Medical Debt Wage Garnishment: Federal 25% Limit & State Protections

The Consumer Credit Protection Act (CCPA), Title III, caps garnishment for any consumer debt (including medical) at:

Federal Limit

• 25% of disposable earnings (gross pay minus legally required deductions: taxes, Social Security, Medicare, state unemployment).
• OR the amount by which weekly disposable earnings exceed 30× federal minimum wage ($7.25 × 30 = $217.50/week), whichever is less.

Example: Weekly take-home $600 → 25% = $150. $600 – $217.50 = $382.50. Lesser = $150 max garnishment.

State Variations (Often More Protective)

• CA, NY, TX, PA, NC, SC: Lower caps (e.g., CA: 25% but stricter "disposable" definition; TX: no garnishment for consumer debt).
• Head of household exemptions: FL, others protect more income.
• Total bans: TX, PA, NC, SC for most consumer debts (medical included).

Process

1. Creditor sues → judgment.
2. Creditor requests writ of garnishment.
3. Employer served; must comply.
4. Employee notified; can claim exemptions (file with court).

Protections

• Bankruptcy (Ch 7/13): Automatic stay stops garnishment.
• Negotiate: Payment plan, lump-sum settlement (often 30–50%).
• Financial hardship: Court may reduce garnishment.
• Nonprofit credit counseling: Debt management plan (DMP) may stop legal action.

Key: Respond to lawsuit; don't ignore. Show up, assert exemptions, negotiate.