Indiana Debt Collection Laws: Garnishment Limits, Verified Exemption Figures, and Debt Deadlines

No creditor in Indiana can start taking money out of your paycheck simply because a bill is unpaid. A creditor must first sue you, win a judgment, and then get a garnishment order from the court, except for support orders, tax debts, and federally administered student loan garnishment. Most garnishments follow a default judgment entered because the person being sued never answered the lawsuit, which makes answering the summons the single most valuable step available to an Indiana debtor. One honest note before the details: Indiana's official code website renders its statute text through JavaScript in a way that blocked automated verification for much of the research behind this article. Where a figure is confirmed directly against an official Indiana source, that is stated plainly below; where it rests on cross-corroborated secondary sources rather than a direct reading of the statute, that is flagged too.

How Wage Garnishment Works in Indiana

Indiana's substantive garnishment cap is set out in the Uniform Consumer Credit Code, IC 24-4.5-5-105, part of Title 24 (Trade Regulation). It caps ordinary wage garnishment at the lesser of 25% of disposable earnings for the week, or, if the debtor shows good cause, a lesser amount down to 10% of disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage ($217.50 a week at the current $7.25 federal rate). Some older material online cites this rule to «IC 37-2-6-4», which does not correspond to any active section of the current Indiana Code; the correct citation is 24-4.5-5-105. This formula was confirmed directly against the live statute text at iga.in.gov.

The same section, at 24-4.5-5-105(8), gives a support-withholding order priority over an ordinary garnishment order regardless of which one was entered or activated first, also confirmed directly against the live statute text.

No head-of-household wage exemption was located in Indiana law. On firing protection, IC 24-4.5-5-106, confirmed directly against the live statute text, bars discharging an employee because «a creditor or creditors» has subjected the employee's earnings to garnishment «for the purpose of paying a judgment or judgments», language that is explicitly plural and broader than the federal one-debt limit in 15 U.S.C. 1674. Some secondary sources describe a violation as a Class A misdemeanor carrying reinstatement and back pay; that penalty detail does not appear anywhere in the statute text itself and should be treated as unconfirmed rather than repeated as fact.

Indiana's state tax wage-levy percentage was not located this session, and no figure should be assumed.

The One Figure Confirmed Directly: Indiana's Exemption Amounts

The strongest sourcing in this article comes from a document that was read directly rather than cross-corroborated: Indiana's Department of Financial Institutions publishes a regulatory PDF (Title 750 of the Indiana Administrative Code, the agency's own dollar-amount indexing rule) that sets the current exemption figures tied to IC 34-55-10-2. As of that document, current since a March 2022 adjustment and not due for another mandatory update until no later than March 2028: $22,750 for a personal or family residence, $12,100 for other real estate or tangible personal property, and $450 for intangible personal property. Those figures correct older guesses that circulated closer to $10,250 and $400 for the real estate and intangible categories; the DFI's own current numbers are $12,100 and $450.

The same DFI document indexes a separate consumer-credit figure, the $4,800 threshold under IC 24-4.5-5-103(7) relevant to restrictions on deficiency judgments in Indiana consumer credit sales. The precise mechanics of how that threshold limits a deficiency judgment were not independently confirmed this session, so treat the number as accurate but the operative rule around it as something to verify before relying on it in a specific case.

Indiana's Medical-Debt Garnishment Fight, and What Actually Passed

Indiana considered, and did not enact, a broad medical-debt garnishment reform in its 2026 legislative session. Senate Bill 85 would have eliminated wage garnishment entirely for medical debt owed by patients at or below 200% of the federal poverty level, and capped garnishment at 10% for everyone else. It passed the Senate in late January 2026 but died in the House without becoming law, according to consistent reporting from multiple Indiana news outlets. As a result, Indiana currently applies the same general 24-4.5-5-105 cap to medical debt as to any other consumer judgment; there is no separate, lower medical-debt garnishment percentage in Indiana.

A different bill did become law. Senate Bill 225 (Public Law 124, effective July 1, 2026) is a hospital price-transparency compliance measure, not a garnishment-percentage cap: if the Indiana Department of Health determines through a semiannual review that a hospital is not complying with the state's price-transparency requirements, that hospital and its debt collectors are barred from pursuing collection on debt from the noncompliant period, and the patient gains an affirmative defense. It is a collections bar tied to a hospital's own compliance record, a different mechanism from a garnishment-percentage limit, and it should not be described as the latter.

How Long Can You Be Sued: Indiana's Statute of Limitations

Indiana's debt deadlines have an unusual feature worth flagging up front: they do not follow the common national pattern where a written contract gets a longer deadline than an unwritten one. For instruments executed after August 31, 1982, IC 34-11-2-9 sets a 6-year period for promissory notes and other written contracts for the payment of money (instruments from September 19, 1881 through August 31, 1982 get 10 years, a category that has largely aged out). Deposit accounts are a specific carve-out within that same section: IC 34-11-2-9(c), confirmed directly against the live statute text, gives an action on a deposit account, whether brought by the depositor or the depository institution, only 2 years, not the 6-year period that governs other written contracts under the rest of the section. IC 34-11-2-7 separately groups «accounts and contracts not in writing» at 6 years as well. In Indiana, written and unwritten money obligations currently converge at the same 6-year period, which is not true in most states.

Indiana courts have addressed how credit card debt fits into that framework. In Smither v. Asset Acceptance, LLC, Indiana courts treated a credit card account as an open account governed by the unwritten-contract statute, IC 34-11-2-7, rather than the written-contract statute, because the full account terms are not contained in one signed writing. In Indiana, that classification affects accrual and revival mechanics more than the length of the deadline itself, since both tracks currently sit at 6 years.

On revival, IC 34-11-9-1 addresses acknowledgment and new promise: a written, debtor-signed acknowledgment of the debt suspends or restarts the limitations clock. Secondary sources also describe a bare partial payment as capable of restarting the period on its own, but the precise interaction between the writing requirement and an unwritten payment was not confirmed against the live statute text this session. Until that is checked, the safer assumption is that a signed writing is what reliably restarts the clock in Indiana, and a partial payment without one should not be relied on either to expect a restart or to expect none. For deadlines on other kinds of Indiana claims, see the Indiana statute of limitations guide.

Rules Debt Collectors Must Follow

Third-party collectors working Indiana debts are bound by the federal Fair Debt Collection Practices Act: no harassment, no false statements about what they can legally do, no contact at unreasonable hours, and validation information on first contact. Under Regulation F, 12 CFR 1006.26, a debt collector must not sue or threaten to sue on a time-barred debt, though asking for voluntary payment remains legal. Because Indiana's revival rule for an unwritten payment is not fully settled, treat any request to «just make a small payment» on an old Indiana debt with real caution until you know exactly how old the debt is.

Car Repossession in Indiana

Secondary sources describe Indiana's UCC Article 9 enactment, IC 26-1-9.1-609, as following the standard national self-help rule: a secured party may take possession of collateral without judicial process if it can do so without breach of the peace, and must otherwise pursue the matter in court. That section itself was not opened directly this session, though its existence and general subject matter are corroborated by other Title 26 sections that cross-reference it.

Indiana also imposes a law-enforcement notification requirement on repossession agents worth knowing about. Under IC 26-2-10-6, confirmed directly against the live statute text, a repossession agent who repossesses or intends to repossess a motor vehicle or watercraft must provide the sheriff's department for the area with the repossession company's identity, a description of the vehicle, and the possessor's name and address, either before the repossession occurs or no later than 2 hours after it does. This is a police-notification rule rather than a debtor cure right, but it means a call to the local sheriff's department can confirm whether a repossession was reported as the statute requires.

Whether Indiana has a general right-to-cure notice before repossession is a genuine open question, not a confirmed negative. This article specifically looked for IC 24-4.5-5-110 and -111, the sections the Uniform Consumer Credit Code typically uses for notice-of-default and cure rights, and could not locate their text or confirm they exist under those numbers in the current Indiana Code. That is a research gap, not proof that Indiana has no cure right; a different section number, or a right buried in a chapter not searched this session, may exist. A separate and unrelated statute, IC 24-5-0.5-4 and -5, gives consumers a 30-day «offer to cure» mechanism for general deceptive sales practices, but that is not a repossession-specific right and should not be treated as one.

If You Are Being Garnished or Sued in Indiana

Start with the paperwork. If you were served with a lawsuit, answer it before the deadline even with a simple denial, because a default judgment forfeits every defense, including an expired statute of limitations. If a garnishment has already started, check the math against the 25%/10%-good-cause formula, and ask a legal aid attorney or the court about the good-cause reduction if your income is tight. If a car is at risk of repossession, do not assume there is no cure period without checking your specific contract and asking a lawyer, since Indiana's cure-right statute could not be confirmed either way this session. If the debt is old, be careful before making even a small payment, since Indiana's rule on whether that alone restarts the clock is unsettled. When judgments and garnishments have stacked up faster than a budget can absorb, bankruptcy's automatic stay stops wage garnishment immediately, and a structured guide to stopping wage garnishment walks through the options in order.

Information last verified on 2026-08-12. This article has not yet been reviewed by a licensed lawyer.

Related Resources

• Debt Collection Laws by State
• Statute of Limitations on Debt
• How to Stop Wage Garnishment
• Car Repossession Laws
• Indiana Statute of Limitations
• Indiana Bankruptcy Laws

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Last updated: 2026-08-12.