Bankruptcy Attorney in Indianapolis Answers Reader’s Question About Unemployment

March 11, 2012 1:05 pm Published by

From time to time, Bankruptcy in Indiana readers will pose questions on matters I believe other readers will want to know about. So, this week, I’m devoting all three of my articles to answering readers’ questions.

Today’s question relates to wage garnishment in Indiana, but it’s especially timely, because the reader is worried not about his paycheck from work being garnished, but about the unemployment benefits he’s been receiving since he lost his job. I’ve been hearing a lot about this lately.  In fact, one of the Columbus bankruptcy lawyers who works in the Zuckerberg bankruptcy law offices there tells me she’s hearing just this question, just about every day.

Generally speaking, under the new bankruptcy laws of Indiana, income that can be garnished includes:

  • Salary
  • Commissions
  • Hourly wages (or daily or weekly wages)

Now, as I tell clients when they come to me for Indiana bankruptcy help, not all of your pay can be garnished.  The most that can be taken is 25% of your income OR whatever amount of disposable income that is more than 30X the federal minimum hourly wage.  (Whichever of these two numbers is greater is the maximum that can be garnished.)

Going back to our reader’s specific question about whether unemployment benefits can be garnished, the general answer is “No”.

But, as all good bankruptcy attorneys in Indiana know, there are several important exceptions to that “no” answer when it comes to wage garnishment and even when it comes to the garnishment of unemployment benefits:

  • Child support debt
  • Alimony debt
  • Debts owed to the state of Indiana
  • Criminal fines

Filing individual bankruptcy in Indiana is a way to put a halt to all collection efforts, including garnishment.  For those without work who are collecting unemployment benefits, the most common form of personal bankruptcy they can file is bankruptcy Chapter 7.  That’s because, under Chapter 13 bankruptcy law, the debtor must have enough income to sustain a debt repayment plan.

The bottom line answer to today’s reader question about whether he’s lose his unemployment benefits is “Probably not!”.



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This post was written by Mark Zuckerberg

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