Indiana Bankruptcy Blog-Can a collector garnish my wages?

            As a bankruptcy attorney helping people file for bankruptcy in the Indianapolis area, you hear a lot of stories about collection calls.  In fact, many people show up at my office to find out whether bankruptcy is a solution to their financial problems because a debt collector has threatened to garnish their wages.

           Yes.  It is true that in Indiana a creditor may garnish your wages....BUT.....the creditor can't just call up your employer and tell them to start withholding funds.  Many debt collectors will threaten garnishment when they are in no position to garnish.  In order to garnish a debtor's paycheck the creditor must first file a lawsuit.  This does not mean a certified letter from the creditor.  Filing a lawsuit requires the collector to serve, via sherif or certified mailing, a summons explaining how long you have to respond or a court date at which you need to appear and a complaint.  These are legal documents and are not on the letterhead of a collector or the collector's attorney.

          Even once the lawsuit has been filed this does not mean that the creditor is entitled to garnish wages. First, the creditor must obtain a judgment.  This can be done if you don't answer the complaint or show up at an assigned hearing date or if you do show up and the judge finds against you.  Just because the creditor has obtained a judgment against you in a lawsuit does not mean that the creditor can garnish your wages.  The creditor must then send interrogatories to your employer to make sure that you are eligible for garnishment.  To be eligible for garnishment means that you make enough money to be garnished according to Indiana law.  There is a formula by which this is calculated, but in the interest of simplicity, I can tell you that almost everyone makes enough to be garnished.

        Once your employer returns the interrogatories to the Court and you are found eligible for garnishment, the Court can issue a Final order in Garnishment.  At this point the order will be sent to your employer and your employer will be ordered to start withholding funds to pay for the garnishment.  The amount of the garnishment is 25% of your net (take home) pay.

       As you can see, the creditors will often try to coerce debtors to pay with false threats.  The threat of garnishment without a lawsuit is almost always without merit.  As with most things said by collectors, the threat of garnishment should be taken with a grain of salt.  And, if you are not certain whether the threat of garnishment is valid, consult a bankruptcy attorney in your area.

      In the event that you have had a garnishment order entered against you or your wages are presently being garnished, the filing of a bankruptcy petition will stop a garnishment in most cases.  If you live in Indianapolis or the surrounding areas and have questions about whether bankruptcy is a good option for you to stop a garnishment please contact me.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.