Occupy Is Buying Loans and Forgiving Debt

'The People's Bailout'

Parts of the Occupy movement have reorganized over an interesting idea: a "People's Bailout," or, to give it its official title, The Rolling Jubilee. The idea is to purchase random debt in default and forgive the loans, as the New Statesman's Alex Hern reports.

Occupy are able to do this because banks will sell debt that isn't worth the effort to collect from debtors, as Hern explains. They sell it at a reduced price, and the purchaser takes on the responsibility of collecting. In the Rolling Jubilee's case, $500 is used to buy up $14,000 of debt.

Some critics wonder about the fairness of Occupy's plan to help debtors. Slate's Matthew Yglesias asks why, given two poor families, the family in debt is more worthy of assistance.

Via Salon

Does 'the people's bailout' sound like a good plan?

[Dan_Tien]

At least they are trying to put their money where their mouth is.

[MRMacrum]

Hey go for it. Beats pissing money into an election campaign.

[PNWest]

No - I think this is just a way to get publicity. For all you greedy 1%er's out there the real message here is that you can buy up to $14,000 of debt for only $500. That might be a pretty good investment if you have a way of making the debtors pay or just want to use it for bragging rights.

[bsking]

if you have a way of making the debtors pay?

why should they have to pay it?

[Denizen_Kate]

@bsking -- I think PN meant, if you have a method of extracting blood or the proverbial pound of flesh out of the already destitute.

[PNWest]

@Denizen_Kate Exactly. That seems to be the kind of thing that the 1%ers enjoy best.

[LetsAllBeHappy]

I am not understanding what you mean-Are you saying that they bought a persons debt of 14,000 for only 500-why do they not let those of us with a debt do that

[PNWest]

@LetsAllBeHappy Say you lend me $14000. I don't pay you back. After a while you decide that you'll never get the money back from me. A big guy with a baseball bat says, I'll give you $500 for PNWest's IOU that you can't collect. You say $500 is better than nothing and sell him the $14000 debt. The guy with the baseball bat then tries to collect from me.

[Kajai]

What a wonderful idea.

[MongoAPillager]

not sure if there motives are sincere,but if they are my hats are off to them,a very noteworthy episode in ows saga

[Fishbone345]

Better than the tactic they had previously.

[Lorth]

"Some critics wonder about the fairness of Occupy's plan to help debtors. Slate's Matthew Yglesias asks why, given two poor families, the family in debt is more worthy of assistance." - If you can't help everyone, why help anyone? Pretty weak.

[woodtick57]

The Occupy movement actually did something? who'da thunk it?

[Cheenoguy]

They are actually doing a lot more then you think. Google "Occupy Sandy"
They were a bunch of young kids who were pissed off at the inequality and the screwed up economy. They knew the system was broke and knew it needed fixed. They just didn't know how to fix it. They organized and found like minded people. Now they are trying to make a difference with simple and logical ways.

[woodtick57]

@Cheenoguy Not sure what that has to do with the Occupy movement, just sounds like citizens doing some productive actions.

[Cheenoguy]

@woodtick57
The Occupy movement started Occupy Sandy and the loan program. They realized the establishment isn't helping and that they can't take down the establishment and change will be slow. So they decided to just start organizing their own organizations to help victims.

[woodtick57]

@Cheenoguy See, they should have just done those things in the first place instead of wasting time with the Occupy movement, which did nothing.

these seem like real, productive organizations. Occupy was pointless.

[Cheenoguy]

@woodtick57
Because they were young frustrated and confused. They knew there was a problem and knew that the governments and the 1% were largely the problem. Sometimes it makes you feel more empowered to stand and loudly declare your desire to fix it.
The original Occupy movement was simply these kids finding themselves and each other. Now that they have started to figuring out how to make a difference they are.
Had they just sat at home bit$&ing on the Internet none of the good stuff ever happens.

[jessejaymes]

This makes me wonder if there is any subject in the world that people don't have an opinion on? It's none of my business who buys up bad debt or who choses to help who. I literally could not care less.

[Sonny]

Hey they are using the same tools that any red-blooded vulture capitalist would use. The buying and selling of debt. Its just that they are disposing of that debt in a way that makes most vulture capitalist cringe. But there is nothing they can do about it. Once it belongs to them, they can dispose of it any damn way they please...Freedom...I thought you guys on the right approved of that concept.

[Jasonopolis]

Actually we do. I think that it is a great idea. I will say that it is amazing that it only took the Occupy movement a full year to actually come up with a good idea.

[Lorth]

Actually there is something they can do about it. They can refuse to sell the bad debt to them. In the article this headline links back to - it was mentioned that mortgage companies were refusing to sell to an organization that would buy the bad mortgage and then allow the owner to lease it back until they got on their feet. Mortgage companies were afraid it would diminish homeowners efforts to pay if the consequences weren't severe enough. Makes perfect sense - if profit is more important to you than people.

[Sonny]

@Lorth Yes...but they won't "refuse" to sell the bad debt to them....And this is, by the way, very different than what the mortgage companies did. Not even in the same boat. They won't "refuse to see their bad debt"...because that is NOT the way our American capitalist system works...They will indeed take the tax "write-off" inspite of what you might think they should do.....because this is NOT about principle ---its about MONEY!...And MONEY talks---and everything else WALKS!...Thats the American way...So, no, there is NOTHING that can be "done about it"...Its our "system"...I know its ugly at times---But this is THE system that you guys claim you love & embrace....

[Lorth]

@Sonny - First - you said there was nothing they could do about it. They can refuse to sell the debt. I am correct in that statement. Your opinion that they won't refuse to sell does not make my statement incorrect. Second - exactly which group of - THE system "you guys" claim to love & embrace - are you including me in and why?

[Sonny]

@Lorth Look Lorth- respectfully, I don't think you understand this at all. Its not that the occupy people are going to these banks and demanding that they sell their debt....Just the opposite---The banks are saying to the world..."we have a large portfolio of paper to sell, who wants to buy it"...That's how it works, Lorth...Not the way you are thinking...Now if you are saying that the bank should not do that---Then ---again you don't really understand this at all. Try telling the bank that. Its NOT that they "won't refuse to sell" --------The Banks ARE the Very One's WHO ARE INITIATING THE SALES"...See that's the part you don't seem to get.. Now thats not my opinion---that is how its done...

Here, look at this...Then you can do some more research on your own. But this will get you started..........http://www.op erating-capital.com/BadDebt-Co nsumer.htm

[bsking]

if the banks willing to sell the debt at such a low reduced price, why can't a person who owns the original debt just pay the reduced pricing get out of it

[simplytoi]

i normally do not agree with things that you say but you have as great point here . You are a logical thinker .

[bsking]

@simplytoi I have my moments thanks

[Sonny]

Well just to help you out, "bsking"...That's exactly what is happening in this story...Take for example a $1,000.00 debt. And lets say that Occupy bought it for $5 bucks. they can then turn around and tell the original debtor --"hey, look if you give us $5 bucks, we will consider your loan paid in full and wipe the slate clean of the original debt, report it to the credit bureau as " settled/paid in full"...And it will be forever retired. The debtor says ok...its done. Then the Occupy group gets that five bucks back to buy another $1,000.00 debt and make the same offer to the next debtor...That is the Whole Point and Idea of the Story, mr. bs...Got it now?!?

[Dan_Tien]

Sometimes lending institutions do offer that sort of thing, but if you're broke you're broke.

[simplytoi]

@bsking yes you do but you make alot of sense . If everyone wasn't so hostile here on the forum i would love to meet eveyone in a open setting and have a real live debate only problem would be someone would insult someone so bad that it may come to blows . lol

[DARSB]

How long before somebody on the Banking Committee introduces a bill to outlaw this practice?

[Sonny]

I doubt they will Darsb. This has been a mainstay practice of our "financial system" for generations. There are a lot of problems with this system though..Take for example literally anyone can do this. And they often do. And it ain't that hard to put together a few thousand dollars, buy up about 80 to 100 thousand in "paper", sign a few "forms" and go into the "collections business". And many people have done just that....including some criminals, vulture capitalist types, and numerous overseas entities....And you know what else comes with the "paper" that these people buy??? All of the social security numbers, driver license numbers, other account & bank account information, names, addresses and reference contacts....etc. In this case its being done for a noble purpose, but this really can be a very scary practice. Someone (literally from anywhere in the world) can get all of your personal/private information...with just a few buck---ANYONE!

[Sonny]

One correction here... It would not take a couple of thousand to buy 100K in "bad paper"...Try about a "couple of hundred" instead...They buy this stuff for literally pennies on the dollar.

[FFX_VA]

Interesting idea, it would be nice if the debt relief was based on some criteria, like relief for medical debt yes, nice car & clothing or living beyond my means debt no.

[Jasonopolis]

As long as they buy up my student loan debt - for full market price since it is not in collections - than it is just fine with me. This is a much better plan than sitting around in public squares shouting obscenities while families and children are passing by.

[jessejaymes]

While Sonny makes a fair point it's not quite that cut and dried. The banks could rewrite the loan at sustainable levels and then write of the remainder as bad debt but they don't. We think of "deductions" as we get to take 5.00 off for what we gave to charity. Not 5.00 less tax but 5.00 off of taxable income. The banks get to write off bad loans dollar for dollar against profit. It makes them more money to write off bad debt en masse RIGHT NOW. In the old days corporations had 5, 10 and 20 year profit plans. Today they have quarterly profit gouging. As Deep Throat of Nixon fame said, follow the money, always follow the money.

[Sonny]

That's right, jessejaymes...And its usually at that 120 day time frame that most of this stuff is written off. And by them "bundling a bunch of paper" they can just sell that "written off" debt to a wholesale debt-buyer. Enjoy their write-off against profits, a small token payment for the unloaded debt, and not have to spend a lot of money paying staff to try to collect what may very well ultimately end up as a few pennies on the dollar anyway. Its funny though because the "collection companies" who by this stuff---often do try to collect at the face-value of the debt---including all additional interest and fees..that has been factored into this bad paper....They then "offer the debtor" a "partial payment to retire the loan"...Which after all the interest, fees, charges, and fiat money added onto it...usually turns out to be fairly close to the original amount in the first place...In many ways its a real "racket".

[Jasonopolis]

@Sonny Obviously someone looses big for this. Any guesses who? The banks?... no, they just raise the rates. The end game looser for this scenario ARE THE PEOPLE who are responsibly paying their loans back.

[jessejaymes]

@Sonny It is a racket and it's a racket perpetuated by our Govt as well. When they took in all those Fannie Mae and Freddie mac guaranteed loans they could have also rewritten those home loans at current market values and retired about 3/4th of the money the Govt lost but they didn't do that. They just ate the whole thing and put people out of their homes. That's not good economic government.

[Sonny]

@jessejaymes I agree!

[Sonny]

@Jasonopolis I understand your point. But this is what we have "always" done in our financial system. People have built companies, and become millionaires doing this stuff. But ultimately a lot of debt is paid back and placed back into the economy at some point or another...That's why you see so many new "collections companies" springing up every year...I don't see any adverse effect on the people "who are responsibly paying their loans back"...They are rewarded by getting the best rates for new loans (or able to get a loan at all)...

[Demgirl2012]

I LOVE this idea!! I need to find out how to join Occupy and so does the rest of this country! Apparently it will be mostly the people of the East Coast, West Coast and maybe Florida (we don't know yet)! Maybe we can even get Gov. Christie to join, LOL!

[ya_right]

I still say to take every rich person and deport them to China, problem solved.

[bizaroWorld]

Isn't this what started the whole financial meltdown in the first place?
Banks gave out loans to borrowers who couldn't possibly pay it back but they didn't care because they could just bundle all of the worthless paper and sell it with the backing of Fannie and Freddy who would guarantee it. The bankers made money as they passed the debt along but when the guy at the end of the line couldn't collect (because a guy make 25k with a 300k mortgage was bound to go belly up) everything fell apart.

I guess Occupy Sandy will learn the hard way that when you're the guy getting stuck with all of the bad debt at the end of the line, you'll have a financial meltdown.

[DrNickels]

Wow whatever happened to personal responsibility? Why should people who make poor financial decisions be bailed out while the rest of us who live within our means suffer?

I'd love to own a $300k home, but I couldn't afford it so I bought something I could afford.

I knew I couldn't afford over 100k in student loan debt so I lived a very frugal lifestyle in graduate school and took a job that had federal loan forgiveness after so many years of service.

Don't borrow what you can't afford to pay back and if you do then don't kavetch when you are raked over the coals and forced to pay it back.

[Zoe2012]

It is about time they do something productive!

[LetsAllBeHappy]

I would love for them to pay off my student loans