Can a 1099 Be Garnished in Indiana?

Many people do not earn their income working regular 9 to 5 jobs. Rather, these people may instead do contract work for various companies. So, instead of being paid under a regular W-3 classification, in which the individuals have their salary withheld from their paychecks, they are paid under 1099 status, as contractors. These payments can be garnished in Indiana, as well as in other states.

1099s

A 1099 is a classification of worker, one who is not a regular employee, but a contractor. There are many differences between contractors and regular employees, but one of the largest is that contractors do not receive a weekly paycheck from which money is withdrawn, but one or more irregular, lump sum payments. Thus, when garnished, a creditor doesn't just have to take a portion of the salary, as with W-2 employees, but sometimes he can take the whole payment.

Garnishments in Indiana

In Indiana, garnishments are allowed for creditors who wish to collect on old debts. However, as in all states, the creditor must first have his lawsuit against the debt heard by a civil court and must receive the authorization of a judge to serve the garnishment. Garnishments for contract work function very similarly to garnishments for full-time work, although a creditor is not limited to taking only a portion of the paycheck.

Garnishment of 1099s

While the money paid in a 1099 -- the taxes paid to the IRS -- cannot be garnished, the money provided by the employer hiring the contractor definitely can. All a creditor has to do is serve the employer with a garnishment order, authorized by a judge, before the money is paid to the contractor. The money will usually be taken in a lump sum instead of as a percentage.

Considerations

If the money from a 1099 cannot be seized from the employer before it is paid -- as is often the case, as a court may not have any forewarning of a contract work's payment -- then the money may be seized from the individual's bank account later. Indiana allows creditors to, in certain circumstances, seize money from the bank account of debtors and use it to pay down the debt.