A Different Debt Conversion

Craig Antico and Jerry Ashton had the kind of careers that never get featured during 4th Grade career day.  They were not fire fighters nor veterinarians taking care of puppies.  They were not small business owners nor video game designers nor cupcake makers. 

They were debt collectors.

Yeah, not a lot of kids dream of that job.  Not a lot of adults either. 

But, hey, someone has to do it. 

Between them, they had about 70 years in the credit and collections industry.  Along the way, they developed a deep sense of dissatisfaction at how the entire process worked, especially for healthcare patients who owed money they would long struggle to pay.

So, in 2014 the men formed RIP Medical Debt, non-profit organization that takes donor money and uses it to purchase outstanding patient debt.  They then notify the patient that the debt has been forgiven and erased.  To date, RIP has forgiven an amount approaching half a billion dollars.

The organization buys and forgives the healthcare debt of patients who make less than two times the federal poverty level and have debts that exceed their assets. 

As you might imagine, these outstanding accounts are not getting paid and have been passed around the collection agency world to no avail.  That is why they can generally buy a $1 of balance for a penny or less.  A recent gift of $12,500 purchased a portfolio of balances totaling $1.5M.

Now, it would be easy, and obvious, to make the point that these balances would never get paid and that the providers still carrying them on their books have taken ‘hopeful’ to the point of ‘delusional.’  Take the dang write-off already and move on. 

There is $750 billion of patient debt in the US that is past due.  ALN does not play in this space, so I can’t say with certainty, but I think we all know that pile of accounts is going to yield cash that is substantially less than three quarters of a trillion dollars, I don’t care what the balance sheets say.

Yet, for the person used to receiving collection letters who now gets a mysterious yellow envelope announcing that their debt has been forgiven and removed from their credit report, the value, at least psychologically, is huge.

Pretty cool solution.