Cleveland City Council announced Monday that $33 million worth of medical debt held by 16,000 Cleveland residents was canceled by RIP Medical Debt, the national nonprofit that buys patients’ debt from hospitals at a steep discount. 

The stage for the move was set in April, when Cleveland City Council unanimously passed legislation setting aside $1.9 million in American Rescue Plan Act funds for the nonprofit to negotiate with local hospitals to buy unpaid medical bills. Council hopes the federal money will help erase $181 million in medical debt for roughly 50,000 Clevelanders. 

RIP Medical Debt has begun notifying Cleveland residents whose debt qualified to be wiped out in what is the first round of the program.  Council said the debt is from a local hospital it did not identify.

Kris Harsh, Cleveland City Council member and co-sponsor of the legislation, told Signal Cleveland federal money given to the debt relief program was strictly used to erase Cleveland residents’ medical debt. He said the success of this first round of the program makes way for other hospitals in the region to get involved. 

“This is only the beginning,” Harsh said. 

Founded in 2014, RIP Medical Debt uses private donations to purchase large bundles of past-due medical debt from hospitals and healthcare providers.  The nonprofit has eliminated more than $10 billion in medical debt, freeing more than 7 million individuals and families across all 50 states from the burden of unpaid healthcare bills, according to its website. 

Residents will not have to apply to have their debt forgiven. Instead, RIP Medical Debt will buy and forgive the debts of people who meet certain income thresholds. Households making up to 400% of the federal poverty guidelines would be eligible. Currently, the poverty line is $30,000 for a family of four. Also eligible are patients whose debt represents 5% or more of their annual household income.