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It is a time of freedom and of celebration when everyone will receive back their original property, and slaves will return home to their families.
November 8, 2012 2:05 PM   Subscribe

Rolling Jubilee. New from Occupy Wall Street, a program to buy distressed debt for the sole purpose of forgiving it. It starts off with a show. Previously
posted by charred husk (76 comments total) 43 users marked this as a favorite

 
I'd question whether it could raise enough to make a difference, but then I look at Kickstarter and it seems within the realm of posibility.
posted by Artw at 2:11 PM on November 8, 2012 [3 favorites]


I'd question whether it could raise enough to make a difference

It will make a big difference to those it helps, even if it only helps a few. If it does well, it might help more than a few. It's primary purpose is presumably symbolic, a way of declaring that oppressive debt is wrong and a way of calling for government action to address the problem more systematically. It also reminds people that Occupy still has a pulse. At first glance, this looks like a very good idea.
posted by justsomebodythatyouusedtoknow at 2:27 PM on November 8, 2012 [8 favorites]


Here is what I don't get: Shouldn't the market price for given debt instrument (e.g. Susie's Mortgage tranche) approach the expected return after accounting for risk? If a bank is willing to sell its claim on $10 owed for $1, why not take $1 from the debtor and call it a day?
posted by phrontist at 2:31 PM on November 8, 2012 [16 favorites]


This is such a fantastic fucking idea.
posted by davidjmcgee at 2:36 PM on November 8, 2012 [8 favorites]


Regardless of how much difference it makes, I love this idea. Those fucking amoral assholes in the banking, finance, real estate/appraisal industries blithely made most of my home equity vanish, vanish with their amusing little shellgames -- and I'm not talking about fake inflated-market-price bubble adjustable rate blah blah equity but the real kind you build up bit by bit by religiously paying your mortgage, doing little improvements, etc. over many years. I will be thrilled out of my tiny mind to chip in so as to help disappear some of the debt of real, struggling people.

Doing even a small good turn and keeping a few thin dimes out of the hands of rapacious jerks in the process? Priceless.
posted by FelliniBlank at 2:39 PM on November 8, 2012 [9 favorites]


The people who benefit from this should be encouraged to donate to keep it going. I would gladly do so.
posted by yesster at 2:48 PM on November 8, 2012 [1 favorite]


If a bank is willing to sell its claim on $10 owed for $1, why not take $1 from the debtor and call it a day?

Depending on the lender, individual debtors can negotiate such settlement. It happens all the time in courts - bank sues debtor, they go to court and the plaintiff & defendant usually settle outside the courtroom before the hearing and it's often a negotiation: debtor give a good faith payment up front and then the total debt is reduced.

I just wish this sort of negotiating was available for student loan debt, which is one of the biggest problems for the middle class.
posted by eustacescrubb at 2:48 PM on November 8, 2012 [10 favorites]


Surely I'm not the only one who had a reflexive moment wherein the brain started shouting, "Pick me! Pick me!"...?

May their jubilee roll with power and reach.
posted by batmonkey at 2:49 PM on November 8, 2012 [3 favorites]


phrontist: Sometimes this is the case with smaller lenders, however established systems/practices seem to drive large lenders to simply pass it on down the line as opposed to working with the debtors directly...

I assume this is due to redefining/amending contracts and other legal process issues but I really have no clue...

Or it could be the simple fact that if they condone the behavior directly, they have less ability to enforce the rest of their contracts... (Well everyone else didnt pay, and you took 10% so why should I?!)
posted by anthroprose at 2:50 PM on November 8, 2012


Isn't this simply yet another bank bailout?? If this is "pennies on a dollar" debt it's in the "never gonna be paid back" bucket already. Only now, it will be.
posted by Nahum Tate at 2:51 PM on November 8, 2012 [2 favorites]


Somewhere, deep in the bowels of an investment bank, a coke-addled banker is trying to come up with a way to take advantage of this. I pray to Elizabeth Warren that he is thwarted.
posted by benito.strauss at 2:52 PM on November 8, 2012 [12 favorites]


Phrontist, it's not about the money, it's about sending a message.

In principle this should work. Debt buying firms operate exactly as described. So why not just be one, or pretend to be one, get funded by donations, buy debts, and forgive the debts you buy?

Because the system wants to fuck you over. This is a project based on a fundamental assumption that is in error - specifically, that the debt sellers couldn't be that evil. Part of the entity's selling conditions, the consideration given by the vote-buying firms, is that the firm will attempt to collect the debt at the full rate, or more under the name of "fees and costs" (which is of course absolute bullshit).

You could jubilee yourself right now, if you're being hounded by debt collectors. They might want you to pay $10,000. It's a plain fact that they paid about $500 for it. You could offer them $1,000 to fuck off, and they would be in profit. People try. Occasionally it succeeds, but the debt collectors piss and moan and have to be dragged kicking and screaming to accept their mere 100% return. The debt-selling entities want them to not do this at all. If they can't collect in full, or at some reasonable approximation of full, they are supposed to take the loss themselves.

It keeps the debt collectors motivated not to do this. You must remember that the debt collectors are part of the half of the working class that is paid to beat up the other half.

The way to break it is a shell game. There is no way that banks will sell debts to this project. They will sell to apparently legitimate debt collection companies, and these companies can then be wound up. There are ways around that as well, eg "lending" the "asset" of the collectible debt to the debt collector, and it returns to the bank if the debt collector is unsuccessful.

I still think it is worth doing. At worst, it will make debt collection harder, by narrowing the field of entites whom the debt sellers are willing to sell to. And it will also make debtors more conscious that the debt collector bought the debt for $500 rather than $10,000 so the debtor may be more willing to say "my final offers are $1,000 and fuck off, or $0 and file to make me bankrupt - pick one" and since it costs them money to file to bankrupt people, and it pretty much guarantees no useful result, they will be more likely to accept the first option.
posted by aeschenkarnos at 2:53 PM on November 8, 2012 [22 favorites]


There is no way that banks will sell debts to this project.

When banks write off bad debt and sell it to brokers, they have a fiduciary obligation to get the highest price from the brokers.

If the highest bidder is OWS or an OWS front, tough shit. They get the debt, and dispose of it as they please.
posted by ocschwar at 3:04 PM on November 8, 2012 [6 favorites]


THIS is the America I like.
posted by bonobothegreat at 3:13 PM on November 8, 2012 [4 favorites]


Ocschwar: [citation needed]. if you're relying on the fiduciary duty to maximize profit, that's debatable and in any case does not operate on a per-transaction or even on a per-class-of-transaction basis. McDonalds is not legally obligated to sell franchises to Burger King fronts intending to run down the image and quality of the brand, even if they do offer $1 more than independent franchisees.
posted by aeschenkarnos at 3:17 PM on November 8, 2012 [2 favorites]


This is a wonderful initiative and one I will contribute to. People helping people. But it won't change the structural inequalities of our currently FIRE (Finance, Insurance, Real Estate) dominated economy. To do that, there will need to be legislative action. If this serves as a precursor to that, so much the better. Sometimes many smaller instances of justice lead to a big Justice. Let's hope these efforts are combined with pressure on Congress, too.
posted by CincyBlues at 3:25 PM on November 8, 2012 [1 favorite]


If this was my project I would approach it as follows (and the people whose project it is, may already be doing this).

I would bring on board an attorney or a number of attornies who are licensed to operate, competent, and have a personal hatred of debt collectors and/or banks. There is no better partner, or employee, than one who has a personal motivation to see the project succeed. I would ask those people to research and gain a strong understanding of laws constraining conduct of debt collectors and especially fines for misconduct. These are going to become a major source of income for the project.

I would put out feelers for people who are in serious financial trouble already. These folks are not hard to find. With each of these folks I would begin with a consultation with the attorney and the purpose of this is to establish any provable breaches that could lead to voiding of the debt and/or collection of a misconduct-related fine. If there are none, or none that are strong enough to sustain it, the attorney would work out with the debtor a plan of conduct that would offer the debt collectors the maximum opportunity to commit breaches, and allow the debtor to document them. The debtor is not yet a client and the information given to them is, legally, of a general nature only.

Once the necessary breaches have been committed then the debtor can become a client of the attorney and the attorney can take it from there. If the debt collector commits no breaches, the debtor can become a client of the attorney and the attorney can perform the maximum legally allowed to stave off the debt collectors from the client. They can pay as slowly as possible, potentially with donated funds, they can cause the maximum inconvenience to the debt collector, and they can repeatedly issue offers to settle the debt at a low rate.

I would also market for donated funds as the Jubilee.org folks are doing.

I would establish companies some time in advance and these would operate and be seen to operate as small debt collection firms with impressive virtual addressses and websites. These would have four purposes. Firstly, they would generate high success rates, through "recovery" of funds donated to debtors for that purpose. Secondly, they would purchase or accept donated debts from other debt collection companies. Thirdly, they would attempt to purchase debts from banks. Finally, once they have accumulated enough debts sitting in them, they can be wound up without the debt reverting to its origin or being sold to another collection company.
posted by aeschenkarnos at 3:38 PM on November 8, 2012 [8 favorites]


aeschenkarnos: I don't get what message it sends. And it seems to have the awfully large drawback of, you know, engaging the market process and recouping some of the losses the bankers would suffer if nothing were attempted, to say nothing of a real debt strike.
posted by phrontist at 3:41 PM on November 8, 2012


In other words: why bother with this cute legalism? If the goal is to resist payment, why not organize to resist payment?
posted by phrontist at 3:42 PM on November 8, 2012


In principle this should work. Debt buying firms operate exactly as described. So why not just be one, or pretend to be one, get funded by donations, buy debts, and forgive the debts you buy?

Transferring money from hipsters (children of the professional middle class and a smattering of the wealthy) to the owners of securities (banks and other financial sector enttities) to the indirect benefit of people who took out mortgages they couldn't pay which also includes real estate speculators and various people with capital.

Graeber's idea of reinventing the jubilee was never a very good one. The same would be achieved and more if you could get the Fed to agree to set an inflation target of say 4%, until unemployment improved.
posted by ennui.bz at 3:44 PM on November 8, 2012 [1 favorite]


The message that the banks send, by insistIng the debt collectors collect $10,000 or more on the debt that they paid $500 for, rather than $1,000 or whatever they can get, is that the debtor will gain no advantage from letting the debt go to collections. Otherwise, quite sensibly, a large number of debtors would let their debts go to collections and offer low settlements. Currently, only the sophisticated and tenacious debtors get to do that.
posted by aeschenkarnos at 3:46 PM on November 8, 2012 [1 favorite]


In other words: why bother with this cute legalism? If the goal is to resist payment, why not organize to resist payment?

Because it is the difference between declaring war and fighting the enemy, and quietly sabotaging the enemy's ability to wage war at all.
posted by aeschenkarnos at 3:49 PM on November 8, 2012 [4 favorites]


Because it is the difference between declaring war and fighting the enemy, and quietly sabotaging the enemy's ability to wage war at all.

It's the difference between declaring war and fighting the enemy, and ill-thought out idea which sounds good but you-don't-need-to-worry-about-the-unintended-consequences-of because-it-could-never-happen-in-the- world-we-live-in and you know it.

I mean, Greece is a fucking disaster, 25% unemployment and rising, a general collapse of living standards, riots in the streets, communists in government and they are still cutting off pounds of flesh to satisfy creditors... what makes you think this is going to happen here?
posted by ennui.bz at 3:57 PM on November 8, 2012


I used to work for a company that bought portfolios of distressed consumer debt, often at a very steep discount, often due to substantial collection difficulties and liabilities I previously described here.

I think this could be a very effective use of OWS efforts and the money of people who want to do something not just about the problems of unjust debt burden, but also to help the economy.

Let me explain. Lots of these debts are on the market after having been bought and sold by various debt buyers several times over and have been worked to death by collectors and creditors attorneys. Having not been liquidated after so much time and effort, these accounts have very little value and can be purchased very, very cheaply.

How cheaply? There are portfolios out there of debts reduced to judgment that sell for .5¢ on the dollar. Yes, that’s right, half a cent on the dollar amount. Not the dollar amount with interest, mind you, half a cent on the dollar for the amount of the judgment at the date the judgment was entered, and some of these judgments are a decade old, and have awarded interest at rates as high as 25%. The statute of limitations on money judgments in many states is really long, often 20 years or more, and they can often be renewed.

Who are these people that have these judgments entered against them that are being sold at such an absurd discount? Mostly the elderly and disabled, people with income that can’t be garnished, but there are also lots of people who have had these judgments chasing them for years, and they are afraid of participating in the legitimate economy, because as soon as they do, a skiptracer will find their employer and any disposable income will be garnished. As a result, these people hide. They stay living uncomfortable lives on disability benefits that they thought were temporary, say after a bad car accident that left them insolvent in the first place, afraid that if they try to find work again, they will just be working for their creditors forever. They remain a dependent of their common-law spouse, afraid to get married or start working for fear whoever owns the judgment now will find them. They work crappy, exploitative jobs under the table like an undocumented immigrant.

Just $50 can buy a $10,000 judgment on someone like this who has spent every day for years hiding from life. It would cost more for the filing fees on the assignments and satisfactions of judgment than to buy these debts. Forgiving these debts would be good for the economy, removing some of the debt overhang that is like an anchor on the economy and brining people back into the workforce, raising tax revenue and putting more money in the hands of the people most likely to put it right back into circulation.

For debts not reduced to judgment, documentation is a huge factor. Lots of accounts just don’t have it, and you don’t need any documentation to ruin someone’s credit, only if you want to sue. Portfolios to target here would be ones that have been scrubbed for employment and property hits in databases a few times, but are still a few years out from the statute of limitations and the debt falling off their credit report. These debts are likely to be more expensive than judgments, however.

People wishing to do this need to watch out for swindlers selling old debts that are passed the statute of limitations and passed the reporting period (i.e. have fallen off the consumer’s credit report). These debts could be had extremely cheaply, but that’s because collectors have no leverage on these accounts. They can be legally bought and sold because they don’t cease to exist, but consumers have no reason to pay them other than a sense of moral obligation.

[LAUGH TRACK]

Occupy Wall Street would be better off educating people about these debts, instead of buying them. Telling people that if the statute is up, and the credit reporting period is over (7 years from the date of the first missed or late payment), there is NOTHING compelling them to pay the debt, and they have no obligation, legal or moral, to pay it. Moreover, making a partial payment is about the worst thing you can do in a lot of jurisdictions. In some states the statute can be reset if the debtor chooses to make a token “good faith payment” that sleazier companies try to get out people with statute-barred debts, since it is calculated from the date of last payment.

Wisconsin and Mississippi are actually the most progressive in this regard, with statutes of limitation that explicitly erase the debt, and require creditors to erase the tradeline on a consumer’s credit report. New York City, on the other hand, can’t change New York State’s laws on this, but they can try to make sure people know what's up. This is from NYC's regulations on debt collectors:
The following disclosure must be included in every written communication sent to a consumer to attempt to collect time-barred debt:

“WE ARE REQUIRED BY LAW TO GIVE YOU THE FOLLOWING INFORMATION ABOUT THIS DEBT. The legal time limit (statute of limitations) for suing you to collect this debt has expired. However, if somebody sues you anyway to try and make you pay this debt, court rules REQUIRE YOU to tell the court that the statute of limitations has expired to prevent the creditor from obtaining a judgment. Even though the statute of limitations has expired, you may CHOOSE to make payments. However, BE AWARE: If you make a payment, the creditor's right to sue you to make you pay the entire debt may START AGAIN.”

The above notice must be provided in at least 12 point type and set off in a sharply contrasting color from all other type on the permitted communication. The language must also be placed adjacent to the identifying information about the amount claimed to be due or owed on the debt.
So basically, the law says that right next to the amount owed on a dunning letter, you have to put in big, bold, red type “NEW YORK CITY REQUIRES WE DISCLOSE THAT YOU WOULD BE FOOLISH TO PAY THIS, AND THAT WE ARE TRYING TO DECIEVE YOU.”

Also, fun fact, did you know there are two zip codes that straddle Queens and Nassau County? All other zip codes fit neatly into 2 sets: completely within NYC, and completely outside NYC.
posted by [expletive deleted] at 4:37 PM on November 8, 2012 [51 favorites]


This is petty much the best thing I have seen in my life. What an awesome, liberating use of human intellect. The good guys finally outsmart those who would seek to exploit us! There's how fit the human race yet!
posted by spacewaitress at 5:05 PM on November 8, 2012 [1 favorite]


I just wish this sort of negotiating was available for student loan debt, which is one of the biggest problems for the middle class.

There's a good reason that's not the way it works. The debts are federally guaranteed. So the lenders have no incentive to negotiate a settlement.

You could get rid of the federal guarantee (I tend to think it might be a good idea). The debts would likely become much more negotiable like that, but the loans would also likely become much more expensive and/or rare.
posted by Jahaza at 5:15 PM on November 8, 2012 [1 favorite]


This seems really cool. I know a guy who used to work for a company that bought up debts and had some kind of automated system for tracking people down and getting judgments. It seemed like an unpleasant way to make a living, and I'm glad he moved on.... but I'll have to talk to him about this and see if there's some way to use that kind of analysis for good, some way to automatically process big piles of these debts and figure out which ones would make the most difference.
posted by Mars Saxman at 5:40 PM on November 8, 2012


Can someone explain again why this is supposed to be great? It seems like we'd just be giving the banks free money for worthless debt they've already written off. Why not send Wells Fargo my spare change?
posted by gerryblog at 6:26 PM on November 8, 2012 [2 favorites]


Gerryblog: someone is going to buy this debt regardless. If it isn't OWS, it will be some shady debt collector. Buying it and forgiving it doesn't make Wells Fargo any richer - they take a loss either way - but it probably makes a big difference to the person whose head it's been hanging over.

I do wonder how the jubilee people will get in touch with the debtors to let them know they have been forgiven. The idea of skip-tracing someone just to let them off the hook is hilarious.
posted by Mars Saxman at 6:36 PM on November 8, 2012 [4 favorites]



I do wonder how the jubilee people will get in touch with the debtors to let them know they have been forgiven. The idea of skip-tracing someone just to let them off the hook is hilarious.


Well, the idea is to bring these people out of the shadows.
posted by ocschwar at 6:45 PM on November 8, 2012 [1 favorite]


Won't someone please think of the banks?
posted by monju_bosatsu at 6:56 PM on November 8, 2012 [3 favorites]


tl;dr, but did anyone involved with this think about the fact that forgiven debt is considered taxable income by the IRS? That is, if they get $200k of mortgage "forgiven", the IRS is still going to want their $70k or so in income tax, and they *will* get it, one way or another. At least a foreclosure means you're done paying for the property.
posted by kjs3 at 7:41 PM on November 8, 2012 [5 favorites]


It sounds like a great idea, but it reminds me of the people who tried to ameliorate slavery by buying and freeing slaves. When this had any effect, it tended to encourage the market in child slaves - cheap but attractive to people wishing to do good. Similarly, I remember seeing vendors of small animals line up outside Buddhist temples in Thailand. The idea was that their customers could perform virtuous acts by purchasing and releasing the animals. The market in these animals was, of course, driven by customer demand.

I suspect that debt collectors will see this as another opportunity to sell bad debts and they will adjust their methods accordingly: they may keep hounding debtors past the point where it would otherwise be economic; and they may make their debtors more miserable, in the hope of creating a more saleable asset.
posted by Joe in Australia at 7:50 PM on November 8, 2012 [5 favorites]


Joe in Australia, I agree completely. Or, for example, sell OWS debts that they already know they aren't going to be able to collect. Instead of freeing a consumer from the yoke of debt (because that consumer has long since skipped and doesn't care), OWS will just be handing debt collectors free money. Financing what they despise.
posted by gjc at 7:55 PM on November 8, 2012 [1 favorite]


There may be a meaningful legal difference between an entity with a legal right to forgive a debt doing so, and that entity ceasing to be in a position to pursue the debt.
posted by aeschenkarnos at 7:58 PM on November 8, 2012 [1 favorite]


Brilliant, OWS. For your next act, why don't you stake out Ray Kelly's residence and threaten to run his well dry by taking turns drinking from his garden hose?
posted by indubitable at 8:11 PM on November 8, 2012 [1 favorite]


Well, this seemed amazingly cool at first, but you all are bringing some good complexity arguments here. I will wait before I go trumpeting this opportunity around.

Expletive_deleted's comment was really great, yet I'm skeptical that forgiving random debts is going to bring many people out of the shadows, as a lot of people with serious debt and years-long collection issues have more than one such debt.
posted by Miko at 9:21 PM on November 8, 2012 [1 favorite]


What Occupy Did to 2012, What It Will Do to 2013
posted by homunculus at 9:46 PM on November 8, 2012 [2 favorites]


As far as return on investment goes, I suspect this may be the most effective form of charity yet devised.
posted by mek at 10:00 PM on November 8, 2012 [1 favorite]


tl;dr, but did anyone involved with this think about the fact that forgiven debt is considered taxable income by the IRS? That is, if they get $200k of mortgage "forgiven", the IRS is still going to want their $70k or so in income tax, and they *will* get it, one way or another. At least a foreclosure means you're done paying for the property.

In the tax-on-forgiven-debt scenario, someone's debt has been reduced 65%, and their creditor has changed from being (very likely) a parasitic entity to one that ensures that some of the debt (if and when it's collected) gets used in socially constructive ways. In the foreclosure scenario, someone doesn't owe anything, but is potentially homeless (if, for instance, their actual income is low enough).

There could even be an OWS effort to get bank loans for people to pay off tax debts incurred by Rolling Jubilee debt forgiveness. Rolling Jubilee could buy and forgive these debts, creating a new, but smaller, tax liability for the forgivee, who would pay that tax with another OWS-acquired loan, ad infinitum. The debtor is happy, since they don't have to pay anything, the taxfolk are happy, since they get paid everything they're owed, every time, the donors are on the hook for at most $200000(1 + 0.65 + 0.65^2 + ... ) or whatever, the banks don't find the situation any more absurd than usual, and OWS gets a propaganda victory about the craziness of the system. Epic win for everyone: a pyramid scheme of Epic Win!
posted by kengraham at 10:00 PM on November 8, 2012


Occupy Sandy Efforts Highlight Need for Solidarity, Not Charity

Occupy Sandy’s Street Medics Go Door-to-Door in Coney Island
posted by homunculus at 10:05 PM on November 8, 2012 [2 favorites]


and their creditor has changed from being (very likely) a parasitic entity to one that ensures that some of the debt (if and when it's collected) gets used in socially constructive ways

The debt has also passed from the private sector that will have difficulty getting its hands on money to the federal government which will pretty much never forget and will use Treasury Benefit Offset to recover the money from tax refunds and federal benefits forever, even decades down the line.
posted by Jahaza at 10:35 PM on November 8, 2012 [1 favorite]


Miko, I'm talking specifically about judgments. I have plenty of doubts about how effective this will be for other debts. Having seen thousands of these kinds of passed around judgments, and crunching data from credit bureaus, I can say with confidence that even for the worst of the worst, at least 25% of the consumers in these portfolios would have no other outstanding judgments against them. Often their other bad debts would be out of statute, or for amounts small enough that nobody would bother to sue over.

The key to doing this right is negotiations for the portfolio. There are some things people who want to do this should pay a premium for, such as the consumers having no other judgments against them, and the consumers being under 65. There's no point doing this for seniors on SSI, because they are judgment-proof anyway. You’ll pay less because you don’t care about clauses regarding previous collection attempts, age of judgment, being repeatedly skiptraced with no employment, etc.

The tax angle isn’t as big a deal with old judgments either, because documentation to establish the principle will be hard to come by, and the vast majority of the debt forgiven will be accumulated interest, fees and penalties, which don’t go on a 1099c. Also, the tax code has a provision for waving taxes owed for insolvent debtors irrespective of bankruptcy.

The more I think about this, the more I’m convinced the best angle would be to pursue robosigned judgments on unsecured debt that have been floating around for years and keep getting cheaper. These debts are going for peanuts due to jitters among debt buyers because of totally founded fears that aggressive attempts to liquidate them will net a bunch of quashed judgments and possibly a class action suit. Still, this is just a risk, not a certainty, and most of these judgments are for debts actually owed, usury notwithstanding. Do-gooders could buy these judgments on the cheap and just filing motions to vacate the judgment. This doesn’t forgive the debt, it’s only removing all leverage over the debtor forever, so no 1099c, but it still vanishes from a credit report, and is permanently statute barred. This can be done ex-parte, so there’s no need to find these people, they just get a nice surprise.
posted by [expletive deleted] at 10:51 PM on November 8, 2012 [8 favorites]


We could just do away with the entire credit reporting system.

Years of struggling just to survive has burdened me with more debt than I can ever pay back. Doctor's bills, utility bills, etc. I've never even had a credit card. I had debt on my account from a hospital since I was 17 (which I tried to get removed by explaining I wasn't even IN Texas at the time, and my SSN was stolen) so I've never qualified for one. I've never been able to get anything on credit at all from day one.

So pretty much all the credit reporting system has done for me is prohibit me, say, if I'm moving and need a new electric company, I can't get the lights turned on without paying a massive $300 + deposit.

I dream of one day making enough money to settle all my debts. That'd be nice, but the reality is that I'll live in debt, and die in debt.

I just do my best now to never acquire any more, and hope the rest of it falls off my credit report in due time, and then when I'm around 50 I can think about buying a house.
posted by Malice at 11:07 PM on November 8, 2012 [1 favorite]


Well I'm all for trying new ways to think about debt or relieve its burden on the poor. Rolling Jubilee doesn't seem like a perfect option, but those are pretty thin on the ground. Good on 'em for at least trying to help - I hope a few people are helped and the experience is educational for those who want to change how we think of economies.
posted by harriet vane at 2:36 AM on November 9, 2012


This is like buying all the cigarettes in a convenience store to make sure that nobody else buys any.

Elizabeth Warren is right - the system is rigged. We need structural change, not palliatives. And while that happens, organizing people to resist debt collectors and cracking down on unethical practices is a much better use of resources.

And also, this wouldn't work for an obvious reason - debt collectors can still try to collect after they've sold your debt to someone else and even after that debt has been forgiven. It's a legal gray area that many collectors abuse. Even with a 1099c in hand, they will still call you and ask you to pay back the debt. You have no legal obligation to do so and the debt collector cannot take you to court. You may even have paid taxes on the forgiven income and they'll still call. Yet even without any real compulsion many people still make payments - either to stop the harassment or because they are confused. There's this pesky thing called the First Amendment that actually protects this behavior. This is also true of debt forgiven after bankruptcy proceedings or debt owned by a deceased spouse. Consumers have no legal obligation to repay these debts and collectors have no legal rights to these debts, but they call and pester anyway, hoping you'll repay anyway.

And since it works, debt collectors continue to do this. And the jubilee would only encourage them to do this more. Sort of like buying all the cigarettes
posted by allen.spaulding at 5:36 AM on November 9, 2012


When I was 25, I made a stupid mistake. I thought my student loans had a six month grace period for repayment. I was studying for the bar exam and wouldn't start working until later in the fall, so even if I had wanted to repay my loans immediately upon graduation I wouldn't have been able. Anyway, as I said. Stupid mistake. So imagine my horror when the loan agency notified me of my delinquency - and then denied my request for a financial hardship deferment (as I was unemployed) based on the fact that I hadn't paid on time. It was one of those bureaucratic nightmares.

By the time I started working several months later, the unpaid debt was far too much to catch up with and my repeated attempts for some sort of forbearance or deferral were ignored. I was sent to a collection agency.

Five years later, during which time I was fully employed and thriving, those loans still sit with the collection agency, being paid monthly. I called the loan agency recently to ask about any sort of loan rehabilitation program. I'm employed. I'm paying already. And yet, those loans are killing my credit - and will for the next 25+ years. No rehabilitation program is available. In a fit of frustration and sadness, I finally made the loan agency representative confirm for me that a stupid mistake I made when I was 25 was going to ruin my credit for the rest of my life. "It looks that way," she said.

I am sure I'm not the only one out there who is trapped between the Scylla of debt and the Charybdis of bad credit, but whose little financial boat is just buoyant enough to keep slamming against the rocks without ever really sinking.

A program like this would be wonderful for someone like me, and many if us would repay the kindness by diverting our previous debt payments to support the program and others. (After all, I'm already planning to pay $400/mo to this collection agency for that long. I'd much rather pay that to OWS and know that my payments were helping others.) I suspect that they wouldn't even run afoul of the law if they conditioned assistance on some kind of "pay it forward" requirement. After all, if a debt holder can bleed you dry to satisfy their claim, what's to keep them from instead just asking that you do something nice and help someone else out?

Actually, I'll still support the program just because I know what a major difference it can make in someone's life. Good on OWS.
posted by jph at 5:41 AM on November 9, 2012 [7 favorites]



Elizabeth Warren is right - the system is rigged. We need structural change, not palliatives.


And the case for structural change will soon have empirical evidence in the stories of the people whose debts are being written off by OWS.
posted by ocschwar at 6:05 AM on November 9, 2012 [6 favorites]


And the case for structural change will soon have empirical evidence in the stories of the people whose debts are being written off by OWS.

1) We have evidence of people whose debt has been bought
2) We don't need more evidence to make the case for change
3) This won't work.

People want to be able to do something and this presents a plan that feels like it could work. In that sense it's like Tom's Shoes or Charity Water or whatever. A feel-good consumption-oriented way to make people feel like they're helping.

It doesn't strike me that this was created by people who understand distressed debt - or by people who have been in the trenches of this fight. It sort of reeks of "social entrepreneurship" by 22 year-olds who think they found a magic bullet.

Step back for a moment and consider what OWS wants: lets give money to banks and debt collectors and hope this means things will get better.
posted by allen.spaulding at 6:12 AM on November 9, 2012


I've said this on MeFi before, but I think there should be a law that says than any time a debt is sold, the debtor should have right of first refusal. If a debt collection agency can buy my debt for pennies on the dollar, I should be offered the opportunity to pay it off at the same discount.
posted by sevenyearlurk at 6:55 AM on November 9, 2012 [21 favorites]


Or, for example, sell OWS debts that they already know they aren't going to be able to collect.

This wouldn't even be an unintended consequence; that's the OWS plan. Bragging about a 30:1 return on investment means that you've bought something the seller regards as basically worthless.
posted by leopard at 7:08 AM on November 9, 2012 [1 favorite]


I agree with Miko that this thread has been great in helping me see the practical and other complexity of this idea. But if the goal of the jubilee is to get us to think hard and talk about the way we regard assets, debts, financial responsibility, etc., that has already had immense usefulness for me just in how I've been thinking about the issue since this was posted, although with my delayed grasp of the obvious, it's probably not news to everyone else.

We -- and not just $$ dunderhead laypeople like me but the moneyfolks themselves -- just simply do regard and treat individual debt as something much more real and concrete than assets, even assets that consist in physical objects. For example, how many thousands of times during this whole fucking mess have you heard someone smugly trot out the old, "Gee, so sorry X person's house lost Y amount of value, but you know, that value was just an illuuuuuuuuuuusion. After all, an asset, even one you can touch or paint purple, is worth only what someone is willing to pay for it."

Well, OK, smartypants. If you buy someone's outstanding $100k medical bill for 500 bucks, then that's clearly what that debt is now worth, and that's all you should be able to collect from the poor schmuck. I'm sure we'll be passing federal legislation to ensure that any minute now.

Or, say your mortgaged home is appraised at $80k today but, for totally arbitrary reasons, only $60k next week. At this time, you have paid off 3/4 of your principal+interest and still owe 1/4. Why does 100% of that loss in value come out of your equity and 0% out of your remaining debt? Because we have somehow decided the value of a given personal debt is holy and sacred and engraved on a stone tablet. I mean, I know people do renegotiate the "market value" of their debt; I have done it myself, but the rigamarole of supplication you have to go through, the social stigma, the worry, the bleeding ulcers, the hit to your reputation and self-image.

There's only so much you can do to resist and counteract the (in my case, midwestern former-protestant) brainwashing, but I really am going to try from now on. Whenever I hear about a rash of student loan defaulters or credit deadbeats or what have you, I'm going to say, "Good! More power to 'em! Because you know, that debt does not actually exist. It's only worth what someone is willing or able to repay."
posted by FelliniBlank at 7:16 AM on November 9, 2012 [17 favorites]


I'm glad I read this thread because I thought it was a great idea when I first heard about it. Structural reform is clearly needed, but now I wonder what a good intermediate step would be.
posted by immlass at 7:57 AM on November 9, 2012


That is, if they get $200k of mortgage "forgiven", the IRS is still going to want their $70k or so in income tax

If the cancelled debt is a mortgage on your primary residence, that's not true. Among other exemptions.

This is a great idea. Yes, it involves giving money to the banks; so what? If OWS wasn't buying this debt, collection agencies would. Maybe if it becomes implausibly successful, it will end up driving up the price of distressed debt—again, so what? Your $50 donation will only help forgive $750 of debt instead of $1000, but it's still worthwhile. It is debilitating to have huge unpayable debts hanging over your head, as [expletive deleted] describes so well; I think it is fantastic if OWS is able to help some people escape from that, even if it is only going to be a subset of all the people who are in debt, and even if it means some distressed debt sellers make a few bucks more than they would have made otherwise.
posted by enn at 8:51 AM on November 9, 2012 [1 favorite]


And yes, it's not as good as getting the Fed to pursue a more inflationary policy, or the various other structural changes people have proposed upthread. It's also not as good as if magical unicorns descended from the sky to shit gold at the feet of the indebted, which is probably more likely than any of those things happening in the immediate term.

The beauty of this plan is that it is something that people can do right now, as a group of interested activists, without waiting for legislative action or other systemic changes—which won't happen anyway unless there are people providing pressure to make those changes by doing things like this.
posted by enn at 8:54 AM on November 9, 2012 [9 favorites]


nthing the notion that this isn't nearly as effective as the fed pursuing 4% inflation or higher until full employment, or better yet, a higher inflation target combined with fiscal stimulus focused on rehiring state and local government workers, infrastructure, education, basic research and decarbonizing the economy, but the aforementioned gold-shitting unicorns aren't that improbable in comparison.
posted by [expletive deleted] at 9:39 AM on November 9, 2012


It sounds like a great idea, but it reminds me of the people who tried to ameliorate slavery by buying and freeing slaves.

This project will never be more than a drop in the ocean, but if something miraculous happened and they convinced people to donate millions, what would happen is that the resale value of bad debt would go up due to the increased demand. The multiplier would go down and the project would become less effective. But who cares? They'd still be liberating people from tens or hundreds of millions of dollars of debt.
posted by Mars Saxman at 9:40 AM on November 9, 2012 [1 favorite]


Warren and Grayson bring Occupy to Congress
posted by homunculus at 10:11 AM on November 9, 2012



That is, if they get $200k of mortgage "forgiven", the IRS is still going to want their $70k or so in income tax

If the cancelled debt is a mortgage on your primary residence, that's not true. Among other exemptions.


Also, picture this:

Hi, your 22K in credit card debt from that car crash 10 years ago
was just purchased by OWS. You are on notice that from this day forward, OWS will make no attempt to garnish your wages, ding your credit, or otherwise interfere in your endeavors to find work or housing. We in fact encourage you to do so. Four years from this day, or sooner if you allow, OWS will declare your debt forgiven. At that point, the IRS will find you liable for 5K or so in income taxes, so you need to save up, but even then, the IRS is a more reasonable creditor than any dect collector. Good luck. --OWS


Nothing stopping them from sitting on these debts indefinitely.
posted by ocschwar at 10:48 AM on November 9, 2012 [2 favorites]


If there's one thing metafilter does well, it's armchair nitpicking any progressive idea to death.
posted by latkes at 11:47 AM on November 9, 2012 [9 favorites]


latkes:
"If there's one thing metafilter does well, it's armchair nitpicking any progressive idea to death."
Aside from it being a neat thing on the internet, I kind of wanted to have a more critical eye turned to it for my own personal information. This seems like a fantastic idea from a few different directions, but I couldn't tell what unforeseen consequences it might have. The picking apart here seems to bring me the conclusion that it won't solve the big problem but if done well will be worth doing anyways.
posted by charred husk at 11:57 AM on November 9, 2012


If there's one thing metafilter does well, it's armchair nitpicking any progressive idea to death.

Well, I agree with charred husk. This is something that in principle I would really support and would share with all my friends, and so on. But if it's not likely to produce the intended effect, then that energy and goodwill is better spent on some other project. So I appreciate the critiques a lot.
posted by Miko at 2:10 PM on November 9, 2012 [1 favorite]


Has anyone found anything like a prospectus, or a plan, that I could read? Who is administering these funds? Where is the evidence of how this worked in the past? What are the tax implications of this forgiven debt? I can't find anything but a donate button.
posted by gerryblog at 3:59 PM on November 9, 2012


Also, if OWS can do this, can other people do this? Where would I go if I wanted to buy myself some distressed debt?

Could KIVA start selling distressed debt? "Microdebt collection"?
posted by feets at 4:05 PM on November 9, 2012


3 Occupy Wall Street Protesters Win $50K Settlement Over "Thought Crime" Arrest
posted by homunculus at 7:06 PM on November 9, 2012


Why Occupy's plan to cancel consumer debts is money well spent
posted by homunculus at 2:19 PM on November 12, 2012


Andrew Ross: The Debt Resistor's Operations Manual
posted by the man of twists and turns at 4:16 AM on November 13, 2012


Also, if OWS can do this, can other people do this? Where would I go if I wanted to buy myself some distressed debt?

I was thinking this is something churches can get behind, independently from OWS if so desired.
posted by 2N2222 at 8:15 AM on November 14, 2012 [2 favorites]


The folks behind @StrikeDebt are doing an AMA on reddit tonight (Wednesday, 11/14) at 8pm EST.
posted by davidjmcgee at 11:44 AM on November 14, 2012 [1 favorite]


The Roosevelt Institute's Mike Konczal weighs in, and seems pretty sanguine about the Rolling Jubilee's prospects. He does express some concern that the tax issue is still up in the air, though.

It would be a major bummer if they raised a ton of money and abolished a ton of debt, only to have large tax bills show up in the mailboxes of all these people who had finally gotten themselves out from under their debt obligations. Konczal links to a Daily Beast post that goes deeper into the tax issues, and it really seems like this is going to be a series of judgement calls on the part of the IRS. This... may not end well.
posted by tonycpsu at 10:15 AM on November 15, 2012


Douglas Rushkoff: Occupy Debt
posted by homunculus at 3:57 PM on November 15, 2012


Jubilee Fines: JPMorgan Chase and Credit Suisse had to pay a $400,000,000 fine to the US government. Those banks should have had to forgive $400M in mortgage debt.
posted by davidjmcgee at 12:33 PM on November 16, 2012


A critical view of Rolling Jubilee from Doug Henwood.
posted by 2N2222 at 4:50 PM on November 16, 2012


Addendum to the above link.
posted by MartinWisse at 2:21 PM on November 20, 2012 [1 favorite]


Occupy Sandy doc screened at secret cinema

Occupy Sandy
posted by homunculus at 12:47 PM on November 29, 2012


Why Strike Debt’s Rolling Jubilee Puts Borrowers at Risk
he short version is that Strike Debt maintains that there is no risk here, when as we will demonstrate, the outcome is not knowable at this juncture (yes, that is unsatisfying, but welcome to the world of tax). It’s possible that things will work out just fine for the Rolling Jubilee. But if not, the ramifications to Strike Debt and the borrowers whose debt was cancelled would be significant. Thus, to dismiss this very real possibility is irresponsible
posted by the man of twists and turns at 3:20 PM on December 2, 2012


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