Occupy Wall Street offshoot to buy-back consumer debt, then forgive it

Occupy Wall Street has bred a number of offshoots that are specifically focused on providing mutual aid to members of the 99% who are in crisis.

I’ve been involved with Occupy Our Homes for over a year – it’s a housing justice campaign aimed to keep people in their homes and stopping bank theft of houses. More recently, Occupy Sandy has provided crucial aid to affected areas following Hurricane Sandy. And now, Strike Debt has launched a Rolling Jubilee, a campaign meant to leverage the cheapness of debt to reduce it for others:

We buy debt for pennies on the dollar, but instead of collecting it, we abolish it. We cannot buy specific individuals’ debt – instead, we help liberate debtors at random through a campaign of mutual support, good will, and collective refusal.

Here’s a quick video explaining Occupy Wall Street’s new project — it’s a neat idea:

Projects like this are critical for three reasons:

  1. Occupy off-shoots like Occupy Our Homes, Occupy Sandy, & Strike Debt’s Rolling Jubilee are providing services which government at all levels has failed to provide. Mutual aid is filling the gap that policy makers and politicians have tragically left open, resulting in massive human suffering.

  2. By providing mutual aid in moments of crisis, these Occupy offshoots have the opportunity to turn people they have aided into activists and leaders for these causes. We’ve seen it time and again with Occupy Our Homes, where people who have been helped become gung-ho community organizers afterwards.
  3. Additionally, by providing mutual aid, these groups succeed in radicalizing the people they help, educating them on the root causes of these crises and the sorts of solutions which are needed to address the problems. These are not things which are part of normal American political discourse, so this step is significant.

All of this work is slow. It’s oriented on helping people one individual or one family at a time. But it has tremendous power and potential, not in the least because each of these efforts provide frameworks of a vision for a better America. One where banks can’t steal homes, where debt doesn’t destroy peoples’ lives, and where natural disasters aren’t exacerbated by human failures. In short, these are the sort of projects which have the potential to create a real, sustained new movement that can create massive change in America.

More than any electoral outcome, these developments make me hopeful for the future of our country.

Matt Browner-Hamlin is a blogger & political strategist based in Washington, DC. He has written about US politics since 2004. He's worked on presidential and Senate campaigns, in the labor movement and the Tibetan independence movement. He is the founder of OccupyOurHomes.org and currently spends much of his time fighting Wall Street banks. Matt on Google+, and his .

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33 Responses to “Occupy Wall Street offshoot to buy-back consumer debt, then forgive it”

  1. blue blue state says:

    Perhaps next we need Occupy Our Safety Net?

  2. Yawn says:

    it seems as though they could act as some sort of mediator whereby
    people could purchase and pay off their own debts for barely anything
    and set themselves right. this would alleviate the vulture middlemen and
    many more people could be helped.

  3. yawn says:

    it seems as though they could act as some sort of mediator whereby people could purchase and pay off their own debts for barely anything and set themselves right. this would alleviate the vulture middlemen and many more people could be helped.

  4. K_L_Carten says:

    Not really the banks have already written the debt off, and will only get a very slim portion when selling these. It will hurt the crappy people that buy it cheap and harass people to pay it. I think it will eventually, if done long term and in a large amounts, push the zombies out of the game. One would hope, I much rather those miserable assholes get hurt than the banks. My mom is going through this since my dad died. She had given the credit card companies the required info, death cert. and still tried to shame her into paying. No one showed up when the estate was closed, the debt was sold, so every once in a while she will get a call asking for my dad. A couple weeks ago, some ass said he was a deadbeat, and my mom said yeah he’s dead alright, and good luck collecting it. Nasty people, the lawyer sends a letter and then another zombie buys it, so its never ending. Thanks bankruptcy reform, now even if your not responsible for the debt you can be hounded until doomsday. That’s why I think this is a great idea, you got people still not working and then have some snotty little shit degrade you some more. Screw them!

  5. K_L_Carten says:

    Especially with that crappy bankruptcy reform law, funny how it’s people that either lose a job or health scare. The ones that really game the system are the big corps that can still reorganize without too much hassle, let’s not forget the banks really pushed so it was harder for people to declare bankruptcy. Eventually you kill the golden goose and then what are you gonna do, find even riskier ways of making money, because regulation such as Glass-Stegall won’t ever be reenacted if they can help it.

  6. K_L_Carten says:

    The debt has already been written off, when they sell it normally just a few cents on each dollar. That’s why you have such asses harassing people about the debt. If they only get a handful to pay even half of it, they make a shit load of money. It’s a really ugly business and frankly it shouldn’t be allowed especially with the banks and the bail outs. The debt was already written off of the books.

  7. Alan Young says:

    The heart that motivates this idea is wonderful and powerful. We can be proud of being part of such a thought. But it’s more of a symbol, I think, than an effective strategy.

    The debts you can buy for “pennies on the dollar” is already in default; that means the debtors have long since given up paying them. Just wait a few years, and this debt can’t even be collected in court. it’s effectively abolished, even if it’s still circulating among collection agencies.

    The debt that people are suffering from is the debt they are trying to keep current on, or indeed make any payments on at all. In bank-speak it’s “performing” debt. And it doesn’t get discounted much. If you want to get someone out from under $20,000 on their credit cards or student loans, you need, if not $20,000, at least $15,000 (say) and a good negotiator.

  8. SkippyFlipjack says:

    matt hamlin — I’d be more hopeful for the future of our country if there was a children’s union created to make sure the teachers’ union was acting in the best interests of our next generation

  9. howtowasteyourlife says:

    Buy the debt and write it off so the debtor doesn’t spend the rest of their life hiding from unscrupulous zombie debt collectors. Not paying a debt isn’t the same as “writing off” a debt.

  10. JP English says:

    Should be considered a non-taxable gift. That means that contributions to the group in excess of $13k are taxable gifts, but there shouldn’t be an income tax event.

  11. maxabillion says:

    Very interesting and very cool. As someone who believes the government should stay out of our business as much as possible, I can fully support this solution to a major issue. I have traditionally been against occupy movements because they are calling for government to solve our problems. This is a fundamental change, and I like it.

  12. Mario Kenny says:

    great idea, but why are we bothering to buy bad debt and then write it off? we can simply write off the debt by simply never paying the debt.

  13. grgreene says:

    The bad debt, like the mortgages that caused the meltdown, has already been bundled.

    You have to buy it in bundles.

  14. grgreene says:

    “How to buy Junk debt”. Goes 1 state a time and you have to be licensed to collect bad debts in that state (even if, as here, you don’t actually PLAN TO collect).

  15. grgreene says:

    They (the banks) don’t care, but WE do. If the debt is sold (same cheap price) to “the bad guys”, then THEY have to put food on THEIR children’s table by harassing the original consumers who incurred the debt. “The good guys” (occupy), on the other hand, keep THEIR operation going by REQUESTING CHARITABLE DONATIONS TO THE CAUSE from those of US who can afford it. Just think about it — which would you prefer the world at large be doing to people? Harassing them for payments on a bad debt or soliciting them for contributions to fix a social problem? It may be the same amounts of money either way, but one sure FEELS better. Furthermore, if you’re sort of in a middle position — with a decent income but ALSO some bad debts — then you could make a contribution to this and think of it as like PLAYING THE LOTTERY — maybe a piece of the debt that they buy and forgive will turn out to be YOURS!

  16. While I find this commendable in principle, I hope the Occupy people have thought this through and figured out a way to forgive these loans without it becoming phantom income for the debtor that is taxable by the IRS (which is often the case when a bank simply writes off a loan). It would be a shame for a bad debt that is dischargeable in bankruptcy to be transformed into a non-dischargeable tax debt through the well-meaning mistakes of a third party.

  17. SkippyFlipjack says:

    I don’t think you get how this works. the banks are already selling the debt; they’re already losing the money. having more buyers for bad debt — occupy plus debt collectors — is better for the banks. this is only bad for debt collectors because it could raise the price for bad debt.

  18. Butch1 says:

    The people win out in the end and do not owe the banks which will bleed them to death with their endless interest rates.

  19. RepubAnon says:

    It’s a win-win: the banks take their loss and get it off their books, and the consumers get debt forgiveness. The vulture capitalists who purchase the debt and then try to collect it in full by constantly hounding the debtors, placing liens on their salaries (which can get them fired), and other merciless tactics are the only losers here. (If the purchase price of bad debt goes up, the debt collector’s return on investment goes down.)

    We can’t just let people run up debt without consequences, be they individuals, or big Wall Street Banks. Thus, we’ll always need debt collectors. However, moving all the risk to the borrower to discourage irresponsible borrowing has the unintended consequence of encouraging irresponsible lending. Imagine a world with terrible penalties for using heroin while making the sale of heroin perfectly legal: that’s our current system of consumer lending.

    P.S.: Don’t give me the “Government anti-discrimination regulations made me make those bad loans” garbage. The lenders routinely refused to do business with people based on skin color rather than credit history. The regulations forbade them from making decisions based on skin color. Once lenders found that they could make fat bonus checks (which the lenders kept) by making loans to people with poor credit histories, lumping them into derivatives, and selling the derivatives to someone else by lying about the credit history of the borrowers – they did so with glee. Nothing to do with the anti-racial-discrimination rules, everything to do with lack of regulations protecting consumers from those who would prey upon them.

    The refusal of the lenders to take personal responsibility for their irresponsible behavior by claiming it was someone else’s fault merely set us up to repeat this in about 20 years. (Ten years for the regulations to be relaxed, another ten years for the lax regulations to have their inevitable result. 1980s S&L crash due to deregulation – 1990s repeal of the Depression-era regulations, crash in 2008 gives the typical timeline.)

  20. SkippyFlipjack says:

    yeah that’s interesting, maybe my friend was being shined on. that would be even more evil. (although he’d have noticed if the original debtors kept writing to him, I’d think.)

    Occupy is going to get the most bang for their buck — the cheapest debt. The cheapest debt comes from the people least likely to pay, the ones making no attempt no payments and no attempt to pay. is that always going to be who you want to help?

    it’s an interesting idea for sure. if it’s really successful though it’ll end up hurting debt collectors — they’ll be paying more for the same bad investments — and helping the banks by raising the price of the worst debts.

  21. BeccaM says:

    I have to wonder about the legality of what that co-worker did, since many states have in place laws that make it illegal to harass someone for debt collection in the workplace. Moreover, it’s not supposed to be possible to buy a specific person’s debt, and thus I almost have to wonder if that co-worker wasn’t just lying about owning the debt.

    How will they differentiate? They’ve already said they’re planning to target medical debt, student loans, and mortgage debt.

  22. SkippyFlipjack says:

    Not sure what you mean. Occupy is just entering an existing market; they’ll buy at the going price. If they buy a lot then the price will probably rise a little, though the banks won’t profit, they’ll just take a little less of a loss.

  23. Naja pallida says:

    Problem there is that they suddenly see that someone wants to buy it… so they jack up the sale price. This only works when they’re desperate to offload the debt. Once the banks catch on to the scheme, they will do everything they can to profit from it.

  24. SkippyFlipjack says:

    this program helps the banks.

  25. SkippyFlipjack says:

    I had a friend who once confided in a coworker than he had a lot of debt in another state, and the coworker bought the debt and started harassing my friend for the money. my friend eventually quit his job get away from the guy.

    this is an interesting idea, but I wonder how or whether they’ll differentiate good and bad debt — if they’re just doing blind debt purchase they’re going to be relieving the debt of people with the means to pay who just skip out on their obligations. is this a good thing?

  26. SkippyFlipjack says:

    Right, but that’s the case regardless of what Occupy does. If they’re buying it so cheap it’s because nobody wanted the debt. So the bank’s happy, not pissed — they found a buyer and got something for lousy debt rather than nothing.

  27. BeccaM says:

    They’re doing it this way because of how the bad debt market works. Let’s say BankstersOne has a pile of bad debt they know there’s little chance of collecting on. It gets sold for pennies on the dollar to collections agencies, and this is why they’re such jackasses about collecting once they’ve bought it — it’s the only way to make a profit (but through threats and intimidation and shaming tactics, they do make profits). Still, even they won’t get the full debt amount, and this why buying bad debt is so cheap — for like $500, you can buy many thousands of dollars in debt obligations.

    However, nothing says a collections agency has to buy that bad debt. Anybody can. But the rules are set up in such a way as to make it impossible to target one individual’s debt — otherwise the potential for abuse would be pretty high. People would be buying their own debt obligations.

    So anyway, these groups take a small donation or small pool of donations, then go off to the banks and mortgage brokers and buy the bad debt from them. And instead of making any attempt to collect on it, they just let it go, thereby wiping any obligation right off the books.

  28. CreditProtectorSWINDLE says:

    Or, have the debt repaid back with no more interest rate charges, penalties or fees, this in turn creates bigger and bigger waves of money to help more and more people.

  29. Butch1 says:

    They originally owned it for a lot more at one time.

  30. SkippyFlipjack says:

    “We buy debt for pennies on the dollar, but instead of collecting it, we abolish it. We cannot buy specific individuals’ debt – instead, we help liberate debtors at random through a campaign of mutual support, good will, and collective refusal.”

    What do you mean by not buying specific individuals’ debt? Just that you don’t take applications for relief, but instead go to the debtor — the banks I guess — and buy whatever debt is going at the cheapest rate at that time? And what’s the collective refusal part? Just that you refuse to collect on the debt you just bought?

  31. SkippyFlipjack says:

    how does this piss off the banks? they get someone to buy their near-worthless debt for a few cents on the dollar.. why do they care if it’s a debt collector or Occupy?

  32. K_L_Carten says:

    This is a great idea, have to wait till next week to send a some cash. Screw the banks, they will be having their hands out again this year if the Euro fails.

  33. Butch1 says:

    What a wonderful way to piss off the banks.

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