What Happens After a Default Judgment in Indiana?
After a default judgment is entered in Indiana, the person or business that won can start collecting. Collection may include wage garnishment, taking money from bank accounts that are not exempt, a court hearing where you must answer questions about your assets, and a lien on real estate you own in the county. Interest also accrues on the judgment. You may still be able to ask the court to set the default judgment aside, but some grounds must be raised within one year, so it is important to act quickly.
Key points
A default judgment is a court judgment entered because the defendant did not respond or appear.
Wage garnishment in Indiana is generally limited to the lesser of 25% of weekly disposable earnings or the amount above 30 times the federal minimum hourly wage.
Some property is exempt from collection, and certain federal benefits deposited in a bank account are protected.
A judgment can become a lien on real estate for 10 years.
Some grounds for setting aside a default judgment must be raised within one year.
What is a default judgment?
A default judgment is a judgment entered against a party who failed to respond to a lawsuit or otherwise comply with the court rules (Indiana Trial Rule 55). If the defendant has appeared in the case, the defendant must receive written notice of the request for a default judgment at least three days before the hearing.
A default judgment cannot be different in kind from, or larger than, what the plaintiff asked for in the complaint (Trial Rule 54(C)).
Many default judgments come from small claims court. Under Small Claims Rule 10, the court may enter a default judgment if the defendant fails to appear, after an inquiry showing a reasonable probability that the defendant received notice, that the defendant is not under a legal disability or protected by the Servicemembers Civil Relief Act, and that the plaintiff has a prima facie case.
How creditors collect a judgment in Indiana
Interest
A judgment earns interest from the date it is entered until it is paid. If the judgment is based on a contract that set an interest rate, the judgment rate is that contract rate, capped at 8% per year. Otherwise, the rate is 8% per year (IC 24-4.6-1-101).
Proceedings supplemental
The judgment creditor can ask the court to order the debtor to appear and answer questions about income and property that could be used to pay the judgment (Trial Rule 69(E)). The court may also order the debtor to answer written questions.
Do not ignore an order to appear. If a debtor is served with an order to show cause, in person or by certified mail the debtor signs for, and then fails to appear at that hearing, the court may issue a writ of body attachment, which allows the debtor to be arrested and brought before the court (Trial Rule 64(A)). Indiana's Constitution prohibits imprisonment for debt except in cases of fraud. Body attachment concerns failing to obey the court's order to appear, not the debt itself.
Wage garnishment
A court may order an employer to withhold part of the debtor's pay. For ordinary debts, the amount is limited to the lesser of:
25% of the debtor's disposable earnings for the week, or
the amount by which weekly disposable earnings exceed 30 times the federal minimum hourly wage.
A debtor may ask the court to reduce the percentage for good cause, but not below 10%. The employer may charge a fee equal to the greater of $12 or 3% of the total amount to be deducted, split between the debtor and the creditor. These limits were moved in 2026 from IC 24-4.5-5-105 to IC 37-2-6-4 without a change in substance. Different limits apply to child support orders.
Bank accounts and exempt property
A creditor may also seek to reach money in bank accounts and other property. Indiana law exempts certain property from collection (IC 34-55-10-2). Under the amounts currently set by the Indiana Department of Financial Institutions, the exemptions include:
up to $22,750 of interest in a personal residence,
up to $12,100 of other real estate or tangible personal property, and
up to $450 of intangible personal property, which includes cash and bank deposits.
The exemption amounts are adjusted every six years. Federal law adds separate protection for certain federal benefits, such as Social Security and VA benefits, that are directly deposited into a bank account. A bank generally must protect up to two months of those deposits (31 C.F.R. Part 212).
Judgment lien on real estate
When a judgment is entered and indexed, it becomes a lien on the debtor's real estate in that county. The lien generally lasts 10 years after the judgment is entered (IC 34-55-9-2). A lien can make it difficult to sell or refinance the property until the judgment is paid. Separately, Indiana law presumes a judgment is satisfied after 20 years (IC 34-11-2-12).
Can you still set aside a default judgment?
Possibly. Under Trial Rule 60(B), a court may set aside a default judgment for reasons that include:
mistake, surprise, or excusable neglect,
fraud or misconduct by the other party,
a judgment entered after service by publication when the defendant did not actually know about the case,
a judgment that is void, for example because the defendant was not properly served, and
other reasons that justify relief.
Requests based on mistake, surprise, excusable neglect, fraud, newly discovered evidence, or service by publication must be filed within one year after the judgment. Other grounds, including a void judgment, must be raised within a reasonable time. For most grounds, you must also show that you have a meritorious defense. Filing a motion does not automatically stop collection.
In small claims court, the judge may set aside a default judgment within one year for good cause (Small Claims Rule 10(C)). After one year, the judgment can be challenged only through an independent action as provided in Trial Rule 60(B).
Our guides cover this process in detail: Motion to Set Aside Default Judgment in Indiana: A Complete Guide and How to File a Motion to Set Aside a Default Judgment in Indiana.
Other options after a default judgment
Pay or negotiate. A creditor may agree to a payment plan or a reduced lump-sum settlement. Get any agreement in writing, and ask for a release or satisfaction of judgment once it is paid.
Claim exemptions. If a creditor tries to reach property you believe is exempt, raise the exemption with the court promptly.
Bankruptcy. Filing for bankruptcy generally triggers an automatic stay that stops most efforts to collect a judgment (11 U.S.C. 362). Bankruptcy has significant long-term effects, so get advice before deciding.
Steps to take now
Get a copy of the judgment and the court file. Confirm the amount, the date entered, and how you were served.
Write down the one-year date. Some grounds for relief expire one year after the judgment.
Respond to every court order. Attend any proceedings supplemental hearing.
Gather documents. Collect pay stubs, bank statements, and records about any benefits you receive.
Talk with a lawyer about whether to seek to set aside the judgment, negotiate, or claim exemptions.
Frequently asked questions
Can my wages be garnished after a default judgment in Indiana?
Yes. A creditor with a judgment may seek a wage garnishment order, subject to the limits described above.
How long does a judgment last in Indiana?
A judgment lien on real estate generally lasts 10 years, and Indiana law presumes a judgment is satisfied after 20 years. The judgment can still be enforced in other ways after the lien expires. Interest accrues while the judgment remains unpaid.
Can I go to jail for not paying a judgment?
Indiana's Constitution prohibits imprisonment for debt except in cases of fraud. However, a debtor who ignores a court order to appear may be arrested on a writ of body attachment.
Can a business have a default judgment entered against it?
Yes. A business that is properly served and does not respond can have a default judgment entered against it, and the creditor may then pursue the business's accounts and assets.
Questions about a default judgment?
If a default judgment has been entered against you or your business, you can schedule a consultation with Brinkley Law to review your options, or learn more about our business law services.
Brinkley Law, 8888 Keystone Crossing, Suite 1300, Indianapolis, Indiana 46240.
This article provides general information about Indiana law and is not legal advice. Reading it or contacting Brinkley Law does not create an attorney-client relationship. The application of the law depends on the facts of each matter.
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