By Marilyn Odendahl
The Indiana Citizen
January 16, 2026
A bill that would allow Hoosiers facing wage garnishment to keep more of their money is being opposed by debt collectors who say the measure would raise the cost of credit and harm the very people it is meant to help.
Senate Bill 197, authored by Sen. Greg Walker, R-Columbus, would raise the amount of weekly income and savings protected from garnishment to $600 and $1,500, respectively. Under current state law, weekly income that exceeds $217.50 and savings above $300 could be seized by creditors.
The Senate Committee on Insurance and Financial Institutions took testimony on SB 197 during its hearing on Wednesday. However, a vote on the bill was postponed to give Walker time to meet with debt collectors, lenders and creditors, as well as advocates for the impoverished, to see if a compromise on the language can be reached.
“Before we even begin to debate the figures and numbers, I hope we can agree that anyone who is expected to live on … $217.50 per week is asked to do the impossible,” Greg Walker told the members of the legislative committee.
Attorneys representing creditors, debt collectors and financial institutions testified against the bill. They said raising the income and savings levels that cannot be garnished would increase the cost of credit for all Hoosiers and force creditors out of the market, reducing access to loans and financing.
That squeeze on credit, the attorneys said, will likely impact low-income households the most.
Reynold Berry, attorney at Rubin & Levin in Indianapolis, and Valerie Mathies, attorney at Nelson & Frankenberger in Carmel, offered scenarios for how the market might respond if SB 197 were to become law. Since banks and creditors would be limited as to how much income and savings they can seize at one time, they will curtail their lending, which could force the indigent to turn to payday lenders and potentially fall deeper in debt because of the high interest rates such lenders charge. Also, if garnishments become limited, bankers and creditors might try to recover their money by going after the equity that people have in their homes.
“I think (SB 197) puts people in a worse position, because if they’re getting foreclosed upon, they probably need some sort of loan to consolidate their debt or pay off a judgment,” Matheis said. “(However) their access to credit could inevitably be impaired, should this passage of exemptions be so significantly increased.”
In response, policy experts and advocates countered that SB 197 would actually help people settle their debts and remain financially stable. They shared stories of clients who got behind on their bills because of a job loss or medical emergency and then struggled even more with keeping the electricity and water turned on, avoiding eviction, and paying for food and medications when their wages were garnished.
Also, the advocates pointed out that garnishing the wages of one individual creates a negative ripple effect throughout the entire community.
“Any progress we can make that helps folks keep a little bit more of their earnings each week will provide added downstream financial stability to landlords, child-care providers and others who will benefit from that extra protection,” said Sam Snideman, vice president of government relations for United Way of Central Indiana. “I think it’s vital that Hoosiers have the resources to meet their current obligations under court judgments but also meet their basic needs.”
In calculating the income subject to garnishment, current state statute designates it should be the lesser of two amounts: either the weekly take-home pay that exceeds 30 times the federal minimum wage of $7.25 per hour, which equals $217.50, or 25% of disposable earnings for that week. Also, state law protects up to $15,000 of the debtor’s real estate or personal property, including the family residence, from creditors.
Erin Macey, director of the Indiana Community Action Poverty Institute, noted the garnishment floor of $217.50 has not risen since 2009, even though the cost of living has continued to climb. Moreover, she said, some states, including red states like South Carolina and Texas, prohibit garnishments entirely, while 42 other states offer more generous protections, which includes Alabama, Arizona and Florida setting their garnishment exemptions at $1,000, $882 and $750, respectively.
Macey said raising the protected amount to $600 in Indiana would most benefit people who are living paycheck to paycheck and making yearly income of roughly $37,000. Allowing them to keep more of their income in a garnishment situation could help give them enough money to survive and prevent them from falling further into financial hardship, she said.
Asked if $600 would provide meaningful protection, Macey conceded some families would continue to struggle to stay current on their bills, especially single parents who have to pay for child care so they can work. Still, she noted, the advocates had to settle on an amount that would be palatable to the legislature and withstand pushback from creditors.
“We’re not talking about a lot of money here that we’re trying to protect,” Macey said. “We’re not giving people a cushy life with $600 a week. So, we were trying to strike a balance and we’ll continue to try to work with the committee to strike that balance and find a way to keep people’s heads above water and let them afford the basics.”
SB 197 has gained some Republican support. GOP Sens. Kyle Walker, of Lawrence, and Sen. Ron Alting, of Lafayette, have signed onto the bill along with Democratic Sens. Fady Qaddoura, of Indianapolis, and Lonnie Randolph, of East Chicago. Also, Walker said the legislature’s focus this session on affordability convinced him to seek changes to Indiana’s garnishment law.
“I live in my home county. I go to the grocery store and I see folks that I wonder who did they not pay so they could put food in their cart today,” Walker said after the committee hearing. “It’s just a matter of fact that so many of us in the General Assembly are blessed to be able to do this, and … it’s hard for us to put ourselves in the place of those who are not equipped to deal with the complexities of living in America in 2026. I don’t think protecting people from financial ruin and quitting their work is necessarily a Republican or Democrat issue.”
Still, the attorneys representing creditors and lenders told the Senate committee that the system in place is already providing protections to debtors. They said getting a garnishment from a court often involves a hearing and due-process requirements that can take from three to six months.
Representing the Indiana Collectors Association, Heather Gilb, owner and president of Atlas Collections in New Castle, said increasing the exemption to $1,500 for cash accounts would make enforcement of the judgments issued by the courts more difficult and “undermine the integrity of our judicial system.” Also, she said, judges have discretion in setting the garnishment amount.
“The reality is we already have a structure in place. It’s by a case-by-case review,” Gilb said. “Each defendant’s circumstances are different and the court is best-positioned to balance those interests.”
In addition, some representatives of the credit industry were concerned that SB 197 ties the calculation of the garnishment to the Consumer Price Index, rather than the federal minimum hourly wage. Krieg DeVault attorney Randy Head, appearing before the committee on behalf of the Indiana Financial Services Association, said using the index would create a “permanent erosion of garnishment amounts year over year without legislative oversight.”
After the hearing, Walker huddled in the hallway with the creditors and poverty advocates. They shared some concerns and then agreed to try to meet in the coming days to see if the two sides could find some common ground before the bill receives a committee vote next week.
Walker said not taking action will have consequences. Adults may drop out of the workforce to avoid a garnishment and children might be at risk of harm by parents under even more stress because even less money is coming into the household.
“(Creditors) said it would raise borrowing costs and it will, but I’ll also argue that we reach a point in our lives where if we cannot financially meet our obligations, more credit is not the answer,” Walker told The Indiana Citizen. “That’s just kicking the can down the road and the can gets bigger every time you kick it.”
Dwight Adams, an editor and writer based in Indianapolis, edited this article. He is a former content editor, copy editor and digital producer at The Indianapolis Star and IndyStar.com, and worked as a planner for other newspapers, including the Louisville Courier Journal.
The Indiana Citizen is a nonpartisan, nonprofit platform dedicated to increasing the number of informed and engaged Hoosier citizens. We are operated by the Indiana Citizen Education Foundation, Inc., a 501(c)(3) public charity. For questions about the story, contact Marilyn Odendahl at marilyn.odendahl@indianacitizen.org.
