Can Hospitals Garnish Your Wages for Medical Bills?

You are not alone if you have unpaid medical bills. Americans carry between $81 billion and $140 billion in medical debt, according to the Consumer Financial Protection Bureau.

Medical facilities can garnish your wages for unpaid bills. But they must follow strict legal procedures first. Understanding these rules helps you protect your income and fight back.

Can Hospitals Garnish Wages for Unpaid Medical Bills?

Yes, hospitals can garnish your wages for unpaid medical bills. But they must sue you first and win a court order.

Healthcare may be a necessity, but it gets treated like any consumer purchase. Medical care costs add up fast. Outstanding bills can spiral out of control.

Hospitals use the same debt collection tools as other creditors. They call you, send collection letters, and contact you by email. Many hospitals hire collection agencies to pursue unpaid accounts.

Lawsuits are usually a last resort. Suing people costs time and money. But medical facilities and collection agencies may sue to recover large unpaid bills.

You can take control before things escalate. Work with the hospital to negotiate a settlement or payment plan. Address your medical debt proactively.

If you get sued, do not panic. You can respond and protect yourself. Our partner Solo helps you draft and file your lawsuit response. They have helped over 300,000 people handle debt lawsuits. They offer a money-back guarantee if courts reject your documents.

What Is a Wage Garnishment?

A wage garnishment is a powerful debt collection tool. Creditors use it to take money directly from your paycheck.

Medical providers can sue you for nonpayment. If they win, the court issues a judgment. The judgment allows the provider to garnish your wages.

The garnishment order goes straight to your employer. Your employer must withhold money from each paycheck. The withheld amount goes to the creditor until the debt is paid.

Wage garnishment can leave you with little disposable income. Your financial stress increases dramatically. Thankfully, federal law limits how much creditors can take. You also have options to stop garnishment before or after it starts.

Why Is a Debt Collector Calling About Unpaid Medical Bills?

Hospitals commonly turn unpaid bills over to third-party collection agencies. Getting calls from debt collectors feels intimidating. But federal and state laws protect you from harassment and abuse.

The Fair Debt Collection Practices Act (FDCPA) governs most third-party collectors. Under the FDCPA, collectors must validate your debt. They must tell you about your right to dispute it.

Debt collectors who violate the FDCPA can face consequences. You can use their violations as a defense if they sue you.

You Can Defend Yourself in a Medical Debt Collection Lawsuit

Getting served with a summons feels scary. Most people think they need a lawyer to fight back. But you can file the required paperwork yourself.

Free or low-cost legal help is available through legal aid. If you are struggling with medical debt, you probably cannot afford an attorney. With time and effort, you can fight the lawsuit.

Start by filing an answer to the court summons. Meet the deadline listed in your summons. An answer is an official document that tells the court you intend to participate.

Our partner Solo can draft your answer for a small fee. Solo has helped over 300,000 people respond to debt collection lawsuits. They offer a money-back guarantee.

Filing on time and showing up to court gives you a fighting chance. You can beat the lawsuit or negotiate better terms.

What Happens if You Ignore the Lawsuit?

Ignoring a medical debt lawsuit virtually guarantees you will lose. The court will grant a default judgment against you.

A default judgment opens the door to aggressive collection measures. Creditors can garnish your paycheck. They can levy your bank account and take funds directly. They can place liens on property you own.

Never ignore a lawsuit. Responding protects your rights and your income.

Hospitals Cannot Garnish Your Entire Paycheck

Federal law limits how much creditors can take from your paycheck. Even with a garnishment order, hospitals cannot seize everything you earn.

Garnishment amounts are based on your disposable earnings. Disposable earnings are what remains after legally required deductions from your paycheck.

Federal law caps garnishment at 25% of your disposable income. The cap can also be the amount you earn above 30 times the federal minimum wage, whichever is less. Currently, the federal minimum wage is $7.25 per hour.

Some states provide even stronger protections. Check your state laws for additional garnishment limits.

Some Types of Income Are Exempt Altogether From Garnishment

Certain types of income are protected from debt collectors. Social Security benefits are exempt from garnishment for medical debt. Creditors cannot take any portion of your Social Security income.

If you receive different forms of income, keep exempt income separate. Use a dedicated bank account for protected funds. Separation makes it easier to prove what money is exempt.

Keep in mind that the IRS can collect tax debts differently. The IRS may keep your tax refund or take Social Security benefits for back taxes. The government can also garnish Social Security for unpaid student loans, alimony, or child support. But private creditors like hospitals cannot touch these protected funds.

You May Be Able To Avoid Wage Garnishment Altogether

Overwhelming medical debt creates real emotional distress. You may feel hopeless or helpless. But you have debt relief options.

Start by setting up a free appointment with a credit counseling agency. Nonprofit credit counselors help you create a plan to tackle your debt. They may be able to help you:

• Set up a repayment plan with the hospital
• Connect you with resources to reduce your debt
• Establish a debt management plan to streamline repayment
• Decide if bankruptcy is right for your situation

Our partner Cambridge Credit Counseling can help you explore your options and create a manageable payment plan.

You can also explore debt settlement. In debt settlement, you offer a lump-sum payment that is less than you owe. The creditor accepts the reduced amount and clears the debt. Many people in debt do not have large sums available. But debt settlement works well if you receive a tax refund or inheritance.

A Note About the No Surprises Act

The No Surprises Act protects patients from unexpected medical bills. The act reduces financial hardship caused by medical debt. It includes provisions for insured and uninsured patients.

Healthcare providers must offer a good faith cost estimate before treatment. The estimate requirement applies to uninsured patients or those not using insurance. If the final bill exceeds the estimate by $400 or more, you can dispute the charges. Use the patient-provider dispute resolution process to challenge excessive bills.

For insured individuals, the act protects against surprise out-of-network bills. Know your rights under the No Surprises Act.

Filing Bankruptcy Stops Wage Garnishment Fast

Filing bankruptcy has an unfair reputation. But bankruptcy is a constitutional right. If you cannot escape your debt, bankruptcy offers a fresh start.

Bankruptcy comes with powerful protections. The automatic stay is one of the strongest. As soon as you file, the automatic stay goes into effect. All collection actions against you must stop immediately. Collection actions include wage garnishment.

Bankruptcy can also clear existing court judgments for unpaid medical debt. The discharge eliminates your obligation to pay qualifying debts.

Bankruptcy is not right for everyone. But hundreds of thousands of people file personal bankruptcy each year. It may be the solution you need to regain financial stability.