Can My Wages Be Garnished for Medical Bills?
A creditor must get a court judgment before garnishing wages for medical debt. Learn about the legal process, the strict limits, and your right to respond.
Your wages can be garnished for medical bills, but a creditor cannot take money from your paycheck just because a bill is overdue. They must first sue you and get a court order. This process, known as wage garnishment, is a court-ordered mandate compelling your employer to withhold a portion of your earnings and send it to the creditor. The procedure is governed by federal and state laws that establish rules and protections for the debtor.
The Legal Path to Wage Garnishment
The path from an unpaid medical bill to garnishment begins when a creditor or collection agency files a lawsuit to collect the debt. You will then be served with legal documents known as a summons and complaint, which notify you that you are being sued and detail the claims. It is important to respond to these documents within the specified timeframe, which is 20 to 30 days.
Failing to respond to the lawsuit results in the court issuing a “default judgment” in the creditor’s favor. With this court judgment, the creditor can then petition the court for a “writ of garnishment,” the legal instrument that authorizes them to garnish your wages.
Federal and State Garnishment Limits
Federal law limits how much of your income can be garnished for consumer debts, including medical bills. The Consumer Credit Protection Act (CCPA) bases these limits on your “disposable earnings,” which is your gross pay after required deductions like federal and state taxes, Social Security, and Medicare are taken out.
The maximum amount that can be garnished is the lesser of two figures: 25% of your disposable earnings, or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage. The federal minimum wage is $7.25 per hour, so this protected amount is $217.50 per week. If your weekly disposable earnings are $217.50 or less, your wages cannot be garnished.
For example, if your weekly disposable earnings are $600, the first calculation is 25% of $600, which is $150. The second is $600 minus $217.50, which is $382.50. The lesser amount, $150, is the maximum that could be garnished from your weekly paycheck. Many states have laws that offer greater protection by setting lower garnishment limits or protecting more income.
Income Exempt from Garnishment
Certain types of income are “exempt,” or protected, from being garnished for medical debts. Federal law shields government-administered benefits from seizure, even after they are deposited into a bank account. To protect these funds, it is best to keep them in a separate account from non-exempt wages.
Federally exempt income sources include:
- Social Security benefits
- Supplemental Security Income (SSI)
- Veterans’ benefits
- Federal disability benefits
- Federal student aid
Many states also have laws that protect other forms of income, such as:
- Public assistance payments
- Unemployment compensation
- Workers’ compensation benefits
- Payments from certain retirement or pension plans
The Garnishment Process and Your Employer
Once a creditor obtains a writ of garnishment, the process involves your employer. The writ is a legal order served on your employer, who is then legally obligated to comply with its terms. Your employer must calculate the correct amount to withhold from your paycheck, adhering to the limits set by federal and state law as specified in the order.
The employer then deducts this amount from your pay and sends the funds directly to the creditor. You will also be notified of the action, receiving a copy of the garnishment order and a notice from your employer that explains the withholding process.
How to Respond to a Garnishment Notice
Upon receiving a garnishment notice, you have the right to challenge it by filing a “claim of exemption” with the court that issued the order. This formal document asserts that some or all of your income is protected from garnishment by law. You can file a claim if you believe the money being garnished comes from a protected source or if the amount withheld exceeds legal limits.
The court will provide a form for this purpose, which you must complete and file, often within a short timeframe of 10 to 30 days. Filing a claim of exemption triggers a court hearing where a judge will review your claim and the creditor’s arguments. You should attend this hearing and be prepared to present evidence, such as pay stubs or bank statements, to support your position. Federal law also offers protection against termination; your employer cannot fire you because your wages are being garnished for a single debt.