Basics of Indiana Collection Law

What is Small Claims?

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. You may even file a request that the filing fee is waived based on financial need. Most courts in Indiana are going to e-filing. As a pro-se plaintiff, you are able to file at court or online. But that law could change in the future.

Advantages of Small Claims:

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. The rules of evidence are also relaxed, allowing for a more conversational presentation of your claim, vs worrying about the proper method of submitting your evidence proving the debt is owed.

I have Judgment, now what?

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. The formula that is used is 25% of net income (net income is take-home wages after deducting only taxes and Social Security withholding’s). If the Judgment debtor takes home less than $217.50 per week, 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.

What if a debtor has multiple garnishments?

First in time pays. If your garnishment is taking the max 25%, any other garnishments filed after yours has to wait until yours is paid in full. This also works against you, if you are behind another garnishment. This is also where the streamlined process of Small Claims may help you get to a garnishment sooner and beat out other creditors.

Contact Perry Law Office an experienced Fort Wayne debt collection attorney today. Call our Fort Wayne, Indiana law firm at (260) 483-3110 to discuss legal collection services at any stage of delinquency. We offer retail (consumer) and commercial (business to business) Debt Collections.