Change provisions relating to garnishment of wages for medical debt
Summary
LB174 would revise Nebraska’s wage garnishment law to create a special, more protective rule for garnishments tied to medical debt. Under the bill, the general garnishment limits for disposable earnings would remain in place for most debts, but a separate cap would apply when the garnishment is sought by a medical debt buyer or medical creditor. The bill also defines several terms, including “medical debt,” “medical debt buyer,” “medical creditor,” and “health care services,” to clarify which obligations are covered.
For medical debt garnishments, the bill would limit the amount that can be taken from a worker’s disposable earnings to the lesser of 10% of weekly disposable earnings, the amount above 30 times the federal minimum hourly wage, or 20% of weekly disposable earnings if the person is not a head of household. It would also preserve existing protections for other categories of debt, including support orders, bankruptcy orders, and tax debts. The bill states that any assignment or transfer of exempt wages beyond the allowed exemption would be void and unenforceable, and it would prohibit employers from firing an employee because wages were garnished for a debt.
Impact
LB174 would amend Nebraska Revised Statutes section 25-1558, narrowing the amount that may be garnished from wages when the underlying obligation is medical debt and adding statutory definitions that distinguish medical debt collection from other forms of debt collection. It would affect employers, employees, courts, medical providers, and debt buyers by limiting collection remedies for medical bills and by making the exemption self-executing without additional proceedings. The bill would also repeal the original section and replace it with the revised version, thereby changing the state’s wage-garnishment framework for this specific class of debt.
Sentiment
The available record shows no committee transcript excerpts and no recorded votes, so there is no direct evidence of debate or floor sentiment in the provided materials. The bill’s subject matter suggests a consumer-protection approach aimed at reducing the burden of medical debt on workers, but the official action history indicates it was indefinitely postponed rather than enacted. That disposition generally suggests the proposal did not advance to final passage.
Contention
The main policy tension in LB174 is between protecting workers from aggressive medical debt collection and preserving creditors’ ability to collect unpaid medical bills. Supporters would likely favor the bill’s lower garnishment cap and broader wage protections for people facing health-related debt, while opponents or skeptics could argue that the bill would make medical debt harder to collect and could shift costs to providers, debt buyers, or other consumers. The bill also draws a distinction between medical debt and other debts, which may have raised questions about whether medical obligations should receive special treatment under garnishment law.