Proposed ballot measure would put new limits on medical debt collectors

Kim Crooks’ voice shakes with outrage recalling how debt collectors treated her after her husband died of a brain tumor, leaving her with $250,000 in unpaid medical bills.

The high-pressure phone calls started a few weeks after funeral, she said.

“I don’t think he was even dead a month,” said Crooks, 66, a retired University of Arizona administrator and widow for more than a decade.

“Some of them were downright nasty. They threatened to put liens on my house. My bank accounts were frozen.”

Crooks said she learned she wasn’t alone when she joined a grief support group. Harassment by medical debt collectors “was a common topic,” during the four years she attended, she said.

Crooks said she was able to hire a lawyer to get the total bill cut in half and paid off most of it with retirement savings, leaving a hole in her nest egg. But many people don’t have those options, she added.

These days, Crooks is collecting signatures and sharing her story to encourage public support for a proposed ballot measure backed by Democrats, unions and social welfare groups but opposed by one of the area’s largest business organizations.

The Tucson Metro Chamber, which represents 1,500 businesses in Tucson and Pima County, said many Arizonans could have a hard time getting access to credit if the proposal lands on the ballot and is approved by voters.

Asset protection

A recent federal report from the Consumer Financial Protection Bureau said 16% to 20% of Arizonans had credit files with a medical debt in collections in December 2020.

The proposed “Predatory Debt Collection Act” would allow people with medical debt to shield more of their assets from creditors than current state law allows.

For example, a house of up to $400,000 in value would be exempt, a 60% hike from the current $250,000 exemption level. The value of household goods protected from creditors would jump from $6,000 to $15,000.

The measure would also protect a vehicle worth up to $15,000 instead of $6,000 and allow a debtor to keep up to $5,000 in the bank instead of the current $300.

Back to homepage

Subscriber Login

Keep reading with a digital access subscription.

Subscribe now

As well, the proposal calls for a 3% interest rate on medical debt.

The ballot measure is being proposed by a group called Healthcare Rising Arizona, a membership organization that pushes for improvements to health and welfare. “No Arizona family should be bankrupted by the cost of (medical) care,” its website said.

Healthcare Rising Arizona proposed a different ballot initiative in 2020, one that would have raised pay for some workers in medical facilities and also banned surprise billing by health care firms. The effort failed when critics sued and a judge ruled the petition statement was misleading and some of the signatures were not valid.

This year’s ballot measure has the backing of several Southern Arizona community groups including the YWCA of Southern Arizona, the Southwest Conference of United Churches, the Southern Arizona AIDS Foundation and the Southwest Fair Housing Council.

“Negative impact” predicted

The Tucson Metro Chamber recently put out a news release that warns of negative consequences and asks local residents not to sign petitions that aim to put the measure on the November ballot.

The petitions state in the first sentence that the initiative is aimed at “medical debt” and that the measure “does not change existing law regarding secured debt.”

Even so, Chamber President and CEO Michael Guymon said the proposal includes wording that could be applied to any debtor, not just medical debtors.

The chamber’s financial analysis found anyone making less than $50,000 a year would effectively be exempt from having to repay creditors, which would “limit access to credit for the Arizona community.

“If a lender cannot collect outstanding debts from a person earning $50,000 why would they lend to them?” Guymon said.

“This will negatively impact business owners, lenders and the overall financial ecosystem in Arizona.”

Healthcare Rising Arizona needs to collect 237,645 valid signatures to get on the ballot. The deadline for filing the signatures with state election officials is July 8.