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 citation note before the details: Indiana recodified its consumer credit law in 2026 (P.L.115-2026), moving these provisions out of Title 24, Article 4.5, which is now repealed, and into a new Title 37 (Consumer Lending). Much of the material online still cites the old Title 24 numbers, so the current citations used below will not match what many secondary sources show.

How Wage Garnishment Works in Indiana

Indiana's substantive garnishment cap is set out at IC 37-2-6-4, in Title 37 (Consumer Lending). 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). Much of the material online still cites this rule to IC 24-4.5-5-105. That was the correct citation before the 2026 recodification, and the current section text carries the note «Pre-2026 Revision Citation: 24-4.5-5-105», but Title 24, Article 4.5 is now repealed, so IC 37-2-6-4 is the citation to use.

The same section, at IC 37-2-6-4(h), gives a support-withholding order priority over an ordinary garnishment order regardless of which one was entered or activated first.

No head-of-household wage exemption was located in Indiana law. On firing protection, IC 37-2-6-5 (pre-2026 citation IC 24-4.5-5-106) 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 threshold that governs restrictions on deficiency judgments in Indiana consumer credit sales. That rule now sits at IC 37-2-6-2 (pre-2026 citation IC 24-4.5-5-103). The statute states a base amount of $4,000 in subsections (b) and (c), and subsection (g) subjects that amount to indexing under IC 37-2-1-5 against an October 2012 reference base index, which is how the DFI arrives at its higher published figure of $4,800. The operative rule is that where a seller repossesses or accepts surrender of goods whose cash price was at or under that threshold, the buyer is not personally liable for the unpaid balance of the debt, and the seller is not obligated to resell the collateral.

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 IC 37-2-6-4 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.

Indiana's consumer lending law does not give buyers a general right to cure a default before repossession. The remedies chapter that governs consumer credit sales, IC 37-2-6, runs from section 0.1 through section 14 and contains no notice-of-default or cure provision, and a full-text review of Title 37 turned up no general pre-repossession right to cure. The one reinstatement right in the title is narrow and unrelated to vehicles: IC 37-5-5-2 lets a borrower on a high cost home loan cure the default and reinstate the loan before title transfers by foreclosure or sale. 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. Your own loan contract can still require notice before repossession, so read it.

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, check your specific contract for a notice or cure requirement, since Indiana's consumer lending statutes do not supply a general one. 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.

More Indiana Laws

• Indiana Final Paycheck Laws
• Indiana Statute of Limitations
• Indiana Unclaimed Property

Frequently Asked Questions

How much of my paycheck can be garnished in Indiana?

The lesser of 25% of disposable earnings, or a lower amount down to 10% if a court finds good cause, or the amount by which disposable earnings exceed 30 times the federal minimum wage, under IC 37-2-6-4. Many sources still cite this formula to IC 24-4.5-5-105, which was its pre-2026 number; that article of Title 24 has since been repealed.

What is Indiana's homestead and personal property exemption?

Indiana's Department of Financial Institutions publishes current indexed figures of $22,750 for a homestead, $12,100 for other real estate or tangible personal property, and $450 for intangible personal property, current since March 2022 and next due for adjustment no later than March 2028.

Is there a medical-debt garnishment cap in Indiana?

Not currently. A 2026 bill (SB 85) that would have eliminated wage garnishment for lower-income medical debt and capped it at 10% otherwise passed the Senate but died in the House. Medical debt is treated the same as any other consumer judgment under the general IC 37-2-6-4 formula.

What is the statute of limitations on debt in Indiana?

6 years for both written and unwritten contracts and accounts for money owed, under IC 34-11-2-9 and 34-11-2-7, for obligations dating from after August 31, 1982. Indiana courts have treated credit card debt as an unwritten account under 34-11-2-7.

Does making a payment restart the clock on old debt in Indiana?

A written, signed acknowledgment restarts the limitations period under IC 34-11-9-1. Whether an unwritten partial payment alone also restarts it was not confirmed against the current statute text, so treat a signed writing as the reliable route and get advice before relying on an unwritten payment.

Does Indiana require notice before repossessing a car?

Indiana statute does not require a general right-to-cure notice before a vehicle repossession. The remedies chapter for consumer credit sales, IC 37-2-6, contains no cure or notice-of-default provision. A repossession agent must notify the local sheriff's department under IC 26-2-10-6, but that is a police-notification rule, not notice to you. Your loan contract may still require notice, so read it and ask a lawyer.