The Courier Journal
By: Jere Downs
April 25, 2013
A New York-based nonprofit says it has bought up more than $1 million in medical debts owed by more than 1,000 people in the Louisville area, as part of a protest of the credit industry.
The Rolling Jubilee Fund, founded by Occupy Wall Street protesters, said it has forgiven the debts, which ranged from $25.50 to $8,790 -- so they no longer have to be paid.
"We believe that no one should have to go into debt for the basic things in our lives, like healthcare, housing and education," said Thomas Gokey, the organization's vice president.
The goal of the project, which began last fall, is to "to buy and abolish personal debt," said Gokey, who argues there is a double standard with debt -- Wall Street banks that owe billions of dollars are bailed out, while "the same options are not available for the 99 percent."
The Rolling Jubilee said it used donations from people sympathetic to their cause to purchase the debt, which was owed to local doctors and then sold on the credit market after the doctors were unable to collect. The group said it bought the debt from a debt broker and a collection agency in the Louisville area.
But while the organization said it believes in "transparency," it declined to name the debt brokers, or release the names of any of the 1,064 people whose debt they say is being forgiven, citing credit industry practice and privacy laws.
The group's total cost to retire the debt was $22,000. Businesses that can't collect debts owed them often sell them to debt collectors and other third parties for pennies on the dollar.
Certified letters were mailed Friday to those whose debt had been purchased, Gokey said.
"We are committed to protecting the privacy of debtors and it would be irresponsible of us to make that info public," he said. "We are hoping some of the 1,064 people will step forward."
Whitney Bishop, who runs the nonprofit Southern Indiana Asset Building Coalition, a local financial counseling nonprofit agency, isn't involved in the project but said any relief will be welcome to families burdened by medical debt.
"This is so exciting," he said. "It's like Robin Hood."
Occupy Wall Street
Occupy Wall Street protesters in New York City began protesting growing household debt and U.S. wealth inequality in late 2011, drawing national attention and spawning similar protests in other cities, including Louisville. The idea to buy and forgive debt arose in the Wall Street encampment last year.
A nonprofit offshoot of Occupy Wall Street called Strike Debt created The Rolling Jubilee Fund nonprofit, which runs the debt payment program. The Jubilee in the program's name derives from a religious concept in which debts are absolved upon repentance.
Since November, Strike Debt has raised more than $500,000 for the Rolling Jubilee Fund, according to its website. The first place it purchased debt was in upstate New York, where it spent $7,100 to absolve $100,000 in medical bills owed by 44 patients in the Utica area.
About half the letters sent to the debtors came back as undeliverable and not a single person has come forward there to comment on the organization's effort, Gokey said.
Louisville was chosen as Rolling Jubilee's second target because the group got a great deal on overdue debt here, Gokey said, adding that the bills being eliminated came mainly from physicians who billed separately for their services via Floyd Memorial, Baptist East, Jewish, Frazier, Suburban or Norton hospitals from 2010 and 2011.
The relief offered by the Rolling Jubilee program of Strike Debt is scant compared to the mountain of unpaid medical debt in the nation, the group notes. In 2011 alone Norton Healthcare reported $1.6 billion in net revenue, with $54 million reported as "bad debt," and $81 million that was absorbed as "charity" care and not reimbursed, spokesman Thomas Johnson said.
The letters Rolling Jubilee mailed to debtors in the Louisville area state "BALANCE DUE: $0.00"
"You no longer owe the balance of this debt. It is gone, a gift with no strings attached," according to a copy of the letter provided by the organization.
The letter goes on to invite debtors to share their story with Strike Debt.
Consumers can take the letter from Strike Debt as proof the debt has been resolved should they ever be contacted by a collection agency, Rolling Jubilee said.
Half of U.S. households have poor credit scores because they are delinquent on their bills, according to the Assets & Opportunity Scorecard, an annual report of the nonprofit CFED, the Corporation for Enterprise Development.
At the same time, the debt buying industry has grown as credit card companies, banks and others have sought to unload overdue accounts from their books and recover from the recession.
Those who buy the debts usually then try to profit by collecting more than they paid for the debt.
That has sometimes led to complaints about abusive collection practices, particularly as bankruptcies and home foreclosures spike as a result of the recession. In a January report on the growing debt collection industry, the Federal Trade Commission recently called for greater scrutiny and increased protection for consumers.
While Rolling Jubilee's approach is unorthodox, any relief from debt is welcome, consumer advocates say.
"Medical debt is the most catastrophic debt that people deal with -- the bills, for an individual, are astronomical," said Kathy Virgallito, spokesperson for Apprisen, a national nonprofit credit counseling agency with offices in Kentucky and Indiana.
Medical debt is the leading cause of personal bankruptcy, according to a study by Harvard University Law School. An estimated 17 percent of Kentucky residents have no medical insurance, including Medicaid, according to the Center for Business & Economic Research at the University of Kentucky.
Burdensome medical costs hurt people who are already sick and hinder delivery of care to many more, said Garrett Adams, a Louisville physician and immediate past president of Physicians for a National Health Program, a nonprofit group of 18,000 medical professionals who advocate for universal health care.
Health care costs are "such a disaster, a personal and individual disaster for so many Kentuckians and people in Indiana," Adams said, adding the Rolling Jubilee Fund "is truly a wonderful thing."