Experts agree that an Occupy Wall Street offshoot should get some credit for originality. The group, known as Rolling Jubilee, has taken an unusual approach to combating the problem of high levels of medical debt. The group recently revealed that since November 2012 they have purchased and forgiven more than $14 million in medical debt from American banks.
The group originally got the idea after deciding that too many Americans were being crushed by heavy debt burdens, specifically those relating to medical expenses. To combat the problem, the group decided to use the current financial system in its favor. The group intended to raise $50,000, a figure it thought would be enough to purchase more than $1 million in debt that it could then forgive. However, the popularity of the effort received serious attention and the group was able to raise $400,000.
Leaders of the movement say that they initially expected to be able to purchase debt at a ratio of 20 to 1, however, as the secondary debt market has taken such a hit due to the downturn they were actually able to purchase much more debt for their money. The market works by downgrading the price of debt in cases where debtors have fallen behind on payments, with original creditors selling the debt to third parties at steep discounts. This is where Rolling Jubilee comes in and attempts to snatch up some of this steeply discounted debt.
Once Rolling Jubilee officially owns the debt, it is then up to them to decide how to proceed, either by initiating collections or, in this case, by simply forgiving the entire amount of the loan. The group says that while they are happy with the $14 million in debt they have abolished, they understand that is only a drop in the bucket of overall consumer debt. However, they hope the exercise serves as a teaching moment to educate the public about how debts are bought and sold throughout the financial system.
Specifically, the group says that the public should be more aware of how loans are sold to third parties at incredible discounts and how these third party debt collectors then hassle debtors to pay the full value of the loan, something that they purchased for pennies on the dollar. The group says it hopes awareness of the practice will give debtors moral ammunition to deal more aggressively with these debt collectors and attempt to negotiate a lower payment amount to reflect this steep discount in their debt.
The group says that it focused on medical debt out of a belief that no one should have to face bankruptcy because they became ill. The organizers noted that 62 percent of all personal bankruptcy filings in the United States list medical debt as a contributing factor. The group recently purchased a block of $13.5 million in medical debt that was owed by a total of 2,693 people spread across 45 states and Puerto Rico.
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