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'I think it'll be life-changing': Passage of Prop. 209 changes how debt can be collected in Arizona

Proposition 209, which limits predatory debt practices, appears to have passed in Arizona with overwhelming support.

PHOENIX — Two-thirds of all bankruptcies in the U.S. are due to medical debt. A newly passed proposition has eased that burden for all of the state's residents.

Proposition 209, a ballot measure that's expected to help protect Arizonans who struggle to pay medical and other types of debt, appears to have passed with overwhelming support on Election Day. 

The latest results show 72% of voters supported Prop 209, which limits how much income can be garnished to pay off outstanding debts, and some locals say its passage was a victory for all.

One Arizonan who voted for the proposition knows quite a bit about dealing with medical debts.  

"I thought I had done my due diligence when I was looking at my new insurance plan," Sherri Brown said.

After being diagnosed with cancer in 2015, Brown fought to get better.

However, after moving to Arizona, she had to get new insurance and found out the hard way that her treatments wouldn't be covered.

"I asked the receptionist there and she said, 'Yeah, we take your insurance,'" Brown said. "But she didn't look at the total insurance card. Went to my treatment, went to billing, and I asked the billing guy about it. He started looking it up on his computer and he got quieter, and quieter, and I started crying."

Brown was on the hook for $48,400.

"He looked at me and said, 'I'm so sorry we don't take HMO plans,'" she recalled. "That was a huge trauma for me for a long time. I was under so much anxiety."

A new fight then began, figuring out how she'd pay off this unexpected debt.

"I paid it for a while," she said. "But then it was so stressful to me since I couldn't work, I didn't have income coming in, so I had been draining savings. The stresses got to me more than I thought was good for me given everything else I was going through, so I paid it off one day."

It's why she voted "Yes" on Prop. 209, so Arizonans with certain kinds of debt, would be protected. 

The measure includes different exemption increases and components, including limiting the interest rate on medical debt to no more than 3% and only allowing up to 10% of your disposable earnings to pay off debt.

The new law will additionally increase the number of certain assets exempt from debt collection. Now, a debtor's home, household items, motor vehicle, and bank account may be protected from debt collection. 

"I think it'll be life-changing for a lot of people," Brown said.

According to JAMA Network Open, one in five U.S. households carry medical debt, which on average is about $4,600. The study found that debt increases the likelihood of eviction, bankruptcy, and poor health.

"I think it'll give them a little security that they're covered and they don't have to worry about losing their homes, cars, losing everything just for medical debt," she said.

The passing of Prop. 209 only applies to new debt and is expected to become law in January.

"It's given me peace of mind that nobody has to go through what I went through," Brown said.

RELATED: Arizona election results: Ballot propositions 130 209, 211 pass; 128 Legislature initiative rejected

RELATED: Arizona 2022 Ballot Proposition Guide: Everything you need to know

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