Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets. Ask Sally a question, or read her previous answers in the To Her Credit archive
Dear To Her Credit,
What kinds of income can be garnished? I am 61 and live
on my retirement/disability from the California State Teachers' Retirement
System. I receive about $1,800 per month.
I had a heart attack in November 2009 and just received a
bill from the ambulance company for $1,500. I was told that unless I make
payments of $100 per month (I cannot), it will go to collections.
I filed for
bankruptcy in 2008 due to debts from a divorce. My daughter, a full-time
student, lives with me. I am terrified that any amount can be deducted from my
income. -- Nicole
Relax -- the ambulance company is not going to garnish your
income for two reasons. One, your income is likely to be less than the
exemption amounts that apply to you. Joshua P. Friedman, a California collections
and judgment enforcement attorney, says, "There
are lots of exemptions that apply to wages -- some are federally mandated and
some vary from state to state (and there are often still exceptions to the
The second reason the ambulance company won't garnish
your income is because your income is from a disability and retirement plan.
Friedman writes in an e-mail, "Based on the facts stated (retirement
benefits of $1,800 per month), in California, if the judgment is not based on a
child or spousal support order, payments from a retirement plan for annuity,
pension, retirement allowance, disability payment or death benefit are fully
exempt (Cal Civ Pro Sec. 704.115 and 704.110). This means if the debtor
receives payments from a retirement plan, no creditor can take that money."
Just because they can't garnish your wages, however, doesn't
mean you can ignore the debt. It's essential you communicate with the ambulance
company to avoid a negative mark on your credit report and additional fees and
interest. Plus, unresolved bills cause stress -- the last thing you need!
Here's what you should do:
First, make sure your insurance company has paid
its share. Often, it takes a while for insurance to process the bill. Call if
you're not sure of the bill's status.
Contact the ambulance company and ask if it has
a charity program for the disabled and retirees on fixed incomes. Medical
providers often have such programs, but it's up to you to ask. You may be
required to submit proof of income, a monthly budget and other information to
Negotiate a payment plan you can live with. It
may be easier to do this if the company has a local office with an account
representative you can sit across the table from. Be sure to bring your income
and expense information so you can show what you can afford. If your minimum
expenses are as much as your income, the representative should be able to see
that. The company may write the bill off if it is convinced there's no money to
be had, or it may settle for a reduced amount. Get everything you agree to in
Once you settle on a more reasonable payment
plan, stick to it faithfully.
Here's what not to do:
Don't ignore this bill, but don't lose sleep over it,
either. Ambulance companies transport people every day, and a good share of their
customers cannot afford to pay the full fee. Many people have been in the same
situation you are in -- that's why there are solutions available.
Don't consider bankruptcy. It's not necessary and would cost
you more than the ambulance bill.
And don't even think about putting this bill on your credit
card! Once it's on a credit card, the bank is not likely to negotiate below the
amount it paid the ambulance company; indeed, it would be unreasonable to
expect that. And the interest on a credit card would make that $1,500 bill grow
more expensive every day.
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