By Ray Birch
JACKSON, Mich.—Calling it a gift that keeps on giving well past this Thanksgiving, the Southern Michigan Chapter of Credit Unions (So-Mi Chapter) is donating $25,500 to wipe out $2.5 million in medical debt owed by 3,182 consumers in this state.
“If these people didn't get this medical debt wiped out it would continue to affect their lives, maybe their entire lives,” American 1 Credit Union CEO Martha Fuerstenau told CUToday.info right before the Thanksgiving holiday.
The $398-million American 1 was one of nine CUs in the chapter to donate funds. The donations varied based on what each credit union could give, and all CUs in the chapter participated.
“Each of our credit unions recognizes that medical debt doesn’t happen by choice. We don’t view medical collections as an indicator of financial irresponsibility,” said Fuerstenau. “However, because loan rates are based on credit scores, the impact of a medical collection reaches into the wallet of our neighbors month after month. It’s a vicious financial cycle that also burdens the emotional health of those underneath its weight. Through collaborative giving, we are creating a new virtuous cycle for more than 3,000 individuals and families.”
Fuerstenau said she became aware of the impact the credit union could have on consumers’ medical debt after reading an article in the New York Times one year ago.
“I read about some folks in Upstate New York who raised $13,000 to abolish $1.3 million in medical debt,” she said. “When I read that article I couldn't help but be amazed by the impact of the donation. So, I brought the idea to our local chapter and, of course, everyone was on board immediately.”
Deeply Discounted, But…
Martha Fuerstenau
Fuerstenau explained debt on the secondary market is deeply discounted.
“We are buying $ 2.5 million worth of medical collection debt for $25,500; that’s remarkable the impact we’re having for our donation,” she said. “There is not a lot of value on the secondary market for medical debt, but for the person who owes it every dollar is a significant burden.”
The $25,500 gift was made to RIP Medical Debt, a 501(c)(3) non-profit organization, and will help people in Jackson, Lenawee, Hillsdale, Calhoun and Washtenaw Counties in Michigan. RIP Medical Debt uses donations to purchase medical collection accounts at a greatly reduced cost and pays off the debt for the neediest people.
Debt on Members’ Reports
Fuerstenau added that what also sparked the idea is the medical-related debt on so many members’ credit reports.
“Our chapter’s credit unions have a deep interest in the financial health of our members,” she said.
The Michigan Credit Union Foundation awarded a grant of $8,750, which was combined with the So-Mi Chapter funds to increase the reach of debt relief in the state.
The individuals selected for debt abolishment are truly in need, according to Jerry Ashton, founder of RIP Medical Debt.
“We find people who earn less than two times the federal poverty level or are in hardship by paying 5% of their annual income out of pocket for medical expenses, or who face insolvency due to their medical debt being greater than their assets,” said Ashton. “I cannot tell you how thrilled RIP Medical Debt is to partner with this amazing collection of Southern Michigan credit unions that do not simply talk about community involvement but live it daily.”
Jerry Ashton
A First Step
Fuerstenau said she hopes this gift will serve as a step toward restored financial wellness for the recipients. The So-Mi Chapter will begin an ongoing media campaign to inform their communities about the collaborative gift and to extend an invitation to seek a credit union for financial wellness coaching.
The Southern Michigan Chapter of Credit Unions—led by President Terri Paperisky, CEO of South Central Credit Union—is comprised of Aeroquip Credit Union (Jackson), American 1 Credit Union (Jackson), Blue Ox Credit Union (Battle Creek), Community Choice Credit Union (Farmington Hills), CP Federal Credit Union (Jackson), Lenco Credit Union (Adrian), South Central Credit Union (Jackson), TLC Community Credit Union (Adrian), and Washtenaw Federal Credit Union (Ypsilanti).
