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Funders Help Erase More than $35 Million of Debt for Vulnerable Arkansans

January 28th, 2022

Unveils Policy Recommendations to Alleviate Burden of Medical Debt, Court Costs

LITTLE ROCK, Ark. (Jan. 27, 2022) – A group of philanthropic organizations and donors joined together to erase more than $35 million of medical debt for Arkansas residents. The announcement, made during a town hall hosted by Arkansas Asset Funders Network (AR AFN), Arkansas Community Institute (ACI) and Hope Policy Institute (HPI), aims to reduce the burden of medical and court costs on Asset Limited, Income Constrained, Employed individuals and people of color.

“Our current medical and court systems trap Arkansans in debt, harming already vulnerable populations as well as our state’s economic future,” said Bill Bynum, CEO of Hope Credit Union. “We must enact bold policy changes to mitigate wealth-stripping practices that perpetuate debt cycles.”

The Winthrop Rockefeller Foundation, HOPE, Arkansas Community Foundation and other donors raised more than $225,000 to erase the $35 million in medical debt. 23,896 Arkansans in all 75 counties benefitted, with an average eliminated medical debt of approximately $1,500 per individual or family. RIP Medical Debt (RIP) coordinated the payment, purchasing the medical debts in large, bundled portfolios for a fraction of their face value. Recipients were randomly chosen based on who qualifies and account availability. Those selected for debt abolishment will receive a letter notification from RIP.

“Medical debt and court costs, fines and fees create significant barriers to wealth building,” said Neil Sealy, executive director of ACI. “When individuals are unable to pay collections, it can set off a catastrophic chain reaction with lasting impacts to their financial security and economic opportunity.”

As part of their town hall, Arkansas AFN, ACI, and HPI shared federal, state, and hospital-led policy recommendations that could help alleviate and prevent medical debt. They also highlighted how the court system, state legislature, and local governments could enact changes to end the criminalization of poverty and reform debt collection practices.

Medical Debt

  • Enact state legislation to protect consumers from out-of-network medical bill
  • Include medical debt elimination and protections in the state’s COVID-19 recovery plans
  • Pass state legislation to protect patients from abusive medical debt collection practices, limit reporting of medical debt on credit reports, and cap interest charged on medical debt

Court Debt

  • Identify jurisdiction local fines and fees for potential elimination
  • Implement a “no suspension” of drivers licenses for failure to appear or pay fines
  • Amend the state’s debt collection laws to better protect consumers

Funders can also lessen the burden of medical debt and court costs by increasing Arkansans’ access to legal representation or legal counseling; calling for systemic reforms; elevating impacted residents’ stories; and funding advocacy, research, and public-private pilot initiatives or programs. The full list of the policy solutions is available here.

According to the Urban Institute, 37% of Arkansans currently have debt in collections—nearly 10% higher than the national average. The data reveals wide racial disparities, with 35% of people in white communities impacted and 56% of people in communities of color affected. Medical debt and related collection abuses disproportionately impact communities of color. This is of particular concern for a Deep South state like Arkansas, where a history of discrimination and exclusionary policies have led to high levels of economic distress. Policy makers have the power to eliminate the burden and put vulnerable Arkansans on the path to economic opportunity.

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