Collections – Ruling Limits Enforcement of Personal Orders of Garnishment

The Indiana Court of Appeals on November 23, 2010, in Carter v. Grace Whitney Properties, 939 N.E.2d 630, held that the Indiana Constitution prohibits the use of contempt to enforce an obligation to pay money. The Court of Appeals also held that a creditor cannot require a debtor to attend ongoing proceeding supplemental hearings and be reexamined continuously as to whether the debtor has acquired any new assets or income. A creditor must show to the court the existence of new facts that justify a new order or examination under a proceeding supplemental.

The Carter case has had a profound impact on the way that a debtor may attempt to collect debts and the enforcement of personal orders of garnishment. If you have questions on how this may affect you, please contact one of the attorneys in our Creditor’s Rights, Bankruptcy and Collections practice area.