CHAPTER 5. REMEDIES AND PENALTIES
IC 24-4.5-5
Chapter 5. Remedies and Penalties
(Part 1. Limitations on Creditors' Remedies)
IC 24-4.5-5-101
Short title
Sec. 101. Short Title _ This Chapter shall be known and may becited as Uniform Consumer Credit Code _ Remedies and Penalties.
(Formerly: Acts 1971, P.L.366, SEC.6.)
IC 24-4.5-5-102
Scope
Sec. 102. Scope _ This Part applies to actions or otherproceedings to enforce rights arising from consumer credit sales,consumer leases, and consumer loans; to garnishments of theearnings of an individual; and, in addition, to extortionate extensionsof credit (24-4.5-5-107).
(Formerly: Acts 1971, P.L.366, SEC.6.)
IC 24-4.5-5-103
Restrictions on deficiency judgments in consumer credit sales
Sec. 103. Restrictions on Deficiency Judgments in ConsumerCredit Sales _ (1) This section applies to a consumer credit sale ofgoods or services.
(2) If the seller repossesses or voluntarily accepts surrender ofgoods which were the subject of the sale and in which he has asecurity interest and the cash price of the goods repossessed orsurrendered was one thousand dollars ($1000) or less, the buyer isnot personally liable to the seller for the unpaid balance of the debtarising from the sale of the goods, and the seller is not obligated toresell the collateral.
(3) If the seller repossesses or voluntarily accepts surrender ofgoods which were not the subject of the sale but in which he has asecurity interest to secure a debt arising from a sale of goods orservices or a combined sale of goods and services and the cash priceof the sale was one thousand dollars ($1000) or less, the buyer is notpersonally liable to the seller for the unpaid balance of the debtarising from the sale.
(4) For the purpose of determining the unpaid balance ofconsolidated debts or debts pursuant to revolving charge accounts,the allocation of payments to a debt shall be determined in the samemanner as provided for determining the amount of debt secured byvarious security interests (24-4.5-2-409).
(5) The buyer may be liable in damages to the seller if the buyerhas wrongfully damaged the collateral or if, after default anddemand, the buyer has wrongfully failed to make the collateralavailable to the seller.
(6) If the seller elects to bring an action against the buyer for adebt arising from a consumer credit sale of goods or services, when
under this section he would not be entitled to a deficiency judgmentif he repossessed the collateral, and obtains judgment
(a) he may not repossess the collateral, and
(b) the collateral is not subject to levy or sale on execution orsimilar proceedings pursuant to the judgment.
(7) The amounts of one thousand dollars ($1000) in subsection (2)and (3) are subject to change pursuant to the provisions onadjustment of dollar amounts (24-4.5-1-106).
(Formerly: Acts 1971, P.L.366, SEC.6.)
IC 24-4.5-5-104
No garnishment before judgment
Sec. 104. No Garnishment Before Judgment _ Prior to entry ofjudgment in an action against the debtor, no creditor may attachunpaid earnings of the debtor by garnishment or like proceedings.
(Formerly: Acts 1971, P.L.366, SEC.6.)
IC 24-4.5-5-105
Limitation on garnishment and proceedings supplemental toexecution; employer's fee
Sec. 105. (1) For the purposes of IC 24-4.5-5-101 throughIC 24-4.5-5-108:
(a) "disposable earnings" means that part of the earnings of anindividual, including wages, commissions, income, rents, orprofits remaining after the deduction from those earnings ofamounts required by law to be withheld;
(b) "garnishment" means any legal or equitable proceedingsthrough which the earnings of an individual are required to bewithheld by a garnishee, by the individual debtor, or by anyother person for the payment of a judgment; and
(c) "support withholding" means that part of the earnings thatare withheld from an individual for child support in accordancewith the laws of this state.
(2) Except as provided in subsection (8), the maximum part of theaggregate disposable earnings of an individual for any workweekwhich is subjected to garnishment to enforce the payment of one (1)or more judgments against him may not exceed:
(a) twenty-five percent (25%) of his disposable earnings for thatweek; or
(b) the amount by which his disposable earnings for that weekexceed thirty (30) times the federal minimum hourly wageprescribed by 29 U.S.C. 206(a)(1) in effect at the time theearnings are payable;
whichever is less. In the case of earnings for a pay period other thana week, the earnings shall be computed upon a multiple of the federalminimum hourly wage equivalent to thirty (30) times the federalminimum hourly wage as prescribed in this section.
(3) The maximum part of the aggregate disposable earnings of anindividual for any workweek which is subject to garnishment orsupport withholding to enforce any order for the support of any
person shall not exceed:
(a) where such individual is supporting his spouse or dependentchild (other than a spouse or child with respect to whosesupport such order is used), fifty percent (50%) of suchindividual's disposable earnings for that week; and
(b) where such individual is not supporting such a spouse ordependent child described in subdivision (a), sixty percent(60%) of such individual's disposable earnings for that week;
except that, with respect to the disposable earnings of any individualfor any workweek, the fifty percent (50%) specified in subdivision(a) shall be deemed to be fifty-five percent (55%) and the sixtypercent (60%) specified in subdivision (b) shall be deemed to besixty-five percent (65%), if and to the extent that such earnings aresubject to garnishment or support withholding to enforce a supportorder with respect to a period which is prior to the twelve (12) weekperiod which ends with the beginning of such workweek.
(4) No court may make, execute, or enforce an order or process inviolation of this section.
(5) An employer who is required to make deductions from anindividual's disposable earnings pursuant to a garnishment order orseries of orders arising out of the same judgment debt (excluding ajudgment for payment of child support) may collect, as a fee tocompensate the employer for making these deductions, an amountequal to the greater of twelve dollars ($12) or three percent (3%) ofthe total amount required to be deducted by the garnishment order orseries of orders arising out of the same judgment debt. If theemployer chooses to impose a fee, the fee shall be allocated asfollows:
(a) One-half (1/2) of the fee shall be borne by the debtor, andthat amount may be deducted by the employer directly from theemployee's disposable earnings.
(b) One-half (1/2) of the fee shall be borne by the creditor, andthat amount may be retained by the employer from the amountotherwise due the creditor.
The deductions made under this subsection for a collection fee do notincrease the amount of the judgment debt for which the fee iscollected for the purpose of calculating or collecting judgmentinterest. This fee may be collected by an employer only once for eachgarnishment order or series of orders arising out of the samejudgment debt. The employer may collect the entire fee from one (1)or more of the initial deductions from the employee's disposableearnings. Alternatively, the employer may collect the fee ratably overthe number of pay periods during which deductions from theemployee's disposable earnings are required.
(6) The deduction of the garnishment collection fee undersubsection (5)(a) or subsection (7) is not an assignment of wagesunder IC 22-2-6.
(7) An employer who is required to make a deduction from anindividual's disposable earnings in accordance with a judgment forpayment of child support may collect a fee of two dollars ($2) each
time the employer is required to make the deduction. The fee may bededucted by the employer from the individual's disposable earningseach time the employer makes the deduction for support. If theemployer elects to deduct such a fee, the amount to be deducted forthe payment of support must be reduced accordingly if necessary toavoid exceeding the maximum amount permitted to be deductedunder subsection (3).
(8) A support withholding order takes priority over a garnishmentorder irrespective of their dates of entry or activation. If a person issubject to a support withholding order and a garnishment order, thegarnishment order shall be honored only to the extent that disposableearnings withheld under the support withholding order do not exceedthe maximum amount subject to garnishment as computed undersubsection (2).
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by Acts 1979,P.L.239, SEC.1; Acts 1982, P.L.151, SEC.1; P.L.248-1983, SEC.1;P.L.237-1985, SEC.1; P.L.102-1986, SEC.3; P.L.148-1988, SEC.1.
IC 24-4.5-5-106
No discharge from employment for garnishment
Sec. 106. No Discharge From Employment for Garnishment_Noemployer shall discharge an employee for the reason that a creditoror creditors of the employee has subjected or attempted to subjectunpaid earnings of the employee to garnishment or like proceedingsdirected to the employer for the purpose of paying a judgment orjudgments.
(Formerly: Acts 1971, P.L.366, SEC.6.)
IC 24-4.5-5-107
Extortionate extensions of credit
Sec. 107. Extortionate Extensions of Credit _ (1) If it is theunderstanding of the creditor and the debtor at the time an extensionof credit is made that delay in making repayment or failure to makerepayment could result in the use of violence or other criminal meansto cause harm to the person, reputation, or property of any person,the repayment of the extension of credit is unenforceable throughcivil judicial processes against the debtor.
(2) If it is shown that an extension of credit was made at an annualrate exceeding forty-five percent (45%) calculated according to theactuarial method and that the creditor then had a reputation for theuse or threat of use of violence or other criminal means to causeharm to the person, reputation, or property of any person to collectextensions of credit or to punish the nonrepayment thereof, there isprima facie evidence that the extension of credit was unenforceableunder subsection (1).
(Formerly: Acts 1971, P.L.366, SEC.6.)
IC 24-4.5-5-108
Unconscionability
Sec. 108. Unconscionability _ (1) With respect to a consumer
credit sale, consumer lease, or consumer loan, if the court as a matterof law finds the agreement or any clause of the agreement to havebeen unconscionable at the time it was made the court may refuse toenforce the agreement, or it may enforce the remainder of theagreement without the unconscionable clause, or it may so limit theapplication of any unconscionable clause as to avoid anyunconscionable result.
(2) If it is claimed or appears to the court that the agreement orany clause thereof may be unconscionable the parties shall beafforded a reasonable opportunity to present evidence as to itssetting, purpose, and effect to aid the court in making thedetermination.
(3) For the purpose of this section, a charge or practice expresslypermitted by this Article is not in itself unconscionable.
(Formerly: Acts 1971, P.L.366, SEC.6.)
(Part 2. Debtors' Remedies)
IC 24-4.5-5-201
First lien mortgage transactions; civil liability for disclosureviolations; debtor's right to rescind
Sec. 201. For purposes of the provisions on civil liability forviolation of disclosure provisions (IC 24-4.5-5-203) and on debtor'sright to rescind certain transactions (IC 24-4.5-5-204):
(1) consumer credit sale includes a sale that is a first lienmortgage transaction if the sale is otherwise a consumer creditsale; and
(2) consumer loan includes a loan that is a first lien mortgagetransaction if the loan is otherwise a consumer loan.
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by Acts 1981,P.L.218, SEC.7; P.L.152-1986, SEC.69; P.L.35-2010, SEC.62.
IC 24-4.5-5-202
Effect of violations on rights of parties
Sec. 202. Effect of Violations on Rights of Parties _ (1) If acreditor has violated the provision of this Article applying tolimitations on the schedule of payments or loan term for supervisedloans (IC 24-4.5-3-511), the debtor is not obligated to pay the loanfinance charge, and has a right to recover from the person violatingthis Article or from an assignee of that person's rights whoundertakes direct collection of payments or enforcement of rightsarising from the debt a penalty in an amount determined by the courtnot in excess of three times the amount of the loan finance charge.No action pursuant to this subsection may be brought more than one(1) year after the due date of the last scheduled payment of theagreement with respect to which the violation occurred.
(2) If a creditor has violated the provisions of this Article applyingto authority to make consumer loans (IC 24-4.5-3-502), the loan isvoid and the debtor is not obligated to pay either the principal or loanfinance charge. If the debtor has paid any part of the principal or of
the loan finance charge, the debtor has a right to recover the paymentfrom the person violating this Article or from an assignee of thatperson's rights who undertakes direct collection of payments orenforcement of rights arising from the debt. With respect toviolations arising from loans made pursuant to revolving loanaccounts, no action pursuant to this subsection may be brought morethan two (2) years after the violation occurred. With respect toviolations arising from other loans, no action pursuant to thissubsection may be brought more than one (1) year after the due dateof the last scheduled payment of the agreement pursuant to which thecharge was paid.
(3) A debtor is not obligated to pay a charge in excess of thatallowed by this Article, and if the debtor has paid an excess chargethe debtor has a right to a refund. A refund may be made by reducingthe debtor's obligation by the amount of the excess charge. If thedebtor has paid an amount in excess of the lawful obligation underthe agreement, the debtor may recover the excess amount from theperson who made the excess charge or from an assignee of thatperson's rights who undertakes direct collection of payments from orenforcement of rights against debtors arising from the debt.
(4) If a debtor is entitled to a refund and a person liable to thedebtor refuses to make a refund within a reasonable time afterdemand, the debtor may recover from that person a penalty in anamount determined by a court not exceeding the greater of either theamount of the credit service or loan finance charge or ten (10) timesthe amount of the excess charge. If the creditor has made an excesscharge in deliberate violation of or in reckless disregard for thisArticle, the penalty may be recovered even though the creditor hasrefunded the excess charge. No penalty pursuant to this subsectionmay be recovered if a court has ordered a similar penalty assessedagainst the same person in a civil action by the department (IC24-4.5-6-113). With respect to excess charges arising from salesmade pursuant to revolving charge accounts or from loans madepursuant to revolving loan accounts, no action pursuant to thissubsection may be brought more than two (2) years after the time theexcess charge was made. With respect to excess charges arising fromother consumer credit sales or consumer loans, no action pursuant tothis subsection may be brought more than one (1) year after the duedate of the last scheduled payment of the agreement pursuant towhich the charge was made.
(5) Except as otherwise provided, no violation of this Articleimpairs rights on a debt.
(6) If an employer discharges an employee in violation of theprovisions prohibiting discharge (IC 24-4.5-5-106), the employeemay within six (6) months bring a civil action for recovery of wageslost as a result of the violation and for an order requiring thereinstatement of the employee. Damages recoverable shall notexceed lost wages for six (6) weeks.
(7) If the creditor establishes by a preponderance of evidence thata violation is unintentional or the result of a bona fide error, no
liability is imposed under subsections (1), (2), and (4) and thevalidity of the transaction is not affected.
(8) In any case in which it is found that a creditor has violated thisArticle, the court may award reasonable attorney's fees incurred bythe debtor.
(9) The department may act on behalf of a debtor to enforce thedebtor's rights under this section against a creditor who is licensed orregistered with the department or is required to be licensed orregistered with the department.
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by P.L.14-1992,SEC.43; P.L.122-1994, SEC.31; P.L.172-1997, SEC.8.
IC 24-4.5-5-203
Civil liability for violation of disclosure provisions
Sec. 203. Civil Liability for Violation of Disclosure Provisions _(1) Except as otherwise provided in this section, a creditor who, inviolation of the provisions on disclosure (Part 3), of the Chapter onCredit Sales (Chapter 2) and the Chapter on Loans (Chapter 3), failsto disclose information to a person entitled to the information underthis Article is liable to that person in an amount equal to the sum of:
(a) the following:
(1) in the case of an individual action, twice the amount of thecredit service or loan finance charge in connection with thetransaction, but the liability pursuant to this subdivision shall benot less than one hundred dollars ($100) nor more than onethousand dollars ($1,000); or
(2) in the case of a class action, an amount the court allows,except that as to each member of the class no minimumrecovery is applicable, and the total recovery under thissubdivision in any class action or series of class actions arisingout of the same failure to comply by the same creditor may notbe more than the lesser of:
(i) five hundred thousand dollars ($500,000); or
(ii) one percent (1%) of the net worth of the creditor; and
(b) in the case of a successful action to enforce the liability underparagraph (a), the costs of the action together with reasonableattorney's fees as determined by the court. In determining the amountof the award in a class action, the court shall consider, among otherrelevant factors, the amount of any award granted under the federalConsumer Credit Protection Act (15 U.S.C. 1601 et seq.), thefrequency and persistence of failures of compliance by the creditor,the resources of the creditor, the number of persons adverselyaffected, and the extent to which the creditor's failure of compliancewas intentional.
(2) A creditor has no liability under this section if within sixty(60) days after discovering an error, and prior to the institution of anaction under this section or the receipt of written notice of the error,the creditor notifies the person concerned of the error and makeswhatever adjustments in the appropriate account are necessary toassure that the person will not be required to pay a credit service
charge or loan finance charge in excess of the amount or percentagerate actually disclosed.
(3) A creditor may not be held liable in any action brought underthis section for a violation of this Article if the creditor shows by apreponderance of evidence that the violation was not intentional andresulted from a bona fide error notwithstanding the maintenance ofprocedures reasonably adapted to avoid the error.
(4) If there are multiple obligors in a consumer credit transactionor consumer lease, there may not be more than one (1) recovery ofdamages under subdivision (a)(1) for one (1) violation of this articlewith respect to that consumer credit transaction or consumer lease.
(5) The multiple failure to disclose to any person any informationrequired under this article to be disclosed in connection with a singleaccount under an open end consumer credit plan, a single consumercredit sale, a consumer loan, a consumer lease, or another extensionof consumer credit entitles that person to a single recovery under thissection. However, continued failure to disclose after a recovery hasbeen granted gives rise to rights to additional recoveries.
(6) Any action which may be brought under this section againstthe original creditor in any credit transaction involving a securityinterest in land may be maintained against any subsequent assigneeof the original creditor where the assignee, its subsidiaries, oraffiliates were in a continuing business relationship with the originalcreditor either at the time the credit was extended or at the time ofthe assignment, unless the assignment was involuntary, or theassignee shows by a preponderance of evidence that it did not havereasonable grounds to believe that the original creditor was engagedin violations of this Article, and that it maintained proceduresreasonably adapted to apprise it of the existence of the violations.
(7) No action pursuant to this section may be brought more thanone (1) year after the date of the occurrence of the violations.
(8) In this section, creditor includes a person who in the ordinarycourse of business regularly extends or arranges for the extension ofcredit, or offers to arrange for the extension of credit.
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended byP.L.181-1991, SEC.5.
IC 24-4.5-5-204
Debtor's right to rescind certain transactions
Sec. 204. Debtor's Right to Rescind Certain Transactions _ (1)A violation by a creditor of Section 125 of the Federal ConsumerCredit Protection Act (IC 24-4.5-1-302) concerning the debtor's rightto rescind a transaction that is a consumer credit sale or a consumerloan constitutes a violation of IC 24-4.5. A creditor may not accrueinterest during the period when a consumer loan may be rescindedunder Section 125 of the Federal Consumer Protection Act (15U.S.C. 1635).
(2) A creditor must make available for disbursement the proceedsof a transaction subject to subsection (1) on the later of:
(A) the date the creditor is reasonably satisfied that the
consumer has not rescinded the transaction; or
(B) the first business day after the expiration of the rescissionperiod under subsection (1).
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by Acts 1982,P.L.149, SEC.7; P.L.122-1994, SEC.32; P.L.23-2000, SEC.9.
IC 24-4.5-5-205
Refunds and penalties as set-off to obligation
Sec. 205. Refunds and Penalties as Set-Off to Obligation _Refunds or penalties to which the debtor is entitled pursuant to thisPart may be set off against the debtor's obligation, and may be raisedas a defense to a suit on the obligation without regard to the timelimitations prescribed by this Part.
(Formerly: Acts 1971, P.L.366, SEC.6.)
(Part 3. Criminal Penalties)
IC 24-4.5-5-301
Knowing violations
Sec. 301. (1) A lender who knowingly makes charges in excess ofthose permitted by the provisions of this article commits a Class Amisdemeanor.
(2) A person who knowingly engages in the business of makingconsumer loans without a license in violation of the provisions ofthis article applying to authority to make consumer loans (IC24-4.5-3-502 and IC 24-4.5-3-502.1) commits a Class Amisdemeanor.
(3) A person who knowingly:
(a) engages in the business of making consumer credit sales,consumer leases, or consumer loans, or of taking assignmentsof rights against debtors; and
(b) undertakes direct collection of payments or enforcement ofthese rights, without complying with the provisions of thisarticle concerning notification (IC 24-4.5-6-202) or payment offees (IC 24-4.5-6-203);
commits a Class A infraction.
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by Acts 1978,P.L.2, SEC.2414; P.L.152-1986, SEC.70; P.L.14-1992, SEC.44;P.L.122-1994, SEC.33; P.L.45-1995, SEC.14; P.L.35-2010, SEC.63.
IC 24-4.5-5-302
Disclosure violations
Sec. 302. A person commits a Class A misdemeanor if heknowingly gives false or inaccurate information or fails to provideinformation which he is required to disclose under the provisions ofIC 24-4.5-2-301 or IC 24-4.5-3-301.
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by Acts 1978,P.L.2, SEC.2415; P.L.247-1983, SEC.21.