Paying It Back With Caution

In a segment on debt collectors and their predatory practices, John Oliver, host of HBO’s “Last Week Tonight,” stuck it to them by creating his own debt collection agency buying nearly $15 million in Texas medical debt for a mere $60,000.

Oliver said it was “disturbingly easy” for his show to set up a company, which it called Central Asset Recovery Professionals (CARP), and incorporate it in Mississippi to make the purchase.

Oliver’s show engages in a form of investigative comedy, this week examining an overlooked industry.

Institutions often sell their debt for pennies on the dollar to companies who then attempt to collect on the bills. These companies operate with little regulation, and sometimes employ shady and abusive collectors who try to intimidate people into paying, he said., a nonprofit that raises money to buy debt and forgive the bills owed by people who can least afford to pay them, welcomed the attention.

“It’s absolutely fabulous,” said Craig Antico, CEO of “It puts a light on a problem that few people know exists.”

Antico’s organization was already seeing a boost in donations Monday. has been concentrating lately on buying debt owed by U.S. military veterans.

There is a caution, as noted by David Dayen, in his Salon article.

But something else should give us pause. What’s so hard here? A lender (typically a bank) has an unpaid debt, which it writes off and sells to some bottom feeder. Why can’t that bottom feeder just stick the debt in a drawer somewhere? After all, they now legally own it, and presumably can do whatever they want with it. What expertise is needed? What mechanisms are required?

It turns out to be surprisingly difficult to cancel debt, or at least to do it in a way that helps rather than hurts the debtor. If “Last Week Tonight’s“ fake company just discharged the debt – and they would have to do so to ensure its death – the borrower would have to report that forgiven debt on their taxes as earned income. It’s the same problem with mortgage and student loan debt, which when forgiven can trigger a big tax bill for someone without the money to afford it (a bill in Congress has delayed this situation for mortgage debt, but it’s always precariously close to expiring).

There may have been good reasons for this once, but in practice, it means the Rolling Jubilee or “Last Week Tonight” must structure themselves as a tax-exempt organization to allow them to gift debtors without handing them tax consequences, pulling them up with one hand and punching them down with the other. In this case, “Last Week Tonight” transferred the debt to RIP Medical Debt, a 501(c)(3) non-profit organization set up to receive donations to relieve medical debts.

Except RIP Medical Debt is not a 501(c)(3) yet; they are “awaiting IRS recognition.” So if the IRS denies their status, the borrowers could be on the hook. The only way they really would deny such status is if someone bothers to complain. But if, say, a high-profile HBO show elevated the awareness of the situation, what’s to stop a debt buyer from complaining? And in a potential Administration of a certain Republican eager to use government as a weapon to punish enemies, what’s to stop the IRS from screwing John Oliver, and regular debtors besides?