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 be
cited 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 other
proceedings to enforce rights arising from consumer credit sales,
consumer leases, and consumer loans; to garnishments of the
earnings of an individual; and, in addition, to extortionate extensions
of 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 Consumer
Credit Sales _ (1) This section applies to a consumer credit sale of
goods or services.
(2) If the seller repossesses or voluntarily accepts surrender of
goods which were the subject of the sale and in which he has a
security interest and the cash price of the goods repossessed or
surrendered was one thousand dollars ($1000) or less, the buyer is
not personally liable to the seller for the unpaid balance of the debt
arising from the sale of the goods, and the seller is not obligated to
resell the collateral.
(3) If the seller repossesses or voluntarily accepts surrender of
goods which were not the subject of the sale but in which he has a
security interest to secure a debt arising from a sale of goods or
services or a combined sale of goods and services and the cash price
of the sale was one thousand dollars ($1000) or less, the buyer is not
personally liable to the seller for the unpaid balance of the debt
arising from the sale.
(4) For the purpose of determining the unpaid balance of
consolidated debts or debts pursuant to revolving charge accounts,
the allocation of payments to a debt shall be determined in the same
manner as provided for determining the amount of debt secured by
various security interests (24-4.5-2-409).
(5) The buyer may be liable in damages to the seller if the buyer
has wrongfully damaged the collateral or if, after default and
demand, the buyer has wrongfully failed to make the collateral
available to the seller.
(6) If the seller elects to bring an action against the buyer for a
debt arising from a consumer credit sale of goods or services, when
under this section he would not be entitled to a deficiency judgment
if 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 or
similar 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 on
adjustment 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 of
judgment in an action against the debtor, no creditor may attach
unpaid 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 to
execution; employer's fee
Sec. 105. (1) For the purposes of IC 24-4.5-5-101 through
IC 24-4.5-5-108:
(a) "disposable earnings" means that part of the earnings of an
individual, including wages, commissions, income, rents, or
profits remaining after the deduction from those earnings of
amounts required by law to be withheld;
(b) "garnishment" means any legal or equitable proceedings
through which the earnings of an individual are required to be
withheld by a garnishee, by the individual debtor, or by any
other person for the payment of a judgment; and
(c) "support withholding" means that part of the earnings that
are withheld from an individual for child support in accordance
with the laws of this state.
(2) Except as provided in subsection (8), the maximum part of the
aggregate disposable earnings of an individual for any workweek
which 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 that
week; or
(b) the amount by which his disposable earnings for that week
exceed thirty (30) times the federal minimum hourly wage
prescribed by 29 U.S.C. 206(a)(1) in effect at the time the
earnings are payable;
whichever is less. In the case of earnings for a pay period other than
a week, the earnings shall be computed upon a multiple of the federal
minimum hourly wage equivalent to thirty (30) times the federal
minimum hourly wage as prescribed in this section.
(3) The maximum part of the aggregate disposable earnings of an
individual for any workweek which is subject to garnishment or
support withholding to enforce any order for the support of any
person shall not exceed:
(a) where such individual is supporting his spouse or dependent
child (other than a spouse or child with respect to whose
support such order is used), fifty percent (50%) of such
individual's disposable earnings for that week; and
(b) where such individual is not supporting such a spouse or
dependent 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 individual
for any workweek, the fifty percent (50%) specified in subdivision
(a) shall be deemed to be fifty-five percent (55%) and the sixty
percent (60%) specified in subdivision (b) shall be deemed to be
sixty-five percent (65%), if and to the extent that such earnings are
subject to garnishment or support withholding to enforce a support
order with respect to a period which is prior to the twelve (12) week
period which ends with the beginning of such workweek.
(4) No court may make, execute, or enforce an order or process in
violation of this section.
(5) An employer who is required to make deductions from an
individual's disposable earnings pursuant to a garnishment order or
series of orders arising out of the same judgment debt (excluding a
judgment for payment of child support) may collect, as a fee to
compensate the employer for making these deductions, an amount
equal to the greater of twelve dollars ($12) or three percent (3%) of
the total amount required to be deducted by the garnishment order or
series of orders arising out of the same judgment debt. If the
employer chooses to impose a fee, the fee shall be allocated as
follows:
(a) One-half (1/2) of the fee shall be borne by the debtor, and
that amount may be deducted by the employer directly from the
employee's disposable earnings.
(b) One-half (1/2) of the fee shall be borne by the creditor, and
that amount may be retained by the employer from the amount
otherwise due the creditor.
The deductions made under this subsection for a collection fee do not
increase the amount of the judgment debt for which the fee is
collected for the purpose of calculating or collecting judgment
interest. This fee may be collected by an employer only once for each
garnishment order or series of orders arising out of the same
judgment debt. The employer may collect the entire fee from one (1)
or more of the initial deductions from the employee's disposable
earnings. Alternatively, the employer may collect the fee ratably over
the number of pay periods during which deductions from the
employee's disposable earnings are required.
(6) The deduction of the garnishment collection fee under
subsection (5)(a) or subsection (7) is not an assignment of wages
under IC 22-2-6.
(7) An employer who is required to make a deduction from an
individual's disposable earnings in accordance with a judgment for
payment of child support may collect a fee of two dollars ($2) each
time the employer is required to make the deduction. The fee may be
deducted by the employer from the individual's disposable earnings
each time the employer makes the deduction for support. If the
employer elects to deduct such a fee, the amount to be deducted for
the payment of support must be reduced accordingly if necessary to
avoid exceeding the maximum amount permitted to be deducted
under subsection (3).
(8) A support withholding order takes priority over a garnishment
order irrespective of their dates of entry or activation. If a person is
subject to a support withholding order and a garnishment order, the
garnishment order shall be honored only to the extent that disposable
earnings withheld under the support withholding order do not exceed
the maximum amount subject to garnishment as computed under
subsection (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_No
employer shall discharge an employee for the reason that a creditor
or creditors of the employee has subjected or attempted to subject
unpaid earnings of the employee to garnishment or like proceedings
directed to the employer for the purpose of paying a judgment or
judgments.
(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 the
understanding of the creditor and the debtor at the time an extension
of credit is made that delay in making repayment or failure to make
repayment could result in the use of violence or other criminal means
to cause harm to the person, reputation, or property of any person,
the repayment of the extension of credit is unenforceable through
civil judicial processes against the debtor.
(2) If it is shown that an extension of credit was made at an annual
rate exceeding forty-five percent (45%) calculated according to the
actuarial method and that the creditor then had a reputation for the
use or threat of use of violence or other criminal means to cause
harm to the person, reputation, or property of any person to collect
extensions of credit or to punish the nonrepayment thereof, there is
prima facie evidence that the extension of credit was unenforceable
under 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 matter
of law finds the agreement or any clause of the agreement to have
been unconscionable at the time it was made the court may refuse to
enforce the agreement, or it may enforce the remainder of the
agreement without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
unconscionable result.
(2) If it is claimed or appears to the court that the agreement or
any clause thereof may be unconscionable the parties shall be
afforded a reasonable opportunity to present evidence as to its
setting, purpose, and effect to aid the court in making the
determination.
(3) For the purpose of this section, a charge or practice expressly
permitted 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 disclosure
violations; debtor's right to rescind
Sec. 201. For purposes of the provisions on civil liability for
violation of disclosure provisions (IC 24-4.5-5-203) and on debtor's
right to rescind certain transactions (IC 24-4.5-5-204):
(1) consumer credit sale includes a sale that is a first lien
mortgage transaction if the sale is otherwise a consumer credit
sale; and
(2) consumer loan includes a loan that is a first lien mortgage
transaction 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 a
creditor has violated the provision of this Article applying to
limitations on the schedule of payments or loan term for supervised
loans (IC 24-4.5-3-511), the debtor is not obligated to pay the loan
finance charge, and has a right to recover from the person violating
this Article or from an assignee of that person's rights who
undertakes direct collection of payments or enforcement of rights
arising from the debt a penalty in an amount determined by the court
not 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 the
agreement with respect to which the violation occurred.
(2) If a creditor has violated the provisions of this Article applying
to authority to make consumer loans (IC 24-4.5-3-502), the loan is
void and the debtor is not obligated to pay either the principal or loan
finance 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 payment
from the person violating this Article or from an assignee of that
person's rights who undertakes direct collection of payments or
enforcement of rights arising from the debt. With respect to
violations arising from loans made pursuant to revolving loan
accounts, no action pursuant to this subsection may be brought more
than two (2) years after the violation occurred. With respect to
violations arising from other loans, no action pursuant to this
subsection may be brought more than one (1) year after the due date
of the last scheduled payment of the agreement pursuant to which the
charge was paid.
(3) A debtor is not obligated to pay a charge in excess of that
allowed by this Article, and if the debtor has paid an excess charge
the debtor has a right to a refund. A refund may be made by reducing
the debtor's obligation by the amount of the excess charge. If the
debtor has paid an amount in excess of the lawful obligation under
the agreement, the debtor may recover the excess amount from the
person who made the excess charge or from an assignee of that
person's rights who undertakes direct collection of payments from or
enforcement of rights against debtors arising from the debt.
(4) If a debtor is entitled to a refund and a person liable to the
debtor refuses to make a refund within a reasonable time after
demand, the debtor may recover from that person a penalty in an
amount determined by a court not exceeding the greater of either the
amount of the credit service or loan finance charge or ten (10) times
the amount of the excess charge. If the creditor has made an excess
charge in deliberate violation of or in reckless disregard for this
Article, the penalty may be recovered even though the creditor has
refunded the excess charge. No penalty pursuant to this subsection
may be recovered if a court has ordered a similar penalty assessed
against the same person in a civil action by the department (IC
24-4.5-6-113). With respect to excess charges arising from sales
made pursuant to revolving charge accounts or from loans made
pursuant to revolving loan accounts, no action pursuant to this
subsection may be brought more than two (2) years after the time the
excess charge was made. With respect to excess charges arising from
other consumer credit sales or consumer loans, no action pursuant to
this subsection may be brought more than one (1) year after the due
date of the last scheduled payment of the agreement pursuant to
which the charge was made.
(5) Except as otherwise provided, no violation of this Article
impairs rights on a debt.
(6) If an employer discharges an employee in violation of the
provisions prohibiting discharge (IC 24-4.5-5-106), the employee
may within six (6) months bring a civil action for recovery of wages
lost as a result of the violation and for an order requiring the
reinstatement of the employee. Damages recoverable shall not
exceed lost wages for six (6) weeks.
(7) If the creditor establishes by a preponderance of evidence that
a violation is unintentional or the result of a bona fide error, no
liability is imposed under subsections (1), (2), and (4) and the
validity of the transaction is not affected.
(8) In any case in which it is found that a creditor has violated this
Article, the court may award reasonable attorney's fees incurred by
the debtor.
(9) The department may act on behalf of a debtor to enforce the
debtor's rights under this section against a creditor who is licensed or
registered with the department or is required to be licensed or
registered 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, in
violation of the provisions on disclosure (Part 3), of the Chapter on
Credit Sales (Chapter 2) and the Chapter on Loans (Chapter 3), fails
to disclose information to a person entitled to the information under
this 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 the
credit service or loan finance charge in connection with the
transaction, but the liability pursuant to this subdivision shall be
not less than one hundred dollars ($100) nor more than one
thousand 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 minimum
recovery is applicable, and the total recovery under this
subdivision in any class action or series of class actions arising
out of the same failure to comply by the same creditor may not
be 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 under
paragraph (a), the costs of the action together with reasonable
attorney's fees as determined by the court. In determining the amount
of the award in a class action, the court shall consider, among other
relevant factors, the amount of any award granted under the federal
Consumer Credit Protection Act (15 U.S.C. 1601 et seq.), the
frequency and persistence of failures of compliance by the creditor,
the resources of the creditor, the number of persons adversely
affected, and the extent to which the creditor's failure of compliance
was 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 an
action under this section or the receipt of written notice of the error,
the creditor notifies the person concerned of the error and makes
whatever adjustments in the appropriate account are necessary to
assure that the person will not be required to pay a credit service
charge or loan finance charge in excess of the amount or percentage
rate actually disclosed.
(3) A creditor may not be held liable in any action brought under
this section for a violation of this Article if the creditor shows by a
preponderance of evidence that the violation was not intentional and
resulted from a bona fide error notwithstanding the maintenance of
procedures reasonably adapted to avoid the error.
(4) If there are multiple obligors in a consumer credit transaction
or consumer lease, there may not be more than one (1) recovery of
damages under subdivision (a)(1) for one (1) violation of this article
with respect to that consumer credit transaction or consumer lease.
(5) The multiple failure to disclose to any person any information
required under this article to be disclosed in connection with a single
account under an open end consumer credit plan, a single consumer
credit sale, a consumer loan, a consumer lease, or another extension
of consumer credit entitles that person to a single recovery under this
section. However, continued failure to disclose after a recovery has
been granted gives rise to rights to additional recoveries.
(6) Any action which may be brought under this section against
the original creditor in any credit transaction involving a security
interest in land may be maintained against any subsequent assignee
of the original creditor where the assignee, its subsidiaries, or
affiliates were in a continuing business relationship with the original
creditor either at the time the credit was extended or at the time of
the assignment, unless the assignment was involuntary, or the
assignee shows by a preponderance of evidence that it did not have
reasonable grounds to believe that the original creditor was engaged
in violations of this Article, and that it maintained procedures
reasonably adapted to apprise it of the existence of the violations.
(7) No action pursuant to this section may be brought more than
one (1) year after the date of the occurrence of the violations.
(8) In this section, creditor includes a person who in the ordinary
course of business regularly extends or arranges for the extension of
credit, or offers to arrange for the extension of credit.
(Formerly: Acts 1971, P.L.366, SEC.6.) As amended by
P.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 Consumer
Credit Protection Act (IC 24-4.5-1-302) concerning the debtor's right
to rescind a transaction that is a consumer credit sale or a consumer
loan constitutes a violation of IC 24-4.5. A creditor may not accrue
interest during the period when a consumer loan may be rescinded
under Section 125 of the Federal Consumer Protection Act (15
U.S.C. 1635).
(2) A creditor must make available for disbursement the proceeds
of 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 rescission
period 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 this
Part may be set off against the debtor's obligation, and may be raised
as a defense to a suit on the obligation without regard to the time
limitations 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 of
those permitted by the provisions of this article commits a Class A
misdemeanor.
(2) A person who knowingly engages in the business of making
consumer loans without a license in violation of the provisions of
this article applying to authority to make consumer loans (IC
24-4.5-3-502 and IC 24-4.5-3-502.1) commits a Class A
misdemeanor.
(3) A person who knowingly:
(a) engages in the business of making consumer credit sales,
consumer leases, or consumer loans, or of taking assignments
of rights against debtors; and
(b) undertakes direct collection of payments or enforcement of
these rights, without complying with the provisions of this
article concerning notification (IC 24-4.5-6-202) or payment of
fees (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 he
knowingly gives false or inaccurate information or fails to provide
information which he is required to disclose under the provisions of
IC 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.