I’ve seen stories of individuals buying up a bunch of debt for cents on the dollar then just forgiving it. Why can’t this been done on an individual scale?
In: 4529
It’s tough to answer this as ELI5 as there are different types of debt.
I’m going with the belief this is from the now viral church news of $3M bought for $15k, so I’ll focus only on hospital debt.
The story is nice, but it’s also misleading. There is no company going to waive of $3M of debt for a measly $15k, especially if the cost to acquire the debt was higher than that.
So, what’s going on? Likely, a twist of the actual debt.
Someone receives care for $10k. Insurance pays 80%, leaving $2k in debt. The patient falls into a hardship, so the debt is sold to a collector, usually less than the $2k owed.
Now a church gets involved, but this time, they claim to have purchased $10k of debt for $1k and have it dismissed.
As you can see, it’s a little fibbing as the majority of the debt is already paid, but it sure does look good on viral video titles.
What most Americans don’t know is they can do the very same thing.
Before any hospital bill is paid, it should be a priority to request the charge list *and* an itemized bill from the hospital.
The charge list is now a legally required price list hospitals must provide so the patient knows what they were charged.
For the itemized bill, it’s extremely important to review every single item, and question anything which looks out of the ordinary, especially as hospitals are taking scrupulous actions to avoid insurance payouts.
An example of this is consulting an out-of-network provider to review the treatment. Most insurances will deny this instantly, leaving the entire cost to the patient. It should be illegal, but of course it’s not.
Patients should also question extraordinarily insane billing for things such as Tylenol or a hospital gown, none of which should cost more than $50.
By requesting the hospitals why the charge is so high, many will reduce the cost rather than address the question. It’s definitely in a patient’s best interest to question *everything* on the bill that makes no sense. It could literally save thousands and avoid collections.
It is my belief the $3M is exaggerated, but I’m glad some patients had their debt bought out. Unfortunately, it’s going to take a minimum of 7 years for the damage to be removed from credit, but that’s another pain in the ass situation we should address when it comes to an entire financial industry judging us by a damn number.
At any rate, I hope this helps answer the question.
tl;dr – you can, but not with all debt.
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