A wage garnishment in Indiana on your paycheck can instantly destroy your budget. If you receive a lawsuit, your creditor may be able to obtain a judgment against you. This judgment will allow the creditor to eventually garnish your wages. How much is allowable from your paycheck to be taken in a wage garnishment?
The general rule for wage garnishments in Indiana is that the creditor can take 25% of your gross wages per paycheck. Remember, the general rule for most people being garnished is to take 25% of your gross wages. This can be a considerable amount of your total income because it is taken out before taxes, insurance, and other deductions. A 25% wage garnishment quickly cripples most people’s budget. If you are already in debt, most likely you were facing a tight budget in the first place.
There are some situations where less than 25% is taken for a wage garnishment. However, these less-than situations are limited in Indiana. They are not as common as the standard 25% wage garnishment.
First, some federal and state government garnishments are for less than 25%. These garnishments usually take only 15% of your gross wages. These types of wage garnishments are usually categories such as unpaid taxes, unpaid federal-backed student loans, and over-payment of government benefits.
Second, some wage garnishments in Indiana are entered in at less than 25% according to agreement of the parties. If you make an agreement with the creditor, the creditor will sometimes offer to garnish your wages at a lesser percentage. This allows the sued party(s) to repay the debt through their paycheck without crippling their budget. Some creditors agree to this lesser garnishment percentage to avoid forcing the debtor to file for bankruptcy.
Third, some wage garnishments are ordered by the state court judge at a lesser amount than 25% due during limited income situations. The judge is allowed to decrease the amount of the wage garnishment due to economic considerations. The judge may not reduce this 25% figure automatically. An argument in favor of a lesser amount than 25% may be necessary for judge to consider whether the lesser amount should be garnished. In addition, an Indiana garnishment can sometimes be capped if the amount proposed to be taken is more than 30 times minimum wage.
Planning ahead can many times avoid the “25% garnishment trap.” Most people cannot survive a 25% garnishment on their pay for very long. If at all possible, it may be wise to negotiate a resolution of your debts far before they reach the garnishment stage. If your debt situation is clearly impossible, you need to consider filing Chapter 7 or Chapter 13 bankruptcy.