By Erin Macey
Indiana Poverty Community Action Institute
February 6, 2026
A key piece of affordability legislation passed the Indiana Senate on Jan 27. Senate Bill 197 addresses the aftermath of high utility costs, medical bills, and other debts, preventing debt collectors from taking so much out of a paycheck or bank account that they trigger a financial catastrophe – all by adjusting two numbers in Indiana law.
We hear about the affordability crisis from Hoosiers constantly in our work at the Indiana Community Action Poverty Institute. Right now, we are keeping a pulse on Hoosiers’ needs through our community needs assessment survey, launched in January. At the time of writing, over 1,000 Hoosiers have selected “utilities affordability/assistance” as a top need; it is currently the frontrunner for highest priority in our survey, which will close in mid-February. Hoosiers have told us their stories as well, sharing struggles like, “Even being on the budget plan [for utility services] and having been granted [energy] assistance still leaves me short. Therefore, my credit card has high usage,” and “[Energy] rates are so high it’s next to impossible to afford anything after paying your bill.”
Hoosiers are struggling to afford health care as well. With over $2.2 billion in medical debt in collections, Hoosiers are drowning as a result of getting needed medical attention. One shared, “[My] Daughter had cancer and we used credit cards and loans to pay bills.” Another shared that the debt “is suffocating,” while a third said, “I try really hard to pay my bills and sometimes unexpected things come up and I don’t have enough money to pay all my bills and get food in the house.”
Overdue debt can lead to garnishments: a court can be asked by a debt collector to withdraw the funds directly from a person’s paycheck or bank account. Right now, Indiana allows 25% of a person’s paycheck to be taken to satisfy a debt, but also establishes a “floor” below which an individual cannot be garnished, which provides some protected income. This “floor” recognizes that people still need to eat and keep a roof above their heads while paying down debt. At this time, the floor is currently $217.50/week or roughly $900/month. And what’s protected in a bank account if a collector tries to withdraw funds from it? A mere $450, leaving little for Hoosiers in the event of an emergency.
How did we get here, and how does SB 197 address this? Indiana wrote its garnishment “floor” into law as “30 times the minimum wage” – and the minimum wage has not changed since 2009. The bank account protection only gets updated once every six years, and has not kept up with rapidly rising costs of living. SB 197 would change “30 times the minimum wage” to “83 times the minimum wage,” protecting the first $601.75 of a person’s weekly paycheck, and it increases the bank account protection to $1500, making sure that Hoosiers have a month’s rent available if a debt collector attempts to seize funds.
We have heard from Hoosiers struggling with garnishments for utilities, medical debt, and other bills. In interviews we conducted last year, people shared how garnishment triggered a snowball of mounting debt and pressure. “I was having to borrow money in order to make my car payment. I was borrowing money and selling things in order to make my phone bill. I wasn’t hardly eating. I wasn’t hardly sleeping because I was just so stressed about how I was going to make ends meet,” one Hoosier told us. A single mom of three who was garnished for utility debt shared, “Basically [the debt collector] told me that they didn’t have a first payment by this deadline, they were going to start garnishing my checks. I’m like, I have three kids I support on one income. I can barely make it now. There’s no way that I can pay that.”
In 2023-2024, January Advisors estimated that over 320,000 debt collection lawsuits were filed against Hoosier consumers. Until we address rising costs, more and more Hoosiers will fall behind on bills and face these collection efforts. So while SB 197 is merely updating two numbers in Indiana law, it is absolutely essential to keeping Hoosiers heads above water in an affordability crisis.
Erin Macey, PhD, is the director of the Indiana Poverty Community Action Institute. The views and opinions expressed are those of the author only and do not necessarily reflect the views of The Indiana Citizen or any other affiliated organization.
The Indiana Community Action Poverty Institute is a program of the Indiana Community Action Association. Indiana’s 22 Community Action Agencies provide over 70 programs & services to help Hoosiers throughout Indiana achieve and maintain financial well-being.
