Before a creditor can garnish a debtor's wages or a bank account for unpaid debt, he must file a lawsuit and obtain a writ of garnishment. Although Indiana does not deviate much from federal garnishment law, it has set its own exemptions and restrictions for garnishment procedures. Indiana Code describes the types of income and personal property that can be exempt from garnishment.
Income Exemptions
Indiana Code title 28, article 9, chapter 4 states that certain types of income may be exempt from garnishment. This includes social security, supplemental security income, veterans benefits, crime victims' compensation and certain disability benefits. Under Indiana Code title 27, some insurance policies and annuity income are exempt from garnishment. The state protects fraternal society benefits, group insurance policies and mutual life or accident insurance proceeds. It also exempts life insurance policy proceeds if the beneficiary is the insured's spouse or dependent or if the policy does not allow you to use proceeds to pay creditors.
Pension Exemptions
While many states exempt all pension benefits, Indiana leaves private sector pension benefits open to garnishment. It also exempts public assistance and workers' compensation from garnishment collection. Under Indiana Code title 5, article 10.3, chapters 8 to 9, certain types of pensions are exempt from garnishment. All firefighters' pension benefits are exempt from garnishment collections. Indiana protects police officers' and sheriffs' unpaid benefits. State-employed teacher's pensions are exempt from garnishment. Indiana Code also protects all retirement plans.
Personal Property Exemption
Under Indiana Code title 34, article 55, chapter 10, the state protects real estate or tangible personal property in the amount up to $4,000. It also protects all business partnership property from garnishment. It protects up to $100 of personal intangible property, exempt money that a debtor owes to a creditor.
Garnishment Amount
Indiana Code title 24, article 4.5, chapter 5 states the garnishment amount exemptions set by the state. Indiana follows federal garnishment law and allows a creditor to collect as much as 25 percent of a debtor's disposable income. However, a debtor should have at least 30 times the federal minimum hourly wage, which is $7.25 as of July 2009. For child support garnishment, only 50 percent of a debtor's income is exempt from garnishment if he supports a second family. Indiana allows the child support collection agencies to garnish 55 percent of a debtor's wages if he is more than 12 weeks delinquent. If he doesn't have a second family, the state allows to garnish up to 65 percent of his income.
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