Nebraska amends garnishment laws to limit medical debt collection from disposable earnings

In the heart of Nebraska's legislative chamber, a pivotal discussion unfolded on January 16, 2025, as lawmakers gathered to deliberate on Legislature Bill 174. This proposed legislation aims to amend existing garnishment laws, specifically targeting the financial strain of medical debt on individuals.

At the core of Bill 174 is a significant shift in how garnishments are calculated for medical debts. Currently, individuals can face garnishments that take a substantial portion of their disposable earnings. Under the new bill, the maximum garnishment for medical debt would be capped at 10% of an individual's disposable earnings for the week, a stark contrast to the existing provisions that allow for up to 25% for other debts. This change seeks to alleviate the financial burden on those already struggling with medical expenses, a concern that resonates deeply in a state where healthcare costs continue to rise.

The bill also introduces a nuanced approach for individuals who are heads of families, allowing for a slightly higher garnishment threshold. However, it maintains strict limitations on how much can be garnished for medical debts, ensuring that individuals retain a greater portion of their earnings to support their families.

As the bill was introduced, it sparked notable debates among lawmakers. Proponents argue that the legislation is a necessary step toward protecting vulnerable populations from the crippling effects of medical debt, which can lead to financial instability and even bankruptcy. Critics, however, express concerns about the potential impact on creditors and the broader implications for the healthcare system, fearing that limiting garnishments could hinder the ability of medical providers to collect owed debts.

The implications of Bill 174 extend beyond individual finances; they touch on broader social issues, including healthcare access and economic stability. Experts suggest that by reducing the financial strain of medical debt, the bill could lead to improved health outcomes, as individuals may be more likely to seek necessary medical care without the fear of overwhelming debt.

As the legislative process unfolds, the future of Bill 174 remains uncertain. It stands as a testament to the ongoing struggle between financial responsibility and the need for compassionate healthcare policies. With discussions continuing in the coming weeks, Nebraskans are left to ponder how this bill could reshape the landscape of medical debt and garnishment in their state, potentially offering a lifeline to those in need.