Indiana Courts Given Discretion in Garnishment Orders

March 18, 2013 in Indiana Courts, Post Judgment Execution by Brad Council

On February 14, 2013, the Indiana Court of Appeals in American Acceptance Co., LLC v. Melissa Willis found that an order of garnishment was within the trial court’s discretion and the court had the ability to order or deny the garnishment based upon that discretion.

In 2008 American Acceptance received a default Judgment against Melissa Willis.  Later, in 2010 American Acceptance filed for a wage garnishment against the personal earnings of Willis.  Ms. Willis’s employer responded to the interrogatories produced and stated that Willis was employed and that she made a weekly salary of $724.38.

Ms. Willis appeared at the proceeding supplemental hearing and testified that she worked on commission, and the most she had received since being switched to an all commission income was $1,200.00 for a two week period.  Ms. Willis also testified that she was the only provider to her children as her husband is not working and is awaiting trial on felony charges.  She also stated that she had posted a $25,000.00 bond for her husband’s release and that American Acceptance could be paid out of the bond once his trial was complete.

After hearing her testimony, the trial court denied the order of garnishment finding that Ms. Willis did “not have substantial income to allow for a wage garnishment order.”  The trial court also ordered that the bond be held and not released in Mr. Willis’s criminal trial until a further hearing could be held in this matter.

On Appeal, American Acceptance argued that since Willis had income which was subject to garnishment, the trial court was required to issue the order of garnishment.  However, the Court of Appeals found that the trial court has broad discretion in conducting proceedings supplemental and that the Indiana Code does not mandate the order of garnishment.  The Court cited I.C. § 34-55-8-7(a) which provides that a trial court “may order” garnishment of the debtor’s income to be applied to satisfy the judgment.  The statute provides that a trial court “may order” a garnishment and thus is not a mandate and provides discretion to the trial court as to whether or not to enter the order.

Allowing a trial court to have discretion to enter the order of garnishment in Indiana is very different than the garnishment proceedings in Ohio and Kentucky which provide that the court “shall” enter the order and do not allow the trial court to use its discretion in the matter  (See Ohio Revised Code § 2716.041 and Kentucky Revised Statutes § 425.501).  This allows for equal application of the law to all debtors under the formulas enacted in the statutes.

 

The Full Text of the Indiana Court of Appeals Opinion May Be Found At:

http://www.in.gov/judiciary/opinions/pdf/02141301mpb.pdf

 

Many thanks to Erin Richmond for her contributions to this article.  Erin is a paralegal with Slovin & Associates Co., L.P.A.