Indiana Garnishment Statute: Limits, Exempt Income, and Defenses

Indiana wage garnishment laws cap most creditors at 25% of your weekly disposable earnings, or the amount by which those earnings exceed $217.50 per week, whichever leaves more money in your pocket.¹ Before a regular creditor can touch your paycheck at all, it has to sue you and win a court judgment. Child support, IRS tax levies, and certain other federal debts follow different rules with higher caps, and some of them skip the court process entirely.

How Much of Your Paycheck a Creditor Can Take

For ordinary consumer debts (credit cards, medical bills, personal loans, and the like), the garnishable amount is the lesser of two figures:

25% of your disposable earnings for the pay period, or
The amount by which your disposable earnings exceed 30 times the federal minimum wage — $7.25 × 30 = $217.50 per week.

Whichever calculation leaves you with more money is the one that applies.² If your weekly disposable earnings fall at or below $217.50, nothing can be garnished for a consumer debt.³

Disposable earnings are not your gross pay. Under Indiana law, they are what remains after legally required deductions: federal and state income tax, Social Security, and Medicare.¹ Voluntary deductions such as health insurance premiums, 401(k) contributions, and life insurance do not reduce the number the creditor uses. Commissions and bonuses count as earnings; customer tips generally do not.

A Worked Example

Say your weekly gross pay is $800 and legally required deductions total $160, leaving $640 in disposable earnings. Twenty-five percent of $640 is $160. The minimum-wage calculation is $640 minus $217.50, or $422.50. The creditor gets the smaller figure: $160.

Now take someone earning $300 a week with $50 in required deductions, so disposable earnings of $250. Twenty-five percent is $62.50. The minimum-wage calculation is $250 minus $217.50, or $32.50. The creditor gets $32.50.³

Asking the Court to Cut It to 10%

Indiana gives debtors a tool federal law does not. If the 25% garnishment is causing genuine hardship, you can ask the judge to reduce it, and the court can go as low as 10% of your disposable earnings on a showing of good cause.¹ The statute doesn’t define good cause, so bring documentation: monthly budget, rent or mortgage, utilities, medical bills, dependents, and anything else that shows the full deduction would leave you unable to meet basic needs. Vague claims of difficulty won’t move a court; concrete numbers can.

What Has To Happen Before Garnishment Starts

A creditor can’t garnish you just because you owe the money. It has to file a lawsuit, win a judgment, and then use a process called “proceedings supplemental to execution” under Indiana Trial Rule 69(E) and Indiana Code 34-55-8.⁴

The creditor files a verified motion stating that it owns the judgment, that a levy on your property wouldn’t satisfy the debt, and that your employer (as garnishee) owes you wages. The court issues an order for you and the garnishee to appear or answer questions in writing about your income and assets.⁵ You must be served with the motion and hearing date. If you receive that notice and fail to appear, the creditor can ask the court to hold you in contempt. After the hearing, the court can order a continuing wage garnishment subject to the caps described above.

Child Support Follows Different Rules

Support obligations reach much deeper into a paycheck. Federal law allows garnishment of up to 50% of disposable earnings if you are currently supporting another spouse or dependent child, and up to 60% if you are not. Either cap rises by 5% (to 55% or 65%) when the support order includes arrears more than 12 weeks overdue.²

In Indiana, child support withholding orders take priority over all other garnishments. Only current federal, state, and local taxes come ahead of them.⁶ If you owe support under multiple orders and the combined amount exceeds what can legally be withheld, your employer must prorate across the orders rather than paying one in full while the others go short.

Federal Debts That Skip the Court

Two categories of federal debt bypass the judgment requirement entirely, and they catch a lot of people off guard.

IRS Wage Levies

The IRS can levy your wages for unpaid federal taxes without ever suing you, and the 25% consumer cap doesn’t apply. Instead, the IRS uses tables based on your filing status, pay frequency, and number of dependents to figure out how much of your pay is exempt. Everything above that exempt figure goes to the IRS.⁷ For many taxpayers, this leaves less in the paycheck than a standard garnishment would. The IRS sends a notice of intent to levy first, which is your window to arrange a payment plan or dispute the amount.

Administrative Wage Garnishment

Federal agencies can garnish up to 15% of your disposable pay for non-tax debts (defaulted federal student loans are the common example) without going to court. The agency must send written notice and offer a hearing before the deduction starts, but no judgment is required.⁸

Income and Accounts That Can’t Be Touched

Certain benefits are protected from garnishment regardless of what you owe. Under federal law, direct-deposited Social Security and SSI, veterans’ benefits, federal student aid, military pay and survivor benefits, federal civil service and retirement benefits, railroad retirement benefits, and FEMA disaster assistance are shielded. When a bank receives a garnishment order on your account, it must review the last two months of deposits and automatically protect up to two months’ worth of these federal benefits.⁹ SSI is protected even from child support and government-debt garnishments.¹⁰

Indiana adds more. Workers’ compensation and unemployment compensation are fully exempt. Tax-deferred retirement accounts (pensions, IRAs, 401(k)s), public employee and teacher retirement funds, health savings accounts, medical care savings accounts, group life insurance proceeds, and professionally prescribed health aids are generally protected. Indiana also shields a portion of home equity, other real and tangible personal property, and a small amount of intangible personal property such as bank balances from execution.

Can You Be Fired Over a Garnishment

Federal law bars your employer from firing you because your wages are being garnished for one debt. A willful violation carries a fine of up to $1,000, up to a year in prison, or both.¹¹

The catch: this shield covers garnishment for a single debt. Multiple garnishment orders tied to the same underlying debt still count as one, but orders from different creditors do not, and once you have two, federal termination protection drops away.³ If you’re stacking garnishments, resolving at least one of the underlying debts is the practical way to protect the job.

How To Fight or Reduce a Garnishment

You have several avenues once an order is in place.

Ask for a reduction. File a motion for the 10% good-cause reduction discussed above, with documentation of your income, expenses, and dependents.¹

Claim exemptions. If a creditor is going after Social Security, workers’ compensation, unemployment, or another protected source (including a bank account holding federal benefit deposits), raise the exemption with the court and provide proof of the source: deposit records, benefit award letters, and the like.

Challenge the procedure. If you were never properly served with the underlying lawsuit and a default judgment was entered against you, that judgment may be voidable. If the garnishment exceeds the legal caps, miscalculates your disposable earnings, or targets exempt income, the court can modify or vacate it.

What Bankruptcy Does to a Garnishment

Filing for bankruptcy triggers an automatic stay that halts most collection activity, wage garnishments included. The stay is immediate on filing and covers garnishments for credit cards, medical bills, and similar consumer debt.¹² If the creditor cannot get word to your employer’s payroll office in time to stop the next deduction, you can notify payroll of the filing directly.

The stay does not stop everything. Domestic support obligations, including child support and alimony, continue to be collected from your income during the bankruptcy.¹² Whether the underlying debt is ultimately wiped out depends on the type of debt and the chapter you file. Garnishments for debts that survive bankruptcy (certain tax obligations, support arrears) can resume when the case closes.

1
Indiana General Assembly. Indiana Code 24-4.5-5-105 – Limitation on Garnishment and Proceedings Supplemental to Execution; Employer’s Fee
2
Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
3
U.S. Department of Labor. Fact Sheet #30 – Wage Garnishment Protections of the Consumer Credit Protection Act
4
Justia. Indiana Code Title 34 Article 55 Chapter 8 – Proceedings Supplementary to Execution
5
Indiana Rules of Court. Indiana Rules of Trial Procedure Rule 69 – Execution, Proceedings Supplemental to Execution, Foreclosure Sales
6
Indiana Department of Child Services. Child Support Employer FAQ
7
Internal Revenue Service. Publication 1494 – Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income
8
eCFR. 31 CFR 285.11 – Administrative Wage Garnishment
9
Consumer Financial Protection Bureau. Can a Debt Collector Take My Federal Benefits, Like Social Security or VA Payments?
10
HelpWithMyBank.gov. Can My Social Security or Other Federal Benefits Be Garnished?
11
Office of the Law Revision Counsel. 15 USC 1674 – Restriction on Discharge from Employment by Reason of Garnishment
12
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay