The way it works is simple: RIP Medical Debt purchases debt for pennies on the dollar and then relieves the debt. Our groundbreaking program will wipe out as much as $240 million in medical debt for as many as 41,000 people at a cost of only $1.6 million. There are no administrative hurdles for community members to overcome. Instead, relief recipients are simply sent a letter informing them their debt has been canceled.
After supporting the use of ARPA funds for priorities like job creation, safe neighborhoods, and youth programs, I looked for other strategies to foster a stronger and more equitable recovery. Medical debt disproportionately affects lower-income and working-class households, where the budget is already stretched thin. Alleviating this burden helps families make ends meet and put food on the table.
Now, forward-thinking communities across the country are looking at implementing that model for their citizens. From New Orleans to Pittsburgh, recovery funds or other funds can be used to purchase medical debt for pennies on the dollar, delivering a life-changing impact for everyday Americans.
Polling finds overwhelming, broad-based support for our efforts. A recent national survey conducted by Tulchin Research finds that two-thirds of Americans (67%) would support the Toledo model for medical debt relief being adopted in their community, including strong majorities of Democrats, Republicans, and Independents.
Offer in Compromise (OIC) "mills" make outlandish claims usually in local advertising regarding how they can settle a person's tax debt for pennies on the dollar. The reality usually is that taxpayers pay the OIC mill a fee to get the same deal they could have gotten on their own by working directly with the IRS.
An "offer," or OIC, is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. However, some promoters are inappropriately advising indebted taxpayers to file an OIC application with the IRS, even though the promoters know the person won't qualify. This costs honest taxpayers money and time.
The IRS reminds taxpayers that under the First Time Penalty Abatement policy, taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.
John Oliver created a sensation when he bought $15 million of medical debt owed by 9,000 Americans and forgave it on national television. Oliver and his "Last Week Tonight" producers created a phony debt-buying company and paid less than $60,000 to buy a portfolio containing millions of dollars of consumer debt, shining light on the shady practices of the debt-buying industry.
Unfortunately, individual consumers don't have the same access to deeply discounted debt as debt buyers purchasing thousands of accounts, explains April Kuehnhoff, staff attorney at the National Consumer Law Center. No one would sell just one uncollected debt to a person.
"Even if consumers could afford to purchase whole portfolios of debt, they wouldn't know which portfolios contain their individual account," says Kuehnhoff. "Consumer can certainly call up the original creditor or debt collector and try to negotiate a better rate or a payment plan. But they are unlikely to accept pennies on the dollar as payment for the debt."
Further, the type of very cheap debt that you hear about is generally old (no payment has been made on it for at least a year) and has been sold at least a couple of times. Credit.com points out that the benefits of buying your own debt (like not reporting yourself to a credit agency or adding interest to the amount owed) could also be had by trying to negotiate with your creditors at the earliest stages of debt collection.
John Oliver bought $15 million in discounted debt using the same practices employed by debt forgiveness organizations like Rolling Jubilee and RIP Medical Debt. These groups basically function as Robin Hood debt buyers, relying on donations to negotiate cheap rates on large portfolios of anonymous consumer debt. Once they purchase the debt, they send letters to every account holder gleefully informing them that their debt has been wiped clean.
RIP Medical Debt, which was founded by two former collections industry executives, says on its website that it can sometimes contact medical providers on your behalf and ask for the debt to be transferred to RIP, although they admit it's a long shot.
So who is protecting Americans against these unfair and illegal practices? The Fair Debt Collection Practices Act was originally passed in 1977, but no federal agency had the authority to regulate the debt-collection industry until 2010 with the passage of the Dodd-Frank financial reforms. Now the Consumer Financial Protection Bureau (CFPB) is in the process of writing the new rules, which Kuehnhoff and the National Consumer Law Center hope will include strong protections against harassing phone calls and deceptive legal practices.
I have to admit that I have a bit of fun with debt collection agencies and buying debt for pennies on the dollar. More specifically, I find it somewhat amusing to give back to those who cause ohhh so much stress for my clients. Recently, I had a client with a great credit score who had a large amount of debt and was not a great candidate for Bankruptcy. We began to settle all of her debts, and one of the things I noticed is that the debt collectors, and oddly the ones with the smallest amounts to collect, would make up absurd threats as to why the debt needed to be settled right now. Among the threats:
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If my goal is to collect by myself, I then must be a certified and registered debt collector, or a Lawyer and comply with my State regulations, and also most probably with the regulations of the State where the debtor who owes the debt I purchased is living or has his head office if it is a company.
If I intend to hand over the debt I purchased to a debt collector so that he collects on my behalf, I shall have to pay a commission upon success, Court fees when necessary, and this will lower my profit:
In any case, to buy a debt for pennies on the dollar I shall have to conduct due diligences and ask the seller for all available documentation and information related to the debt he sells, and this to protect myself from a bad investment.
Debtcatcher.com is the best place to find sellers who are selling single debts or portfolios. You may negotiate with them without any third party. As simply as you would buy a pre-owned car on Craigslist.
There are six datasets on Fiscal Data which include the national debt, which is referred to as Total Public Debt Outstanding (TPDO). TPDO is the sum of Debt Held by the Public and Intragovernmental (Intragov) Holdings. Some datasets include debt issued by the Federal Financing Bank (FFB). The datasets listed below only include debt issued by the Treasury Department. The list below provides information on where there are differences in debt calculations related to the national debt.
Daily Treasury Statement (DTS) contains Debt Held by the Public and Intragov Holdings, but does not aggregate these two categories into TPDO. In this dataset, Intragov Holdings includes debt issued by the FFB. Dollar values for Debt Held by the Public and Intragov Holdings are rounded in millions to cohere with other data in the dataset. Please note that the published reports on the Fiscal Service site contain TPDO values.
Monthly Statement of the Public Debt (MSPD) contains TPDO, as well as a breakout of Debt Held by the Public and Intragov Holdings. In this dataset, Intragov Holdings includes debt issued by the FFB. Dollar values are rounded in millions to cohere with other data in the dataset.
Schedules of Federal Debt contains Debt Held by the Public and Intragov Holdings, but does not aggregate these two categories into TPDO. In this dataset, Intragov Holdings do not include debt issued by the FFB. Dollar values are rounded in millions to cohere with other data in the dataset.
Debt broken out by intragovernmental holdings and debt held by the public has not always been provided. Where this occurred, the dataset shows a value of $0.00 instead of a null value. Debt held by the public and intragovernmental holdings data is available yearly (on a fiscal basis) from 9/30/1997 through 9/30/2001, monthly from 9/30/2001 through 3/31/2005, and daily from 4/4/2005 to today. Some columns in this dataset overlap with the Monthly Statement of the Public Debt (MSPD), Monthly Treasury Statement (MTS), Daily Treasury Statement (DTS), and Schedules of Federal Debt datasets. Debt issued by the Federal Financing Bank (FFB) is included in the intragovernmental holdings in the Debt to the Penny dataset, but not in the Schedules of Federal Debt dataset because it is not debt managed by the Bureau of the Fiscal Service. The difference between these datasets is equal to the amount of debt issued by the FFB.
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