Washington House Democrats

House panel endorses homestead protection for medical debt

Dawn Morrell bill would shield up to $100,000 in home equity

January 31, 2006

OLYMPIA– Washington state needs to do more to protect family homes threatened by legal action for medical debt, a key House Committee agreed on Monday evening.

Democrats and Republicans on the House Judiciary Committee united behind a proposal by state Rep. Dawn Morrell, D-Puyallup, to raise Washington’s homestead protection against creditors from $40,000 to $100,000 if the debt is for health care costs.

"Families shouldn’t lose their homes for health care costs they couldn’t possibly control," said Morrell, who proposed the measure in the Legislature. "It isn’t fair to these families that Washington’s homestead exemption has been frozen in time while health costs and home prices have shot sky high."

Homestead exemptions were created in Washington more than a century ago to protect home equity against creditors. The exemption was last raised in 1995, when it was increased from $30,000 to the current $40,000.

Morrell had originally proposed raising the homestead exemption to $150,000 in cases of medical debt. An amendment adopted by the House Judiciary Committee on Monday evening reduced that amount to $100,000 but added a provision to automatically increase the exemption by five percent each year.

"Nearly half of all bankruptcy filings are directly related to health care costs," said Morrell, citing a 2005 study by Harvard University researchers. "It is important to remember that this isn’t about financial protection for people who splurged on credit card spending sprees, it is about protecting family homes after medical tragedies that could happen to anyone at any time."

Morrell’s House Bill 2571 now moves to the Rules Committee for further consideration.

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