Attorney General Ellison celebrates signing of Debt Fairness Act

New law reforms medical-debt collection, wage garnishment, and bankruptcy, including banning automatic transfer of medical debt to one’s spouse, banning reporting medical debt to credit bureaus, and banning denying necessary medical care over unpaid bills

Governor Walz signs Debt Fairness Act that went from bill to law in less than four months; Biden administration moving forward with similar reforms

Minnesota Attorney General Keith Ellison today celebrated Governor Tim Walz’s signing of the Debt Fairness Act, which provides Minnesotans who are repaying debt, including medical debt, with more protections. These reforms include banning the automatic transfer of medical debt to one’s spouse, banning reporting medical debt to credit bureaus, and banning denying necessary medical care on the basis of unpaid bills.

Senator Liz Boldon and Representative Liz Reyer, chief authors of the bill, introduced it for the first time in February of this year, and shepherded it through to pass both houses of the Legislature less than four months after it was initially proposed. Attorney General Ellison championed the bill.

At the national level, President Biden’s administration is moving forward with similar reforms: just last week, Vice President Kamala Harris announced that the Consumer Financial Protection Bureau is proposing a new rule to ban the reporting of medical debt to credit agencies. This would bring the number of Americans who have medical debt on their credit reports from 46 million to zero.

“We all agree that if you borrow money, you should pay it back. We also all agree that we shouldn’t punish people for getting sick. We also agree that a debt-collection system that makes it harder for people to pay back what they owe does nobody any good. And we also agree that debt collection shouldn’t create more debt,” Attorney General Ellison said.

“With the passage and signing today of the Debt Fairness Act, we have a fairer, more dignified, and more just system for repaying debt than we did before. My thanks go to chief authors Senator Liz Boldon and Representative Liz Reyer for their outstanding work in seeing it through to passage, and to Governor Walz and Lieutenant Governor Flanagan for their steadfast support. There is more work to do and we’re not done yet — but today, Minnesotans facing debt, including medical debt, can rest easier in the knowledge that the law provides them with more protections than it did before,” Attorney General Ellison concluded.

Key provisions of the Debt Fairness Act include:

Medical-debt reforms

• Ending the automatic transfer of medical debt to a patient’s spouse.
• Banning medical debt from being reported to credit bureaus.
• Banning medical providers from withholding medically necessary care due to unpaid debt.
• Establishing strong new protections from unethical medical debt collections practices.
• Allowing people who successfully defend medical debt lawsuits to have their attorney’s fees paid.
• Requiring medical providers to publish their medical debt collection practices.
• Creating a new process to help people dispute medical coding and billing errors.

Judgment-collection reforms

• Establishing automatic income-based wage garnishment levels, ranging from 10% to 25%, rather than the flat 25% garnishment cap that previously existed.
• Extending Minnesota’s wage garnishment protections to independent contractors.
• Extending Minnesota’s wage garnishment protections to everyone living and working in Minnesota.

Bankruptcy reforms

• Making bankruptcy more affordable for families by allowing them to keep more of their necessities through the process, including:
  • Doubling protection for vehicles from $5,000 to $10,000, with extra protection for persons with disabilities and for work vehicles.
  • $2,000 for sacred and religious possessions.
  • $3,000 for household tools like snowblowers and lawnmowers.
  • Low income-based tax credits.
  • Money received in personal-injury lawsuits.
  • Protection for personal electronics and personal jewelry.
  • $1,500 additional protection for any property.