Medical Debt & Wage Garnishment: Process, Limits & Protection Strategies

Yes, medical debt can lead to wage garnishment — but only after a court judgment. It's a multi-step legal process with protections.

The Garnishment Process

1. Bill → Collection: Provider → internal collections → third-party agency (6–12 mo).
2. Lawsuit: Agency files suit. **You must be served.**
3. Judgment: If you don't respond → default judgment. If you respond → trial/settlement.
4. Garnishment Order: Creditor requests writ from court → served on employer.
5. Withholding: Employer deducts from paycheck until debt + interest + costs paid.

Federal Limits (Consumer Credit Protection Act)

• Max 25% of disposable earnings (after taxes, mandatory deductions) OR
• Amount by which weekly disposable earnings exceed **30 × federal minimum wage ($7.25 = $217.50/week)** — whichever is **less**.
• Some states set lower caps (e.g., 10–15%, or protect more income).
• **No garnishment** if disposable earnings ≤ $217.50/week.

Protections & Exemptions

• Head of Household: Many states exempt more (e.g., FL, TX, NC — 100% wages exempt for head of household).
• Federal Benefits Exempt: SSI, SSDI, VA, military retirement — **cannot be garnished** for medical debt (except federal debts).
• Bankruptcy (Ch 7/13): Automatic stay stops garnishment immediately. Medical debt dischargeable.
• Negotiation: Settle for lump sum (often 30–50%) or payment plan **before judgment**.
• Financial Hardship: Some courts reduce garnishment if proven.

Immediate Actions If Sued

1. RESPOND TO THE SUMMONS (deadline: 20–30 days). Default = automatic loss.
2. Verify debt: amount, ownership (chain of assignment), statute of limitations (3–6 yrs varies by state).
3. Negotiate settlement / payment plan in writing.
4. Consult legal aid / consumer attorney (NACA.net).
5. If judgment entered: file claim of exemption per state forms.

Medical debt is civil — not criminal. You won't go to jail. But ignoring it guarantees garnishment.