Buying and Forgiving Medical Debt

[MineralMan]

There have been a couple of news stories recently about people and organizations buying up medical debt at less than a penny on the dollar and then forgiving it all. In the most recent story, the Minnesota Nurses Association bought up $2.6 million of debt for just $28,000 and then forgave it all, giving 1800 Minnesota families relief from the threat of bankruptcy. Link below:

http://minnesota.cbslocal.com/2017/06/19/nurses-pay-medical-debt/

In another case, a noted comedian did a similar thing, paying even a smaller percentage for millions in debt.

The secret is that old medical debt is often sold off for less than 1% of its face value to debt collection agencies, which then hound the debtors unmercifully, trying to make money off their misery.

What occurs to me is that this might be an excellent thing for our state governments and federal government to get involved with. For a paltry amount of money, buying up massive individual medical debt in large blocks and then simply forgiving it could relieve tons of financial pain at very low actual cost. It might even generate more revenue in taxes paid by those who no longer had that debt than it cost to buy the debt.

It's also an opportunity for non-profit organizations, like the MNA, described above, to do great good at little cost. I'm encouraged by this sort of initiative, and hope it gets noticed and others follow suit in doing the same thing. Wiping out crippling debt for 1% of its value or even less is an exciting concept that could result in indescribable benefits for people who are saddled with that debt.

What if we, collectively, could take all of that debt out of the hands of predatory collection agencies and simply wipe it out? Somehow, that sounds like a great concept for this country.

[femmedem]

1. This is one of my favorite things to come out of the Occupy movement. n/t

[MineralMan]

3. Yes, and it could be expanded all across the nation.

All sorts of charitable organizations could use this technique to get $100 of good out of $1 in cost. As an investment, it's remarkably efficient, really. I can even envision gofundme.com campaigns set up just for that purpose by anyone who wanted to get involved. Now, bidding on that debt is a little bit specialized, and I'm not sure how it works, exactly, but wouldn't it be great to put a few horrible collection agencies out of business as a side benefit?

[femmedem]

16. It sure would. There is still a tax liability for the person whose debt is forgiven.

So that is another kink to work out, either legislatively or through greater fundraising.

[dembotoz]

2. pity you can not do that with your own debt

[MineralMan]

4. Yes. That has occurred to me, too. Sadly, it seems only

to work with wholesale debt that is up for purchase at steep discounts. What if we could wipe out all old medical debt? Wouldn't that result in new hope for a lot of people for whom hope is hard to come by?

[dembotoz]

8. and we will have opportunity to do this as trump care goes into place

[NobodyHere]

13. Maybe there could be a DU group where we buy each other's debt

[Timmygoat]

5. John Oliver

Has done this I know, in fact I think he just bought another package of debt. Kudos to him!

[MineralMan]

6. Yes. Thanks. That was the one I was thinking of.

I hope this idea grows to be more widespread, and perhaps taken to other forms of debt, as well.

Frankly, it seems like a natural crowdfunding sort of thing. I think it might be something that could be taken up and turned into a national campaign to wipe out debt.

[HeartachesNhangovers]

7. There's no downside to this. However, this debt is

currently cheap because almost nobody wants to buy it. If there was increased demand, either from debt-collectors or from good Samaritans who wanted to retire it, the price would necessarily increase. In the extreme case, where the government, for example, committed to buying all the debt, it would probably cost face value. Actually, there's nothing to keep it from costing more than face value.

[MineralMan]

10. Yes, I'm sure that's true.

I haven't really investigated the debt marketplace more than in a cursory way. There are brokers who sell such debt on the open market. It's sort of an auction-based thing, apparently.

I'd think anyone wanting to get into buying and forgiving debt would need to incorporate as a non-profit. It seems unlikely that individuals could do such a thing on their own, and you'd want some liability protection as well.

Also, such buyers might work to increase the value of those debt instruments by increasing the demand, while the supply remained fairly constant. There might be some resistance generated, too, to selling debt portfolios to such organizations. I'm not sure how that would play out if there was a lot of buy and forgive action going on.

The value of such debt portfolios probably also varies according to the type of debt, the age of the debt, and other factors. It's not a simple thing, obviously, but it does look like a promising opportunity for a non-profit organization to take on.

It won't be me, but I would contribute to a fund that was doing this sort of thing, and I think lots of other people would do the same. The margins here are so enormous that not a lot of money is needed to buy large debt portfolios, and it could be done on a piecemeal basis.

I just see it as a very interesting underground sort of economic activism that should appeal to lots of people who might donate to such efforts. Anyhow...

[NCTraveler]

9. This debt is going to continue to go down in value.

Companies such as my own, who rely heavy on credit reports, don't even recognize medical debt. Many national mortgage brokers are doing the same.

[MineralMan]

11. That sounds promising, actually.

I can see how portfolios of old medical debt would be uninteresting to collection companies. That would help keep discount rates high and costs low for those who wanted to get involved.

What an interesting idea, thinking about healthcare costs in general. A non-profit debt forgiveness program sounds very doable and would probably generate donations fairly easily. If I were younger, I might consider getting involved in starting such a thing up. I'm not younger, though, and would only be a donor at this point.

[Leith]

12. That Sounds Like a Terrific Idea

In a recent "what I would do if I won the lottery" fantasies, I decided to set up a charitable foundation to do just that. Of course, I would need to buy a ticket first (it's an hour and a half drive to get to the nearest lottery outlet and an even longer wait in line so I don't do that often).

There could be comparable student loan debts available for purchase wholesale, too. That would be a worthy charity, too.

[mitch96]

14. Now THIS would be a great Go Fund Me program

Someone go talk to Bill Gates or Warren Buffet.. I don't know them that well...
m

[trentwestcott]

15. I like this.

I think it's beautiful.