Here’s another one for the “Why doesn’t the U.S. economy just collapse under the weight of its health care system?” file: John Oliver buys $15 million distressed medical debt for $60,000.
3 thoughts on “Hacking America’s Financial System: purchasing $15 million in debt for $60,000”
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That’s 0.4% of face value. That is way beyond distressed. That must be SOLed out debt, and SOLed out for some time. It’s legally uncollectable (if it is SOL). He was doing the owners of that debt a solid there, they were probably never going to collect even that much.
I am pretty sure the hospitals, like the credit card companies, build in quite a bit of markup to take care of the very predictable percentage of write-offs that sort of debt creates. That percentage must be double digits.
Is he buying a tax deduction?
It’s amazing that debt that is beyond the SOL (statute of limitations) has ANY value at all, since the court system will not enforce such debt – you can tell the owner of the debt to go pound sand. The only reason that it is worth even one cent is that there are some people (not many though) who are stupid enough to pay SOL debt when someone tries to collect it from them.
Oliver (or his employer – I doubt he personally paid) should get a tax deduction for forgiving these debts (of $60,000, not $15 million) but of course the deduction only makes up for part of the purchase price so he still loses money on the deal. Arguably the purchase itself was a deductible expenses since he didn’t buy the asset to make money but as a “prop” for his TV show.