Advantages and disadvantages of the Prop. 209, which targets debt collection rules

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Proposition 209 targets all debt collections, not just medical. But medical debt is the most common reason debt collectors come calling, according to a 2022 report from the Consumer Financial Protection Bureau.

In 2004, 15-year-old Liz Gorski was driving a car on her way to the mall when a tire burst. The resulting accident threw her and her friends onto a busy road. A passenger died. And Gorski was left with years of medical bills and trauma.

“So I was in the hospital for five days in a coma, and I came out of the coma and they were trying to tell me everything that happened, and I just didn’t believe them,” Gorski said.

The insurance covered some of his initial hospital bills, but he still had tens of thousands of dollars in medical debt.

Some of that was referred to debt collectors and his credit took a hit.

“And then you can’t qualify for a loan or an affordable loan, or even housing,” Gorski said.

She also racked up more debt and faced more collectors, while seeking continued treatment for neurological and muscle damage resulting from the accident.

She was only able to find housing through Habitat for Humanity.

“But I think if that program wasn’t shown to me, and I wasn’t physically able to do it, I’d probably be on the streets or something,” Gorski said.

She is 33 now. A mother. And she helped Healthcare Rising Arizona get enough signatures to put Proposition 209 on the ballot.

It’s election season and it’s not just people to consider on the ballot. Arizonans will vote on several proposals, including what is billed as the Predatory Debt Collection Protection Act.

The pros and cons

Proposition 209 targets all debt collections, not just medical.

But medical debt is the most common reason debt collectors come calling, according to a 2022 report from the Consumer Financial Protection Bureau.

Liz Gorsky

Liz Gorsky

Liz Gorski (left), an Arizona resident who helped Proposition 209 get on that ballot, with her daughter Nikki.

Proposition 209 increases protections for Arizonans who may face asset or wage garnishment due to unpaid debts.

The measure will not eliminate medical bills. It won’t make hospitals pay less.

This will affect the amount of interest added to medical debts.

But there are arguments against Proposition 209 — coming from organizations like the Arizona Bankers Association and the Arizona Chamber of Commerce and Industry.

But Arizona business leaders say Proposition 209 has unintended consequences because it targets all debt, not just medical.

Danny Seiden is the Speaker of the House.

“When lenders can’t collect outstanding debts, they pass on their losses to other customers, which means higher interest rates for Arizonans,” Seiden said.

Proponents of Proposition 209 say it’s simply updating the protections that already exist.

With few exceptions, Arizona law allows collectors to nearly empty a debtor’s bank account, leaving them with only $300.

Proposition 209 would allow debtors to keep at least $5,000.

Rodd McLeod is a spokesperson for Health Care Rising Arizona.

“We firmly believe that no family should lose their home or their car or have difficulty putting food on the table due to a medical emergency or accident.” McLeod said.

But Seiden argues that medical costs, themselves, are what should be addressed instead.

“I think having a transparent discussion about what drives these costs, whether it’s unpaid care, whether it’s a lack of options in the private insurance market, what people say is the rising cost of pharmaceuticals, I think we could look at that and find a better way to do it,” Seiden said.

Seiden also argues that changing the amount debt collectors can garnish from wages, or assets that can be taken as collateral, will discourage creditors from lending to low-income people.

But Mike Weston, owner of a multistate consumer defense law firm with offices in Arizona, disagrees. He calls Proposition 209 a step change.

“Arizona’s collection laws are currently very creditor-friendly, which makes them a bit more consumer-friendly, but it still won’t be a complete boon to either side,” Weston said.

Weston Legal has offices in Arizona, Texas and Florida. Weston says Arizonans should look at what other states have done. Texas, for example, has banned wage garnishments.

“It’s not super drastic when you compare it to a state like Texas, which I think would be surprising to a lot of people if a very conservative state like Texas was the most debtor-friendly state in the country,” Weston said.

Further arguments for and against Proposition 209 are available on the Office of the Secretary of State website.

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