditor. Probably the best known type of garnishment is wage garnishment, when money owed to a debtor by the debtor’s employer is instead paid to a creditor.
Some types of income are protected, or exempt, from garnishment. For example, Social Security is largely (though not entirely) exempt from garnishment: under federal law, it can be garnished only for certain debts to the federal government (like income taxes), child support, and alimony.
Besides the federal exemption for Social Security, states have the right to establish additional exemptions to or protection from garnishment. Indiana, however, has largely declined to exercise that right; the state leaves more non-wage, non-salary types of income potentially open to garnishment than most states. (Note: wages and salary typically enjoy the least protection from garnishment, and are usually fully garnishable subject only to the maximum threshold discussed in the next section.)
Indiana, as can be seen from the above, leaves most forms of income vulnerable to garnishment.
In addition to not establishing many of its own exemptions from garnishment, Indiana has chosen to simply federal law in terms of the maximum amount of income garnished. Under federal law, the lesser of the following may be garnished:
This allows the debtor something to live on, since he or she gets to keep the equivalent each week of working 30 hours at minimum wage.
Note: the 25% threshold is not 25% of income for each garnishment: it is a total of 25% of disposable income subject to garnishment, no matter how many creditors there are.
Once a creditor has a judgment in its favor, under Indiana law, it has a LONG time to look to garnish the debtor’s wages: 20 years for most judgments, which means a creditor can wait two decades to see if a debtor starts earning more money, before garnishing the debtor’s wages or salary.
First, though, it needs to get the judgment. That means suing within the appropriate time (statute of limitations). The limitations period varies with the type of debt or cause of action. For common consumer debts, the limitation periods are:
Since garnishment comes after a creditor has already won in court, getting a judgment ordering the payment of money on some debt, the debtor should already have had an opportunity to defend him- or herself. As a result, the debtor’s involvement in garnishment is often minimal, and the main parties to the garnishment are the creditor and the garnishee (the party holding debtor’s money).
The creditor applies to the court in writing for garnishment. The basis of the application is the judgment. The creditor needs to state those facts or circumstances which give rise to garnishment: money is due it under a judgment (and has not been paid); garnishment is believed necessary to satisfy the judgment; and the garnishee is believed to have money owed to the debtor which can be used to satisfy the debt. For wage garnishment, the garnishee will be the debtor’s employer, and the money owed is the debtor’s salary or wages.
Unless the debtor has some valid (usually procedural, or based in income exemptions) ground for challenging the garnishment, the process of garnishment primarily involves verifying that the garnishee has money due to the debtor, then ordering that some portion of the money instead be turned over to the creditor to satisfy the judgment. More on Stopping Wage Garnishment in Indiana.
Garnishments are granted to satisfy judgments based on legally recognized debts. By the time garnishment is in the works, the debtor should no longer be challenging the basic validity of the debt—that should have been done during the litigation in which the creditor obtained the judgment against the debtor. However, there may be other grounds to challenge the garnishment, or at least to reduce its size; for example—
This is where a lawyer can help a debtor: in challenging the procedural basis for, and application of, the garnishment.