Medical bills can increase so quickly, especially when facing unexpected illnesses or injuries. If you as the lender cannot pay your medical debts, your wage may be garnished by the creditors. The question is, can our wages be really garnished for unpaid medical bills?
Overview of Wage Garnishment
Wage garnishment refers to a thing that occurs when a portion of your earnings is withheld by your employer to pay off a debt as ordered by a court or authorized government agency. Usually, this kind of procedure applies to debts such as unpaid child support, student loans, back taxes, and so on. However, it is also possible to be applied to unpaid medical bills.
According to several sources, wage garnishment is as follows:
- U.S. Department of Labor: “Wage garnishment is a legal procedure in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt such as child support.”
- Forbes: “Wage garnishment is a legal procedure in which an employer is required to withhold a portion of an employee’s wages as payment for outstanding debt.”
- Investopedia: “Garnishment, or wage garnishment, is when money is legally withheld from our paycheck and sent to another party. It refers to a legal process that instructs a third party to deduct payments directly from a debtor’s wage or bank account.”
- The People’s Law Library of Maryland: “Wage garnishment is a court procedure where a court orders a debtor’s employer to hold the debtor’s earnings in order to pay a creditor.”
Types of Debts That Can Be Potentially Subject for Wages Garnished
There are a few kinds of debts that can be potentially subjects to wage garnishment, such as:
- Medical bills
- Credit card debt
- Child support and alimony
- Unpaid taxes
- Federal student loans
Types of Medical Bills That Can Result in Wage Garnishment
There are also several kinds of medical bills that can result in wage garnishment, including:
- Hospital bills
- Medical bills or visits
- Surgical fees and costs
Garnishing Wages for Medical Bills
For anyone who is wondering whether or not wages can be garnished for medical bills, the short answer to the question is yes. It is true that wages can be garnished for medical bills. However, it should be noted that it just happens instantly or automatically, meaning it takes time. Before garnishing your wages, the creditor, in the case of medical bills can be a hospital, medical facility, or healthcare provider, must take certain legal steps. Check out the process generally works:
- First of all, the medical provider will try to collect the debt directly from you. They will usually contact you by phone or send bills to you. If you do not pay the debt for an extended period, the debt may be sent by them to a collection agency.
- If the creditor is still unable to collect the debt from you, even after making several attempts, they may seek a court judgement for the unpaid amount by filing a lawsuit against you in civil court.
- If the creditor wins in the court, a court judgment ordering you to pay the debt will be issued by the court. If even after the judgement has been ordered you are still unable to pay the debt, the creditor may seek a wage garnishment from the court.
- By holding the court order and a writ, the creditor will be able to instruct your employer to withhold a portion of your wages, usually a maximum of 25% of your disposable income. However, it may be different, depending on the federal and state laws. The court or the employer will send you a notice regarding the garnishment order. In this notice, you will be able to find the details of the amount to be garnished. Besides, you will also find a way to contest it. In this case, the employer will then send the withheld amount to the creditor until your debt is fully paid.
Federal and State Laws Regarding Wage Garnishment
If your wages are garnished, you can only have little or no disposable income, which can be really hard for you to get through every day’s life. The good news is that there are federal and state laws that regulate this. With these laws, there is a limit on how much of your wages can be garnished.
In 1978, the Fair Debt Collection Practices Act took effect. According to the Federal Trade Commission or FTC, the things that are covered under this federal law include credit card debt, student loans, auto loans, mortgage and other household debts, and medical bills.
As for the state laws, they can vary. There are some states that offer greater protection to customers, such as by restricting wage garnishment for certain types of debts or lowering garnishment limits. Meanwhile, there are also some other states that prioritize medical debts from other consumer debts.
Exemptions and Protections
In some situations, wage garnishment cannot be applied. In other words, it is possible for you to be protected from this. These situations include:
- Head of household: If you are the main income earner in your house, you may be protected by your state because there are some states that protect the people like you by limiting or exempting the wages from garnishment for medical bills.
- Income thresholds: If your income is under a certain threshold, wages garnishment may be prevented by federal law. For example, this kind of procedure is not allowed to cut your disposable earnings to less than 30 times the federal minimum wage.
- Hardship exemptions: If you have financial issues, for example you are struggling to meet basic living expenses, and you can provide evidence of your hardship to the authority, you can be exempted from wage garnishment.
- Bankruptcy: If you file for bankruptcy, your wage garnishment may be halted as your debts are addressed by the bankruptcy court. For your information, it is also possible for the medical bill to be discharged or reorganized for repayment, depending on the type of bankruptcy filed.
Avoiding Wage Garnishment for Medical Bills
Apparently, it is possible for you to avoid wages garnishment for medical bills. The things that you can do to avoid it include:
- Complain about inaccurate bills: It is important for you to ensure the accuracy of your medical bills. You can be charged higher if there is a mistake in your medical bills. If such a mistake happens, resulting in you paying more, please dispute it.
- Communicate with creditors: As a debtor, you are suggested to reach out to the medical provider or collection agency to negotiate a payment plan. Do not hesitate to do it because your creditor may be willing to set up affordable monthly payments, making it possible for you to avoid legal action.
- Seek financial assistance: Try to find options for financial assistance or charity care programs that may be offered by the medical providers so that you can minimize or get rid of your medical bills.
- Settle the debt: Sometimes, medical providers or collection agencies may want to settle the debt for less than the full amount owed as long as you can make a lump-sum payment.
Bottom Line
In conclusion, wages can be garnished for unpaid medical bills. However, this kind of thing can only happen after the healthcare provider or collection agency sues you for nonpayment and they win the case in the court. As they win, a judgement will be issued by the court, allowing them to garnish your wage.
