NJ wipes out another $86M in medical debt — thousands get surprise relief letters

💸 NJ wipes out another $86M in medical debt for 53,000 residents
📬 Relief letters sent as state continues work with nonprofit Undue
🏛️ Murphy administration touts 6 rounds of medical debt forgiveness

TRENTON – New Jersey and a nonprofit wrapped 2025 with a sixth round of medical debt relief — wiping out a combined $86 million in medical bills for more than 53,000 New Jerseyans.

Through the partnership with Undue Medical Debt, a collective $1.4 billion in medical debt has been eliminated for over 828,000 New Jersey residents, starting with the first wave in August 2024.

Before this round, the fifth wave of debt forgiveness was announced by the state in October.

This time, the past-due medical debt was purchased from health care provider partners, using $600,000 in American Rescue Plan federal funds.

Federal rescue funds used to buy and erase medical bills

"At a time when the medical debt crisis is on track to get even worse, New Jersey stands as a national leader — not only providing direct relief, but also enacting critical protections like prohibiting medical debt from appearing on credit reports,” Undue Medical Debt CEO and President Allison Sesso said in a written release.

“No one chooses to get sick, be in an accident, or have a chronic illness, and I'm grateful for the provider partners who continue working with us to ensure medical debt doesn't prevent people from seeking the care they need. We're proud that tens of thousands more families will soon receive this welcome news in the mail," Sesso added.

How Undue Medical Debt eliminates bills for struggling families

Undue works directly with hospital systems to buy large, bundled portfolios of past-due medical debt for pennies on the dollar — belonging to those least able to pay.

According to Undue, over 100 million people in the U.S. struggle with medical debt, owing a collective $195 billion in past-due medical expenses.

Read More: NJ wipes out over $1B in residents' medical debt with Undue 

NJ law bans medical debt from credit reports

New Jersey has a law dubbed the Louisa Carman Medical Debt Relief Act, which protects residents against predatory medical debt collectors and bans the reporting of medical debt to credit reporting agencies.

In 2024, New Jersey became one of just five states that both prohibit medical debt reporting to credit agencies and that have allocated funds to help with direct medical debt relief.

No application required: who qualified for debt forgiveness

There was no application process for this medical debt relief.

Instead, those who qualified were either four times or below the federal poverty level, or had medical debts that equal 5% or more of their annual income.

Instead of trying to collect, Undue erases the debt, sending letters in the mail over the coming weeks.

This is a one-time abolishment, according to the governor’s office, to help remove the financial and emotional burden of unpayable medical debts.

Those benefiting from medical debt relief will receive an Undue-branded letter in the mail, which went out starting Dec. 27.

“With nearly $1.4 billion in medical debt abolished for hundreds of thousands of New Jersey residents, we are making a real, tangible impact and alleviating the burden of unpayable medical bills for our residents. Our partnership with Undue Medical Debt continues to build on my Administration’s efforts to create a more affordable and accessible health care system for all New Jerseyans,” Gov. Phil Murphy said in the same release.

“Nobody should have to delay life-saving care because they fear the crushing burden of medical debt or cut corners to ensure their basic health care needs are met," Murphy also said.

There is strong, nonpartisan public support for help in fending off crushing medical debt.

An October study sponsored by Undue Medical Debt finds that 76% of voters want their state leaders to pass laws that protect them from medical debt.

Report a correction 👈 | 👉 Contact our newsroom