During August 2020, Westminster Presbyterian Church in Rehoboth Beach raised enough money to wipe out $1.6 million of Delawareans' unpaid personal medical bills that had gone to collection.
This was accomplished through the auspices of a national charity called RIP Medical Debt. RIP uses donated funds to purchase and then forgive medical debts of individuals and families whose household incomes are less than 200 percent of the poverty level and whose debts makes up more than 5 percent of their earnings.
Crushing medical debt is the No. 1 reason individuals file for bankruptcy in the United States. Whether due to lack of adequate insurance, job loss or insufficient income, 66 percent of U.S. bankruptcies are tied to medical debt issues. Tens of millions of Americans must choose between paying medical bills or purchasing basic food and shelter.
Collection agencies purchase past-due accounts from medical providers at a sharp discount. The agencies then vigorously pursue collections from the individual debtors and make negative reports to various credit rating agencies. These negative reports remain a part of the debtors' credit rating for seven years, making it more difficult for them to continue medical treatment, access credit, get a job, secure housing, purchase insurance and more.
RIP Medical Debt acquires such qualifying medical debt from collection agencies at a cost of one cent on the dollar. But rather than try to recover the debt from the debtor, RIP uses donated funds, like those from Westminster Rehoboth, to extinguish the debt and provide folks with a fresh start, enabling them to seek continued medical care and work their way back to financial stability. RIP also sends forgiveness notices to the benefiting families and the credit reporting agencies, so the debt is removed from their credit reports. Furthermore, such forgiven debt is considered a gift and is not taxable income to the debtor.
RIP Medical Debt, a nonprofit charity, was founded in 2014 by two former debt collections executives whose compassion and expertise combined to create this unique ministry, which has thus far eradicated the outstanding medical debts of more than 1.7 million individuals and families, totaling more than $2.6 billion. RIP Medical was awarded the Guidestar charity rating service Platinum Seal of Transparency in 2020.