Colorado lawmakers are weighing a bill that would sharply curb how medical debt collectors can come after patients’ money, from paychecks to homes to nest eggs. The proposal would largely block garnishing wages for medical bills, stop liens on a primary residence in many cases, and shield retirement and bank accounts up to a certain level. It would also force hospitals and collectors to screen people for public coverage and offer realistic payment plans before they head to court. Supporters say it is about stopping working families from getting crushed by debt; critics warn the move could backfire with higher costs and new pressure on rural hospitals.
What the bill would do
House Bill 26-1267, introduced Feb. 19, creates a new category of "impermissible extraordinary collection actions" that would generally bar collectors from garnishing wages, placing liens on a person’s primary home, or seizing retirement accounts and other personal property in many situations. As laid out on the Colorado General Assembly site, the measure would stop courts from ordering banks to pull funds if that would drop a patient’s combined account balances below $30,000, require at least 30 days' notice before a medical debt is sold or assigned, and mandate that creditors offer a payment plan that caps installments at no more than 4% of weekly net income. The bill also creates a private right of action so patients whose debts are mishandled could seek $3,000 or actual damages, plus attorney fees.
Why sponsors say it’s needed
Backers say the proposal responds directly to reporting that found wage garnishment being used even for relatively modest medical debts. A review by KFF Health News estimated Colorado courts sign off on garnishment in roughly 14,000 medical-debt cases a year and documented lawsuits against people who likely should have been screened for Medicaid or other aid. Supporters argue that this kind of aggressive collection can tip families into job loss or bankruptcy and that the state’s rules need to close those gaps.
Supporters and critics
Lawmakers allied with consumer groups frame the bill as basic guardrails for workers and families. "In the wealthiest country on Earth, people are going bankrupt, suffering wage garnishment, just because they get sick," Representative Javier Mabrey said, according to The Colorado Sun, with advocates arguing that the reforms are aimed at obvious excesses in current practices.
Debt collectors and some hospital leaders counter that the measure could scramble the financial math of health care. KFF Health News reported that collection firms have warned the bill "poses an existential threat" to some of their clients, while a Colorado Hospital Association spokesperson said it "could drive up costs and financial risk for health care providers," a trade-off lawmakers are expected to probe in hearings.
Where the bill stands
HB 26-1267, introduced Feb. 19, is currently parked in the House Health & Human Services Committee, with its status listed as under consideration on the Colorado General Assembly’s bill page. Lawmakers have requested a fiscal note, and committee hearings are scheduled as advocates on both sides ramp up their campaigns ahead of any vote.
Legal implications
The proposal would not just tweak tactics; it would rewrite the legal footing for collecting medical debt in Colorado. Sales or assignments of medical debt that do not follow the new rules would be void or dismissed, and patients would gain a civil cause of action with statutory damages and fee-shifting. That private enforcement hook is designed so compliance does not depend solely on state regulators.
What it would mean for patients
If it becomes law, the measure would largely take wage garnishment and many liens off the table as tools for collecting medical bills, while forcing providers and collectors to hit pause and offer capped payment plans first. The fight at the Capitol now centers on whether the protections can be written tightly enough to shield households from financial free fall without putting access to care at risk, especially in smaller and rural communities.
