Garnishment of Wages

What is garnishment?

Garnishment is a process by which creditors take a part of your income in order to enforce a debt. If you are employed, your employer will be ordered to pay a portion of your wages or salary directly to the court. That money will then be paid over to the creditor.

Do I have to be sued first, before my income can be garnished?

In most cases, yes. Creditors such as hospitals, doctors, credit card or loan companies or banks must file a lawsuit against you and get a judgment, before your income can be garnished. In most cases, a “Proceedings Supplemental” hearing is scheduled – see our separate topic, Proceedings Supplemental, for more information.

There are a few exceptions, including some tax and student loan cases, in which the government can garnish your income without first going to court. If this happens, you may wish to seek legal advice.

What kind of income can be garnished?

A portion of your earnings may be garnished. "Earnings" include: wages, commissions, rent received, or other income such as dividends. Generally, Social Security, SSI, Veterans benefits, and Railroad Retirement cannot be garnished, nor can certain types of civil service, military and pension benefits. Child support you receive cannot be garnished.

If you've arranged with a bank for the direct deposit of funds from Social Security or the V.A., or have put these governmental benefits into your account, these benefits cannot legally be garnished or seized. BE SURE to tell your creditor, its attorney, and/or the Judge if your bank account has funds from governmental benefits; otherwise, these might be taken by mistake.

How much can be garnished?

Your wages can be garnished only if there is a judgment against you AND your weekly take-home pay is more than $175.50. This figure is based on 30 times the minimum wage (30 x $5.85) and will change if the minimum wage changes. If your weekly take-home pay is more than $175.50 per week, the court will use two formulas to determine how much of your check can be garnished. The court will order your employer to take out the lesser of:
  1. 25% of one week’s take-home earnings; or
  2. The total amount by which a week’s take-home earnings is more than $175.50 (30 x minimum wage).

For example, if your take-home pay is $300 the court could garnish the lesser of:
  1. 25% x $300 = $75 or
    2. $300 - $175.50 = $124.50

So the court could order up to $75 to be garnished from your weekly check.

NOTE: Different rules apply if you owe child support or if you owe money to the government for taxes or student loans. Contact an attorney if you have judgments on these debts to see what can be taken.

Can more than one creditor garnish me at a time?

Normally not – if one creditor is garnishing the maximum amount allowed by law, other creditors must wait until the first creditor’s judgment is satisfied.

What happens to my employer?

Your employer may be summoned to Court and/or sent papers from the Court. Your employer may be ordered to take money directly out of your paycheck to be sent to the Court.

Can my employer fire me because I have been garnished?

NO – you may not be fired just because your wages are being garnished.

Can I be sent to jail because I cannot pay anything?

NO – you may not be jailed or fined, just because you have no income that can be garnished. You cannot be ordered to pay the judgment in installments, if the installments are larger than those under the garnishment formula.

However, you may be punished if you don't go to Court, if you hide assets or wages, or if you refuse to pay a lawful garnishment Order.

Can I set up payments with the creditor out of court?

Yes. If you want to do this, call the creditor or its attorney before your hearing date. The attorney may allow you to pay the judgment in installments instead of going to Court. This could stop your employer from becoming involved. Be sure that the creditor or its attorney gives you proper credit for all payments you make, and keep all receipts and a record of the balance due.

Some creditors may also accept a lump-sum settlement to satisfy the Judgment. If you agree to pay a lump sum, be sure to get a release ("satisfaction of judgment") from the creditor or Court.

Last revised: 7-2003
LSC Code:1020400
© Copyright, 2003 Indiana Legal Services, Inc.
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