The logistics of forgiving debt like John Oliver

| Jun 10, 2016 | Debt Relief |

Texas fans of John Oliver may have watched his show where he bought $15 million worth of medical debt for $60,000 and then canceled it. An organization called Rolling Jubilee has been doing something similar for several years and recently shifted its focus from medical debt to student loan debt. However, even these efforts represent a very small amount of the total Americans owe.

Another issue is the fact that even though this debt forgiveness may put a stop to calls from collectors, it may not help a person’s credit score. However, newer formulas are slowly coming into use that do not view medical debt in the same way as other types of debt, so Oliver’s gesture may be helpful for some people. Another issue with this type of debt is that it may be outside the statute of limitations, and collectors may not have a right to collect on it.

Yet another issue to keep in mind is that it is unclear whether this type of forgiveness qualifies as debt settlement and thus is taxed. Finally, it would be difficult or impossible to target any one individual using these methods.

A person who is struggling with debt might want to consider filing for bankruptcy. Bankruptcy can provide a fresh financial start. An attorney may be able to review options for a person in debt and advise as to whether bankruptcy or other approaches may be the best choice. The attorney also may be able to dispel a number of myths about bankruptcy. For example, it may be possible to file for bankruptcy and keep some assets. It is also possible to rebuild credit following a bankruptcy. Out-of-control debts may occur as a result as unemployment, divorce or other life changes, and in many cases, bankruptcy can be the most responsible choice.