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LB 174

Change provisions relating to garnishment of wages for medical debt

109th Legislature (2025-2026) Introduced by Danielle Conrad and 1 co-sponsor

LB 174 tightens wage garnishment for medical debt: cap at 10% of disposable earnings (or affidavit-based limits); strengthens exemptions and protections for workers.

Title printed. Carryover bill
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Bill Summary · LB 174

Summary of Nebraska LB 174 (2025)

Overview

  • Bill: LB 174
  • Title: Change provisions relating to garnishment of wages for medical debt
  • Introduced: January 13, 2025
  • Committee: Judiciary
  • Chief Sponsor: Senator Jason Prokop
  • Hearing: January 24, 2025
  • Status note: Conrad name added

LB 174 amends Nebraska’s wage garnishment law to adjust how much of a debtor’s earnings can be garnished specifically for medical debt. It creates tighter limits on garnishment for medical debts and adds defined terms related to medical debt, buyers, and creditors.

Purpose and Intent

  • Primary goal: Reduce the portion of a consumer’s disposable earnings that can be garnished for medical debt, compared with other types of debt.
  • Intent highlighted in the Introducer’s Statement of Intent: restrict the percentage of wages that can be garnished for medical debt when pursued by medical debt buyers or medical creditors.

Key Provisions (Substantive Changes)

Section 25-1558 – Garnishment limits (as amended)

  • General rule (subsection (1)): For most garnishments, the maximum part of disposable earnings per workweek is the lesser of:
    • 25% of disposable earnings, or
    • The amount by which disposable earnings exceed 30 times the federal minimum hourly wage, or
    • 15% of disposable earnings if the individual is a head of a family.
  • Exemptions (subsection (2)): The above limits do not apply to:
    • Court orders for support
    • Bankruptcy under Chapter XIII (Chapter 13)
    • Debts owed to state or federal taxes
  • Medical debt garnishment (subsection (3)): New limits specific to medical debt sought by medical debt buyers or medical creditors:
    • The maximum part of disposable earnings per workweek shall not exceed the lesser of:
    • 10% of disposable earnings, or
    • The amount by which disposable earnings exceed 30 times the federal minimum hourly wage, or
    • 20% of disposable earnings if the individual is not a head of a family (this 20% limit requires specific factual allegations from the judgment creditor in a sworn affidavit)
  • Other notes (subsections (4)-(5)):
    • Exemption, once allowed, is granted without further proceedings.
    • Definitions:
    • Earnings, disposable earnings, garnishment
    • Head of a family: person who supports one or more dependents
    • Health care services and medical debt definitions
    • Medical debt buyer and medical creditor definitions
  • Enforcement and safeguards (subsections (6)-(7)):
    • Wages exempted from garnishment remain exempt; assignments, sales, or transfers of exempted wages are void to the extent of the exemption.
    • Employers may not discharge an employee solely because earnings were garnished for a single indebtedness.
  • Administrative note (subsection (8)): For non-weekly pay periods, the Commissioner of Labor will set a regulation to determine a multiple of the federal minimum wage equivalent to the weekly limit.

Repeal and harmonization

  • The bill repeals the original section and harmonizes the revised statutory language with the new definitions and limits.

Affected Parties and Impacts

  • Consumers with medical debt: The bill lowers the permissible wage-garnishment percentage specifically for medical debt, offering greater protection against aggressive debt collection.
  • Medical debt creditors and medical debt buyers: Subject to a stricter cap (10% of disposable earnings, or alternative limits with stricter conditions and sworn affidavit) when pursuing wage garnishment.
  • Employers: Must apply the revised garnishment limits and honor exemptions; protections against discharge tied to garnishment remain.
  • Courts and the judiciary: Will apply new limits and enforce the sworn affidavit requirement for the 20% non-head-of-family scenario; administer exemptions and related procedures.
  • State administration: Commissioner of Labor to establish guidance for non-weekly pay periods.

Timeline and Procedural Aspects

  • Introduction: January 13, 2025
  • Committee: Judiciary
  • Hearing: January 24, 2025
  • Status: Bill introduced and under consideration; if enacted, the new provisions would replace the current section 25-1558 upon effective date specified by the legislation (not provided in the excerpt).

Bottom Line

LB 174 tightens the garnishment framework for medical debt, reducing the maximum weekly garnishment percentage for medical debts funded by medical debt buyers or medical creditors, and adds explicit definitions to support targeted exemptions and enforcement.

Compiled from official sources — confirm details with the bill’s official record.

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