Medical debt buying and forgiving (1 Viewer)

[NCCommish]

As I mentioned in my other post I have been toying with an idea and I thought I'd see what the FFA thinks and if you want to help.

People of all stripes are drowning in medical debt. Going bankrupt over it. It's a bad thing for the economy and for the people suffering from it. I know from personal experience.

I was thinking about forming a nonprofit whose whole mission was to buy and forgive medical debt. There would be a monthly buy, if donations allow, and forgiveness of as much debt as we can get.

You can be pretty effective with relatively small amounts of money.

Is this something that you would donate to? Perhaps a few bucks every month in a subscription type setup? You'd receive a monthly report on what your money accomplished in retiring medical debt.

Just starting to put together the idea. Would love any input you might have to improve our chances of success. Already have a lawyer and a CPA I'm working with to make it all above board and 100% legit.

What do you think?

Oh and for those wondering no I can't buy any particular persons medical debt not even my own.

 

[Ron Swanson]

Isn't the traditional biggest hammer to medical debt collections credit scoring? And isn't medical debt now exempt from credit rating? No real knowledge of this but I feel like I heard this recently.

Also, a thought...the dollars could probably be stretched much further by those you are paying off giving you the rights to negotiate the debt before payoff.

Not sure if I honestly would support this or not though. I'm convinced we have a completely broken medical billing/payment system and would hesitate to participate in something that might facilitate its continuation.

 

[Sand]

Isn't the traditional biggest hammer to medical debt collections credit scoring? And isn't medical debt now exempt from credit rating?

I believe this has been rescinded.

 

[D_House]

This sounds like what Undue Medical Debt does: https://unduemedicaldebt.org/

Wikipedia article: https://en.wikipedia.org/wiki/Undue_Medical_Debt

 

[NCCommish]

THanks for the info I'll check it out

 

[General Malaise]

I don't understand. Don't most health care insurers have an 'out of pocket max'? Mine does. Maybe that's unique?

 

[ChiefD]

I think a lot of people don't know that you can contact your medical provider directly to arrange payment. We have done this before.

Just talk to their billing department and make an agreement of whatever you can afford. Even if it's just $50 a month, a lot of them will work with you.

 

[NCCommish]

THanks for the info I'll check it out

I don't understand. Don't most health care insurers have an 'out of pocket max'? Mine does. Maybe that's unique?

27 million people don't have insurance at all. And even if you have insurance they don't always pay. I had a heart attack. The VA told me it's wasn't an emergency so i should've waited to see a VA doctor and declined to pay the bill. The hospital claimed I made too much as a pizza delivery guy to qualify for their community help deal. 58k later here we are.

 

[General Malaise]

THanks for the info I'll check it out

I don't understand. Don't most health care insurers have an 'out of pocket max'? Mine does. Maybe that's unique?

27 million people don't have insurance at all. And even if you have insurance they don't always pay. I had a heart attack. The VA told me it's wasn't an emergency so i should've waited to see a VA doctor and declined to pay the bill. The hospital claimed I made too much as a pizza delivery guy to qualify for their community help deal. 58k later here we are.

Dang, man. I'm sorry. As a person who does have health insurance, I'm still spending over $10K/year on medical expenses out of pocket.

My monthly premium is more than my mortgage. It's a broken system.

 

[fruity pebbles]

THanks for the info I'll check it out

I don't understand. Don't most health care insurers have an 'out of pocket max'? Mine does. Maybe that's unique?

27 million people don't have insurance at all. And even if you have insurance they don't always pay. I had a heart attack. The VA told me it's wasn't an emergency so i should've waited to see a VA doctor and declined to pay the bill. The hospital claimed I made too much as a pizza delivery guy to qualify for their community help deal. 58k later here we are.

Dang, man. I'm sorry. As a person who does have health insurance, I'm still spending over $10K/year on medical expenses out of pocket.

My monthly premium is more than my mortgage. It's a broken system.

so badly needs a complete overhaul but won’t happen because there’s too much money being made

 

[Bossman]

I'd need to understand how an company / entity would go about "buying medical debt" ...
Would you approach the hospital or doctor and offer them $.05 on the dollar to obtain a persons medical debt?

 

[fatness]

This sounds like what Undue Medical Debt does: https://unduemedicaldebt.org/

This sounds really smart.

 

[urbanhack]

This sounds like a more aggregated approach to go fund me.

 

[NCCommish]

THanks for the info I'll check it out

I don't understand. Don't most health care insurers have an 'out of pocket max'? Mine does. Maybe that's unique?

27 million people don't have insurance at all. And even if you have insurance they don't always pay. I had a heart attack. The VA told me it's wasn't an emergency so i should've waited to see a VA doctor and declined to pay the bill. The hospital claimed I made too much as a pizza delivery guy to qualify for their community help deal. 58k later here we are.

Dang, man. I'm sorry. As a person who does have health insurance, I'm still spending over $10K/year on medical expenses out of pocket.

My monthly premium is more than my mortgage. It's a broken system.

Man that sucks.

 

[NCCommish]

I'd need to understand how an company / entity would go about "buying medical debt" ...
Would you approach the hospital or doctor and offer them $.05 on the dollar to obtain a persons medical debt?

No there's places that sell it after the hospital or doctors give up on collecting usually bo more than 6 months after the debt ja incurred. Not to an individual though. You have to either be a nonprofit or a debt collecting business that is licensed.

 

[fatness]

I'd need to understand how an company / entity would go about "buying medical debt" ...
Would you approach the hospital or doctor and offer them $.05 on the dollar to obtain a persons medical debt?

No there's places that sell it after the hospital or doctors give up on collecting usually bo more than 6 months after the debt ja incurred. Not to an individual though. You have to either be a nonprofit or a debt collecting business that is licensed.

And after awhile the debt collecting business gives up on collecting it and bundles with other similar debts and re-sells them to another debt collecting business, for less than they bought it for. So over time the amount it takes to buy the original debt is less and less.

 

[culdeus]

Isn't the traditional biggest hammer to medical debt collections credit scoring? And isn't medical debt now exempt from credit rating?

I believe this has been rescinded.

Neat

 

[Bossman]

I'd need to understand how an company / entity would go about "buying medical debt" ...
Would you approach the hospital or doctor and offer them $.05 on the dollar to obtain a persons medical debt?

No there's places that sell it after the hospital or doctors give up on collecting usually bo more than 6 months after the debt ja incurred. Not to an individual though. You have to either be a nonprofit or a debt collecting business that is licensed.

And after awhile the debt collecting business gives up on collecting it and bundles with other similar debts and re-sells them to another debt collecting business, for less than they bought it for. So over time the amount it takes to buy the original debt is less and less.

OK, when the doctor/hospital declares the debt uncollectable, they sell the debt to a debt collector for $0.50 on the dollar, once the debt collector gives up, this charity would purchase the uncollectable debt for $.05 on the dollar? If so, seems like a long process.
But then the charity would "forgive" the debt? ... and the person that incurred the medical expense would no longer owe this money and no damage is done to their credit score?
How would you prevent people from taking advantage of this if they just choose not to pay?

 

[massraider]

How would you prevent people from taking advantage of this if they just choose not to pay?

Someone has the money to pay for a large medical bill, and chooses not to, harm their credit score, and be bothered by debt collectors, in the hope that a charity someday forgives their debt?

I don't see that as a lot of people, and I don't care if a few people get away with not paying a bill. The stack of people who need and will benefit from medical debt forgiveness massively outweigh any concern like that.

 

[kupcho1]

Medical debt is a result of our government's incomprehensible health care / insurance policy. I already pay taxes which should be directed toward this issue. It isn't being solved and, if subsidized by generous Americans, never will be.

I will continue to direct my charitable contributions in other directions.

 

[CletiusMaximus]

I'd need to understand how an company / entity would go about "buying medical debt" ...
Would you approach the hospital or doctor and offer them $.05 on the dollar to obtain a persons medical debt?

No there's places that sell it after the hospital or doctors give up on collecting usually bo more than 6 months after the debt ja incurred. Not to an individual though. You have to either be a nonprofit or a debt collecting business that is licensed.

And after awhile the debt collecting business gives up on collecting it and bundles with other similar debts and re-sells them to another debt collecting business, for less than they bought it for. So over time the amount it takes to buy the original debt is less and less.

I'm not an expert on medical debt but I'm not sure about this model. The kind of debt that is so old its been sold, resold and repackaged (called "Zombie Debt" because its often so old the statute of limitations has expired and the original documentation is unavailable) is likely not the kind of debt any charitable organization cares about, because the debtor is likely so uncollectible they don't care about it anyway and don't really need any relief. When it gets this old, there's really no point in paying it. If a debtor is being chased by a Zombie Debt collector, the best approach is to send a letter threatening them with consumer protection / FDCPA sanctions - maybe a service NCCommish's non-profit could also offer.

My gut feeling is the time to strike in the negotiation process is while the hospital still holds the debt. Once its gone to an outside collection firm, they are going to be harder to negotiate with and more comfortable putting it into suit because they are in the business of debt collection rather than health care. When it becomes a judgment and garnishment starts, the principal amount of the debt is much higher due to fees, costs, interest and they have less incentive to discount it. This sucks for someone who is working, trying to make ends meet, but has a judgment out there and constant garnishments taking a cut. For me, the best approach a non-profit could take is to get in early, present an insolvency case to the health care provider (threatening chap 7) and offer a lump sum cash payment of 20% or something. This puts it to bed and gives the debtor real relief, free of all the collection and lawsuit BS they would face otherwise.

 

[fatness]

I'm not an expert on medical debt but I'm not sure about this model. The kind of debt that is so old its been sold, resold and repackaged (called "Zombie Debt" because its often so old the statute of limitations has expired and the original documentation is unavailable) is likely not the kind of debt any charitable organization cares about, because the debtor is likely so uncollectible they don't care about it anyway and don't really need any relief. When it gets this old, there's really no point in paying it. If a debtor is being chased by a Zombie Debt collector, the best approach is to send a letter threatening them with consumer protection / FDCPA sanctions - maybe a service NCCommish's non-profit could also offer.

My experience with this is based on my Dad dying and his creditors dunning my Mom to pay his bills, for which she was not responsible. Some of that debt was medical debt. It was unconscionable behavior on the part of the collectors, terribly upsetting to her, so I finally met with a local attorney with her. His advice was to never engage with them at all, wait them out, while the "value" of the debt kept going down to the point it wasn't worth anyone's time to collect. 2 years after Dad died, the calls finally stopped.

 

[Bossman]

I'm not an expert on medical debt but I'm not sure about this model. The kind of debt that is so old its been sold, resold and repackaged (called "Zombie Debt" because its often so old the statute of limitations has expired and the original documentation is unavailable) is likely not the kind of debt any charitable organization cares about, because the debtor is likely so uncollectible they don't care about it anyway and don't really need any relief. When it gets this old, there's really no point in paying it. If a debtor is being chased by a Zombie Debt collector, the best approach is to send a letter threatening them with consumer protection / FDCPA sanctions - maybe a service NCCommish's non-profit could also offer.

My gut feeling is the time to strike in the negotiation process is while the hospital still holds the debt. Once its gone to an outside collection firm, they are going to be harder to negotiate with and more comfortable putting it into suit because they are in the business of debt collection rather than health care. When it becomes a judgment and garnishment starts, the principal amount of the debt is much higher due to fees, costs, interest and they have less incentive to discount it. This sucks for someone who is working, trying to make ends meet, but has a judgment out there and constant garnishments taking a cut. For me, the best approach a non-profit could take is to get in early, present an insolvency case to the health care provider (threatening chap 7) and offer a lump sum cash payment of 20% or something. This puts it to bed and gives the debtor real relief, free of all the collection and lawsuit BS they would face otherwise.

This makes more sense to me. I wonder if the hospital would get any additional tax relief if they were working with a non-profit this way.
Otherwise the non-profit would have to at least match the offer of the debt collection agency that is also looking to purchase the debt.