Meet the 18-year-old who helped wipe out $6.7 million in medical debt

A wave of letters sealed in canary yellow envelopes will descend upon Syracuse, New York, and the surrounding region in just a few weeks. They contain good news for the recipients: Thanks to the efforts of a local high school senior, their medical debt has been wiped out.

While some high school seniors were slacking off during their final months of school, Talia Zames, 18, launched a campaign to raise $15,000 in an effort to pay off old medical debt from those in her own community.

To help connect her donated dollars with those in need, Zames coordinated with the nonprofit RIP Medical Debt. The organization locates unpaid medical debt and then uses charitable donations to forgive old, outstanding debts for pennies on the dollar.

In 2016, the nonprofit gained national prominence after "Last Week Tonight with John Oliver" worked with RIP to wipe out $15 million worth of medical debt for approximately 9,000 people, a stunt that John Oliver claimed was the biggest giveaway on television.

Zames' months-long "Project Eraser" campaign did not quite hit Oliver's level, but she did surpass her initial goal, raising $20,000 in total. That enabled RIP Medical Debt to purchase and abolish $6.7 million in old medical debt from Onondaga, Madison and Oneida counties near Syracuse, New York. The recipients will be receiving letters in the mail from RIP around July 12.

"People care. If you're willing to put yourself out there and make those speeches, make those [social media] posts and talk to anyone you can, people can see how passionate you are...and they're going to want to help you," Zames tells CNBC Make It.

It was Zames's grandmother who actually sparked the idea for a campaign. In December, she read a New York Times article that profiled two women in Ithaca, New York, who raised enough to wipe out $1.5 million in medical debt.

"That's when I first heard about RIP," Zames says. "I started looking into it and realized I could start my own campaign to raise money to erase local debt."

The issue hit home for the teen. Seven years ago, her family experienced how much a trip to the emergency room could cost when one of her younger sisters, just 5 years old at the time, was rushed to the hospital. The medical bills for the visit totaled over $150,000, Zames details in a video she created to support the fundraiser. Her parents had medical insurance, but the deductible and related bills still totaled about $30,000, Zames says.

Her family was able to pay off the bills over the course of the next year, but others are not so fortunate. Over half a million families say medical bills were a major factor in their decision to file for bankruptcy, according to recent academic research that analyzed bankruptcies from 2013 to 2016.

Zames reached out to RIP Medical Debt and, with the organization's help, started building out a fundraising game plan. "I'm a planner," Zames says. "I needed to have it all laid out, so I sat down and listed all the possible things I could think of to raise $15,000."

A little more than a month after she heard first heard about RIP Debt in the New York Times, Zames launched her own campaign in mid-January 2019. The goal was to raise $15,000 to abolish about $1 million in medical debt.

In the U.S., approximately 79 million people have unpaid medical bills or debt problems, according to the health nonprofit the Commonwealth Fund. And in many cases, that debt is not held by the hospital or doctor's office that the patient originally visited. Instead, that debt is typically bought and sold several times over — some debts have changed hands upwards of four times.

When debt is sold multiple times, it's usually sold at a discount because it can be increasingly difficult for the collection agency to get paid. That represents an opportunity for RIP, which was founded in 2014 by two former debt collectors who wanted to work on a project to forgive debt, rather than collect on it. RIP is able to swoop in and offer to buy up the debt at a deep discount with donations from individuals like Zames.

Typically, a $1 donation can be used to buy $100 in medical debt. In Zames' case, RIP found that the debt was pretty old in the counties she wanted to target, so they hoped to leverage the donations to wipe out a bit more than average.

The nonprofit, working in partnership with TransUnion, focuses on identifying, verifying and buying up the medical debt of those who are in the most dire need. Typically, it aims to wipe out debt for individuals who are earning less than two times the federal poverty level, which varies by state and household size, but is around $25,750 for a family of four. RIP also focuses on wiping out debt for those who are facing financial hardship or insolvency.

Over the course of five years, RIP has raised enough money to wipe out $675 million of medical debt for over 200,000 people. And that debt forgiveness is tax-free for the recipients, Daniel Lempert, a spokesman for RIP, tells CNBC Make It.

With the help of RIP, Zames spent several hours in January setting up a fundraising website, creating social media pages and shooting a video for Project Eraser. She and her mom even created a bunch of Project Eraser T-shirts with iron-on decals to help spread the word.

But the teen also went beyond the online appeals: Zames wanted to get her classmates, teachers and school faculty involved with the project as well. She attends Christian Brothers Academy in Syracuse, which is a private school with a dress code. But each month, students are allowed to dress down if they donate to a charitable cause.

Zames capitalized on this, giving a speech to her entire school about Project Eraser and how medical debt affects so many Americans. "Before I started the campaign, I didn't understand medical bills and medical debt, so I just wanted my fellow classmates, and even my teachers, to understand what I was doing," Zames says.

Her initiative paid off. The school raised $2,300 for Project Eraser, which was one of the largest single-source donations of her entire campaign. It was so successful, she gave another speech at her local synagogue, and even helped her younger sister give a similar presentation at her elementary school.

At the end of February, Zames coordinated with her favorite restaurant, Panera, to host a community fundraiser night. For every person who ordered food or drinks at Panera on that night and mentioned Project Eraser, the restaurant donated a portion of the sale to Zames' cause.

The event raised about $200, but more importantly to Zames, it allowed her friends and those who couldn't afford to donate directly to her campaign to participate by simply ordering a meal. "I got to have dinner with friends and erase medical debt at the same time," she says.

Zames, who is heading to the Rochester Institute of Technology this fall, says her biggest takeaway from the project is the impact a single person, even a teenager, can make. "At first I was really terrified [about hitting such a big goal]; I had a lot of learning to do, a lot of trial-and-error," she says.

But the success she experienced with her first activist project has her already eyeing more opportunities. "I could definitely see myself getting more involved in the future," Zames says.

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