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Four Things To Know About Medical Bills And Wage Garnishment

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In a Nutshell

A healthcare provider can try to collect unpaid medical debts like any other debt collector might. A provider may even seek to garnish your wages. Before a provider can take your wages, the facility or physician must sue you and win the case.

Written by the Upsolve TeamLegally reviewed by Attorney Andrea Wimmer
Updated November 11, 2021

A healthcare provider can try to collect unpaid medical debts like any other debt collector might. A provider may even seek to garnish your wages. Before a provider can take your wages, the facility or physician must sue you and win the case. If it wins, the court will award a judgment to the provider or its collection agent. You can and should defend against any lawsuit. If you don’t, then a creditor can get a default judgment against you fairly easily.

Fortunately, there are options that can help you to avoid or halt garnishments. Bankruptcy is one way to obtain debt relief. It can even give you a fresh start. A local attorney can help you explore all your options, usually through a free consultation.

Hospitals Can (and Will), Garnish Your Wages to Collect Unpaid Medical Bills

Health care is a premium service. Even the costs associated with a minor ailment or condition can be expensive. At one time or other, many of us have had difficulty paying hospital bills on time. Hospitals are like any other businesses. If you don’t pay your bill, they will use the same debt collection tools other creditors use to collect these debts. Hospitals, like credit card companies, may even use a collection agency to collect their debts.

An example of a debt collection tool is wage garnishment. Most garnishments don’t occur automatically but after a creditor sues you as a final collections resort. Even nonprofit hospitals will sue their patients over unpaid medical bills and may garnish your wages.

Most wage garnishment challenges start when a creditor - like a hospital, bank, or credit card company - sues a customer for nonpayment. State agencies can garnish your wages for unpaid alimony and child support without suing you but private businesses must sue you formally before they can garnish your income. If a creditor wins a lawsuit, it gets a judgment. This judgment provides the legal authority to get a garnishment order and take wages. This can leave you with little or no disposable income and make life stressful. 

The court order for garnishment is sent to your employer. This allows the judgment-creditor to take money from your paycheck before it hits your bank account. Thankfully, federal law provides safeguards for consumers in this situation. There are different ways to stop wage garnishment

You Can Contest Wage Garnishment Over Unpaid Hospital Bills

Debt collectors, including hospitals, must follow federal and state laws when collecting debts. If they don’t follow these laws, they could lose in court. You always have the right to answer the complaint and contest the lawsuit

Most importantly, you’ll need to file an answer in court before the deadline. This date is listed on the summons. Filing after this date could give the hospital an automatic win, known as a default judgment. Once this document is filed, the court can no longer award the hospital a default judgment. This can buy you some time to negotiate a repayment plan with the hospital.

The Federal Debt Collection Practices Act (FDCPA) is a set of laws that applies to most debt collectors. The FDCPA allows you to validate the debt according to its guidelines. If the hospital or any creditor has broken any of the FDCPA’s rules, this misconduct may serve as a defense that will help you win the lawsuit. Examples of these rules include: statute of limitations (not filing the lawsuit within the time allowed under the law), suing you for a debt you don’t owe, not billing your health insurance first, etc.

You may owe the debt because, like many, you or a family member has suffered some illness or medical condition resulting in high medical bills. You do have options for dealing with considerable medical debt. For example, you can try to work with the hospital outside of court to negotiate a settlement or payment plan. Just remember that In many local courts, any settlement negotiations for repayment of the debt won’t prevent a lawsuit from moving forward, so make sure you meet all your court filing deadlines.

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Hospitals Can’t Garnish Your Entire Income, Even if They Win a Debt Collection Lawsuit

Even though creditors can get a garnishment order, federal law and some state laws, depending on where you live, limit the ability of creditors, including hospitals, to garnish your income. The amount of income that a creditor can garnish is based on an employee's “disposable earnings.” This is the amount left after legally required deductions are taken from your paycheck.

Even if a hospital, credit card company, or other creditor wins a judgment, whether by default or otherwise, it can only garnish so much of your income, including your wages. Federal law sets the limit at 25% of your income, or the amount you earn that is 30 times the federal minimum wage (currently $7.25 an hour), whichever is less.

The good news is that certain types of income, such as Social Security benefits, are protected from debt collectors, including collectors of medical debt. Creditors may not garnish any portion of Social Security income. 

No one wants a creditor garnishing their hard-earned Social Security. It’s a good idea to keep this income distinct from other money that you receive from other sources. Using a separate bank account can prevent “income comingling” problems in the future. 

Keep in mind that the IRS may collect debts for back taxes by keeping your tax refund or even taking Social Security benefits. If you have unpaid student loans, alimony, or child support, your Social Security benefits may be garnished by the government but may not be garnished for the purposes of repaying “private” debt.

Filing for Bankruptcy Can Provide Debt Relief From Wage Garnishment

Wage garnishment chips away at your disposable income. It’s not difficult to get behind on other bills as a result. Many people have experienced some health issue or emergency that caused overwhelming medical debt. You are not alone if your bills have piled up so significantly that you are considering filing for bankruptcy.

There is hope. Bankruptcy is just one way of helping you find debt relief. It can also be an effective way of getting a fresh start. It is a fact that 2/3 of all bankruptcy filers in the U.S. (more than half a million people) filed bankruptcy in the last year because of unpaid medical bills. 

Once a bankruptcy case is filed, the automatic stay goes into effect. This unique tool of federal law stops all debt collection activities, including garnishment. But even though this process helps many people struggling with debt, filing for bankruptcy may not benefit everyone. First, you must determine if you’re eligible to file a Chapter 7 bankruptcy case. If you have too much income, you may have to file a Chapter 13 case. Bankruptcy can clear a judgment for an unpaid medical debt. There are alternatives to filing bankruptcy.

Upsolve offers a free web app that can help you decide whether bankruptcy is the right option for dealing with your medical debt. This free tool helps eligible Chapter 7 bankruptcy filers to file for bankruptcy on their own. It can help you if you have a simple case. If you don't qualify, you can schedule a free 1-on-1 evaluation with an attorney to discuss other ways to find debt relief.

Let’s Summarize. . .

Every one of us has experienced some type of health issue. Care, treatment, and medication are expensive in the American healthcare system. Credit cards are predictable expenses. If you have a credit card, you expect a bill every month. A setback requiring medical attention can be, and too often is, serious and unexpected.  If this isn’t enough to disrupt our normal lives, we often have to deal with excessive medical debt in the aftermath.

You are not alone if you are having difficulty paying medical bills. Many people throughout the country have the same problem. You have options for dealing with medical debt as well as other types of debt. Filing bankruptcy is one way to find debt relief and get a fresh start. Upsolve may be able to help file on your own without a lawyer. Our free mobile app makes it easy.

If bankruptcy isn’t your best option, know that there are limits to the amount of money that a judgment creditor can garnish from your wages or bank account. Working with a local attorney can help you sort out your options. Upsolve can help you find one. Help is available!

Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer


Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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