Basics of Indiana Collection Law

If you are owed money and the person or entity that owes you refuses to pay you will have to make the decision whether or not you want to take the matter to court to enforce collection of the monies owed to you. In Indiana for claims involving $6,000 or less, $8,000 or less in Marion County Indiana, there is a simplified procedure for filing a lawsuit in what is called Small Claims Court. The filing fee generally changes slightly from year to year but it should be around $90. Most courts in Indiana are going to e-filing. As a pro-se plaintiff, you are able to file as before. But that law could change in the future.

The advantage to filing in Small Claims Court is a faster route to trial if a trial is necessary. In addition to a streamlined process for obtaining a judgment, Small Claims Court is also designed for a streamlined process for the collection of the judgment. If a trial is required then it usually can be scheduled in a relatively short period of time. One month up to six months. This is a much quicker time frame in which to get in front of a judge than you would have in a court outside of Small Claims Court. Many claims are reduced to judgment without the need for a trial and in that case, you might have a judgment Within 2 months after filing the lawsuit.

Obtaining a money judgment against the person or entity that owes you money is often the easiest part of the process. You then have to collect on the Judgment the court provided to you. This is not automatic. Just because you have a judgment does not mean the person or entity that owes on the judgment will voluntarily pay.

In Indiana, the most common form of collecting on a judgment once one is obtained is through the garnishment of wages. The wage garnishment statutes in Indiana are favorable for creditors. An employer will be required to pay a percentage of an employee’s wages into the court if they receive the proper paperwork from the Judgment creditor through the court system. The formula that is used is 25% of net income (net income is take-home wages after deducting only taxes and Social Security withholdings). If the Judgment debtor makes less than $217.50 which is 30 hours at minimum wage of $7.25 then nothing is taken from their wages on a garnishment. If they make between $217.50 and $290 the entire amount over $217.50 up to $290 is taken as garnishment. If their net income is over $290 then 25% of their wages are garnished. This formula is provided to employers on the paperwork they receive from the court instructing them to garnish the employee’s wages to satisfy the judgment. There can be other considerations such as support payments and independent contractor issues that could change this formula.

Perry Law Office can help you collect on this difficult to collect judgments or help you obtain a judgment.

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