A creditor has a legal right to be paid what is legitimately due. A creditor has the authority to agree to a payment arrangement, and the authority to decide what is acceptable. A debtor has certain rights, too, in that the actions a creditor can take to enforce payment are limited. Ultimately, a debtor can obtain discharge of the debt through bankruptcy. For that reason many creditors wisely accommodate a debtor's good faith attempt to pay and respect a debtor's limited ability. But it is the creditor that decides the terms, until the debtor plays the bankruptcy card. Yes, they can sue you if they want $800 per month and you only pay $200. With the judgment they can garnish wages and take non-exempt property.
By the way, a medical creditor can also refuse to provide no further treatment on credit.
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This answer is offered as a public service for general information only and may not be relied upon as legal advice.
If they sue, as other counsel pointed out they can go after non-exempt assets. As far as wage garnishment, the amount aken out of the wages is limited by your jurisdiction's wage garnishment limitations. It's possible, although I can't be certain due to lack of facts about your earnings, and knowledge about the legal limit of wage garnishment in your state, that the wage garnishment would take less than $800/month from your checks. If you do continue to make payments, even if they are less than $800, it's possible that although they creditor is saying they want $800, that they'll take less and as long as you continue to make the payment will not sue, but as other counsel stated they have a right to sue and have a right to determine for themselves how little they are willing to accept and not sue. If you make your $200/month payment, only time will tell how they will proceed.