Rolling Jubilee, A.K.A. Strike Debt!

[Aelwydd]

I'm surprised no one is talking about this. Occupy Wall Street has a group, Strike Debt, that is raising money to buy up distressed debts, like medical and student debts, for pennies on the dollar and then abolishing them. I saw on RT news the other night that the debtors get one phone call from Strike Debt!, telling them simply that their defaulted loans have been purchased and abolished, and now they no longer owe that debt.

 

They are calling it Rolling Jubilee, and those who are Jewish or Christian should get the Old Testament reference, and the purpose is to bail out the people. OWS has been critical of how Western government after Western government has continued to bail out the multi billionaire financiers and bankers responsible for gaming and then toppling economies left and right. So, they are instituting this new program as a "by the people, for the people" bailout of those most distressed.

 

I think it's an awesome idea, and something that should be supported and encouraged, and not just because it underlines a core Christian belief of mine, that the poor, the sick, the indebted ought to be a priority. Our economy will never fully recover while its people drown in debt, regardless of who is in office. I hope that more such programs will pop up as a ground up approach to solving the debt crisis.

 

Also, how cool would it be to get to make that phone call and someone's Christmas, birthday, and year all at the same time? :)

[Parrothead]

Wow! That is really cool. I hope they are informing people how to get the debt off their credit report too.

[SKL]

I believe in forgiving and helping people pay off their debt. It is one of the ways I help needy people. There are corporate, government, and legal programs to do this as well, if a person in need researches what to request and how.

 

Unfortunately I'm not likely to warm to anything "occupy" does, since, among other things, they attempted to blow up a bridge I drive my kids over several times a week. :glare:

[Liz CA]

But here is what I don't understand. Money was borrowed and spent. Someone loaned it to someone else and now it's gone. Isn't somebody out of a chunk of money without compensation?

Explain this to me. I would love for all of us to be able to start over without any kind of debt - mostly the country itself. How can this work?

[SKL]

But here is what I don't understand. Money was borrowed and spent. Someone loaned it to someone else and now it's gone. Isn't somebody out of a chunk of money without compensation?

Explain this to me. I would love for all of us to be able to start over without any kind of debt - mostly the country itself. How can this work?

 

The creditor has to agree to write down the debt and give up its right to collect.

 

It happens all the time. There will always be some people who don't pay. It has to be figured into the business model up front and then it's again a business decision at the end.

 

My sister is going through money troubles due to being unemployed for 4 years. She has negotiated with one creditor after the other. She calls them, they discuss what she "can" pay over a given time period, and if she pays it as agreed, they forgive the rest. I am sure it's not pretty on one's credit record, but at some point, credit is a luxury an unemployed debtor may not be able to afford.

 

Some creditors will sell a whole bunch of debt for pennies on the dollar just to stop having to deal with non-performing assets.

[goldberry]

But here is what I don't understand. Money was borrowed and spent. Someone loaned it to someone else and now it's gone. Isn't somebody out of a chunk of money without compensation?

Explain this to me. I would love for all of us to be able to start over without any kind of debt - mostly the country itself. How can this work?

 

I would guess it's much the same as a bank selling a foreclosed home for a greatly reduced price. They would rather get part of the money than none at all. The sad part is, though, if they offered the homeowner a reduced amount to refinance, the homeowner probably wouldn't have lost the house in the first place. So the bank ends up with the lesser amount anyway, and the homeowner is still out on the street.

[Parrothead]

But here is what I don't understand. Money was borrowed and spent. Someone loaned it to someone else and now it's gone. Isn't somebody out of a chunk of money without compensation?

Explain this to me. I would love for all of us to be able to start over without any kind of debt - mostly the country itself. How can this work?

This isn't private debt. If you loan Jim money and Jim doesn't pay you back you have very little recourse. You could sue Jim in small claims court and maybe you could get the money back if Jim decides to give it to the court. Otherwise Jim could very easily decide not to work anymore and live on gov't assistance until you go away.

 

Corporations and banks on the other hand recoup their bad debts via tax write offs. Once the debt is 90 days old they are able to write it off. We, the people as a whole, pay for it. Then the company sells the debt to a debt collection agency for pennies on the dollar. The CA is allowed to use several means to collect the total original debt, not just the pennies they paid for it, by ruining one's credit score, harassing phone calls every day, dunning letters and generally making ones life miserable until one pays. And that debt gets paid twice because We the People have paid for it and the debtor who is being harassed by the CA also pay it.

 

I'm not sure why the practice isn't illegal.

Edited November 14, 2012 by Parrothead

[SKL]

There are programs for debtors to renegotiate their mortgages. I'm not sure what the qualifications are, but my sister was able to do this - temporarily. Of course most adults don't plan on being unemployed/penniless indefinitely.

 

The bank does get the house if it calls the mortgage. It's not that the bank wants all those houses (which often sit vacant and cost money to maintain), but there needs to be an incentive for people to do their best to pay if they can. That is, unless we want banks to all stop financing people's home purchases.

[goldberry]

I like the idea, by the way. It's an act of undeserved kindness, that sometimes can turn a person's life around.

Edited November 14, 2012 by coloradoperkins

[goldberry]

There are programs for debtors to renegotiate their mortgages.

 

 

That's what I keep hearing, but I know too many personally who tried very hard to work things out and the mortgage company was totally unreasonable and even vicious to them. It was bad, bad... And yes, it did make people angry that the average person couldn't get a break, when larger companies were getting bailouts. When the govt was buying up the bad mortgage debt, many people were asking why they bought it from the BANK rather that just paying part of the mortgages for the PEOPLE instead. They could have spent the same amount of money, and some people could have kept their homes.

Edited November 14, 2012 by coloradoperkins

[Murphy101]

Basicly a business decides it isn't worth the expense to collect the debt themselves, so they sell the debt to a collection agency for a petty sum. The collection agency then tries to make as much profit as possible by getting the debtor to pay it or even a large part of it.

 

Idk about the original company getting paid for the debt via a write off. It was my understanding that a write off means they don't claim that amount as income, which lowers their taxation. Which is fair bc they didnt get paid. I do not recall that they are actually paid in some manner for their loss. I think some farmers are and maybe some other situations... But over all I don't think that's quite accurate?

[SKL]

This isn't private debt. If you loan Jim money and Jim doesn't pay you back you have very little recourse. You could sue Jim in small claims court and maybe you could get the money back if Jim decides to give it to the court. Otherwise Jim could very easily decide not to work anymore and live on gov't assistance until you go away.

 

Corporations and banks on the other hand recoup their bad debts via tax write offs. Once the debt is 90 days old they are able to write it off. We, the people as a whole, pay for it. Then the company sells the debt to a debt collection agency for pennies on the dollar. The CA is allowed to use several means to collect the total original debt, not just the pennies they paid for it, by ruining one's credit score, harassing phone calls every day, dunning letters and generally making ones life miserable until one pays. And that debt gets paid twice because We the People have paid for it and the debtor who is being harassed by the CA also pay it.

 

I'm not sure why the practice isn't illegal.

 

The bolded: that's very simplified and not accurate (maybe you were just speaking in hyperbole?). First of all debt is not written off for tax purposes until it is forgiven (or sold below face value - in which case only the net out-of-pocket amount is written off). Secondly, a tax deduction only provides a cash benefit to the extent (a) the business has taxable profits exceeding (b) the deduction times the company's tax rate. If the effective tax rate is 35% then the "we the people" (actually only those of us who pay above-average tax) cover 1/3 of the unpaid debt, with the business sucking up the other 2/3. And I am sure the % of debt that CAs actually collect is a lot less than the face value of what they buy. So no, it doesn't get paid off twice.

 

I am all for helping out people truly in need, but the fact is, there is nothing wrong with expecting a debtor to fulfill his promise to pay for value he received. If you'd rather have an economy where nobody is able to get access to cash except by cashing their paychecks, then fine, protest the creditors. Personally I like having the choice to buy on credit if I want to.

Edited November 14, 2012 by SKL

[SKL]

That's what I keep hearing, but I know too many personally who tried very hard to work things out and the mortgage company was totally unreasonable and even vicious to them. It was bad, bad... And yes, it did make people angry that the average person couldn't get a break, when larger companies were getting bailouts. When the govt was buying up the bad mortgage debt, many people were asking why they bought it from the BANK rather that just paying part of the mortgages for the PEOPLE instead. They could have spent the same amount of money, and some people could have kept their homes.

 

The program that my sister made use of involved her working with the bank to come up with a reduced interest rate and interest-only payment period that would enable her to keep paying. It had nothing to do with anyone buying her mortgage or kicking her out of her home.

[Halftime Hope]

:bigear: I agree.

But here is what I don't understand. Money was borrowed and spent. Someone loaned it to someone else and now it's gone. Isn't somebody out of a chunk of money without compensation?

Explain this to me. I would love for all of us to be able to start over without any kind of debt - mostly the country itself. How can this work?

[Lisbeth]

Mostly I believe, if you owe it, you pay it.

It's really not the taxpayer's job to pay it.

 

There are some who think you ONLY use cash for this reason. No debt.

 

I think even if it is a little bit over time, it needs to be paid. Personal responsibility and all.

[happypamama]

While I generally think people should pay back what they owe, even a little at a time, I think sometimes things are just out of people's control -- large medical debts, mortgages that were reasonable before huge economic upsets, stuff like that -- and I think this sounds pretty cool, like it could be a modern way of caring for the widows and poor.

 

I don't necessarily think student loan debt should be included, though, but that is just a knee-jerk reaction and not necessarily well-thought-out. :)

[Aelwydd]

I like the idea, by the way. It's an act of undeserved kindness, that sometimes can turn a person's life around.

 

That's why I endorse it.

[Aelwydd]

While I generally think people should pay back what they owe, even a little at a time, I think sometimes things are just out of people's control -- large medical debts, mortgages that were reasonable before huge economic upsets, stuff like that -- and I think this sounds pretty cool, like it could be a modern way of caring for the widows and poor.

 

I don't necessarily think student loan debt should be included, though, but that is just a knee-jerk reaction and not necessarily well-thought-out. :)

 

Did you know that in ancient times, it was common practice for societies to cancel all debt ever so many years? One of the reasons the Roman government went to war was its refusal to cancel some of the debts of its beholden nations.

 

There's wisdom in forgiveness of debt, whether it is deserved or not, and I think that is why it is an idea enshrined in Judaism, the Christian Bible, and many other religions and philosophies.

 

As far as casting aspersion on the idea because of what some of OWS have done, remember it's a very, very large group, and it has its extremists, just like the Tea Party has its extremists. I don't tend to let extremists do the defining for the entire group. (Furthermore, those two "opposing" groups have a lot more in common than they realize. They're both grass-roots movements attacking a two-headed beast: big government, and big business. Two different aspects, but the same nasty hybridized animal.)

 

Strike Debt! is a group that is spun off of OWS, and I think you should judge it, SKL, on the basis of its motives and actions. In the same way Jesus advised his disciples regarding another group that was baptizing, "If they are not against is, they are for us."

 

I submit to you that Strike Debt! is most definitely for the common person.

[SKL]

Did you know that in ancient times, it was common practice for societies to cancel all debt ever so many years?

 

This is true, but at the same time, people planned for it. If the years of forgiveness were, say, every 50 years, then the deals people cut in 2049 would be different from those cut in 2001 or 2025.

 

Charity is always a good thing, but by definition, it's voluntary and from the heart of the giver. There are other names for amounts given due to demands, expectations, laws, or public pressure.

 

Where's this group getting the money for this operation? Just curious. Is there a donation mechanism on their website, or does some rich person run it, or what?

[goldberry]

The program that my sister made use of involved her working with the bank to come up with a reduced interest rate and interest-only payment period that would enable her to keep paying. It had nothing to do with anyone buying her mortgage or kicking her out of her home.

 

Sorry if I wasn't clear. I wasn't referring to a specific program your sister might have been involved in. And I'm really glad your sister was able to work that out! I just happen to know too many people that their banks refused to work with them on any terms. (IE, no, if you can't pay us the 5 months you owed us while you were unemployed, we won't accept 3 months and a payment plan, even though you are employed now).

 

So family loses house, and now bank owns a "bad mortgage debt". When the govt bailed the banks, much of it was by purchasing the "bad mortgage debt" from them. So, the question raised is, why not help the people directly instead? By helping someone NOT DEFAULT on their mortgage in the first place, you help the bank not have that "bad mortgage debt", and at the same time a family gets to keep their home.

 

Yes, I believe if you owe it you should pay for it. That's why paying off someone else's debt is an "undeserved" kindness. If it is ok to do for a corporation, it should be ok to do for a person.

[Aelwydd]

Mostly I believe, if you owe it, you pay it.

It's really not the taxpayer's job to pay it.

 

There are some who think you ONLY use cash for this reason. No debt.

 

I think even if it is a little bit over time, it needs to be paid. Personal responsibility and all.

 

Warning: Christian content ahead!

 

 

Sure, if the debt incurred was in any way the result of someone's poor choices. What about medical debt? Who chooses to have a child with medical conditions that drive them into bankruptcy? And even those debts that people incur on purpose often end up ballooning way past anything they can pay for, like college loans. You can borrow a perfectly reasonable $15,000 for a degree, get out of college, find no sustainable work, and have interest and penalties blow that puppy up tens of thousands of dollars.

 

But, regardless of the reason, here's where the rubber meets the road for my own personal belief in Christian principles. And that's this: if people have to prove that they deserve to have their debts forgiven in the temporal, tangible things, what does that mean for the eternal and transcendent?

 

I'll abide criticism of my faith in other aspects, but not this. This the core of my faith, and despite all my doubts in the Church and everything else about it, this is a white-hot fire in my bosom.

 

Debt is something we all have in common, and I believe that not a one of us, at the end of the day, can ever truly rationalize, excuse it, or justify it. That's why I still cling to Christ in my heart of hearts, because He is the only one that ever told every self-satisfied person out there, "You don't deserve it either, but I still forgive you, and I still love you, and your debt is settled."

[Aelwydd]

 

I am all for helping out people truly in need, but the fact is, there is nothing wrong with expecting a debtor to fulfill his promise to pay for value he received.

 

 

And there is nothing wrong with buying these debts up for pennies on the dollar, as many collection agencies do, but simply choosing not to collect.

 

The debt is settled with the original creditor. The new owners of the debt are also satisfied, because they are looking to cancel debt, not collect and make their own profit.

 

That's an admirable goal, IMO.

[SKL]

Sorry if I wasn't clear. I wasn't referring to a specific program your sister might have been involved in. And I'm really glad your sister was able to work that out! I just happen to know too many people that their banks refused to work with them on any terms. (IE, no, if you can't pay us the 5 months you owed us while you were unemployed, we won't accept 3 months and a payment plan, even though you are employed now).

 

So family loses house, and now bank owns a "bad mortgage debt". When the govt bailed the banks, much of it was by purchasing the "bad mortgage debt" from them. So, the question raised is, why not help the people directly instead? By helping someone NOT DEFAULT on their mortgage in the first place, you help the bank not have that "bad mortgage debt", and at the same time a family gets to keep their home.

 

Yes, I believe if you owe it you should pay for it. That's why paying off someone else's debt is an "undeserved" kindness. If it is ok to do for a corporation, it should be ok to do for a person.

 

I don't know why they did what they did. I know of some other parts of the "bailout" which also defy reason. Like the fact that they forced some well-performing smaller banks to merge into larger ones, like it or not. There are always wealthy beneficiaries of big deals rammed through by government.

 

That doesn't mean businesses are always unfair, mean, or opportunistic. They are run by people, some of whom are caring and some of whom are not.

 

But I think a key to being given a chance to renegotiate / seek forgiveness is that the debtor needs to be the one to approach the creditor, before the creditor has had a lot of grief from said debtor. People know if they are going to be unable to meet their bills in a given month.

 

Not long ago there was a thread here about a father not paying child support for whatever reason. What was the attitude toward the dad? I don't recall seeing any compassion, though IIRC he was unemployed. We expect more compassion from a big corporation than from an everyday human being. It's kind of illogical when you think about it.

[SKL]

And there is nothing wrong with buying these debts up for pennies on the dollar, as many collection agencies do, but simply choosing not to collect.

 

The debt is settled with the original creditor. The new owners of the debt are also satisfied, because they are looking to cancel debt, not collect and make their own profit.

 

That's an admirable goal, IMO.

 

I did not and do not disagree with this. (However, I agree with the poster who said that they should also do the needful to get the debt off of the person's credit record so the person can start fresh.)

 

I would also note that forgiveness from debt is a taxable event. It could create another short-term debt for the debtor.

[1bassoon]

I'll abide criticism of my faith in other aspects, but not this. This the core of my faith, and despite all my doubts in the Church and everything else about it, this is a white-hot fire in my bosom.

 

Debt is something we all have in common, and I believe that not a one of us, at the end of the day, can ever truly rationalize, excuse it, or justify it. That's why I still cling to Christ in my heart of hearts, because He is the only one that ever told every self-satisfied person out there, "You don't deserve it either, but I still forgive you, and I still love you, and your debt is settled."

 

Ah, yes.

 

Balm for my soul. Beautifully said.

[Aelwydd]

But here is what I don't understand. Money was borrowed and spent. Someone loaned it to someone else and now it's gone. Isn't somebody out of a chunk of money without compensation?

Explain this to me. I would love for all of us to be able to start over without any kind of debt - mostly the country itself. How can this work?

 

When a debt goes so many days or months without payment, there are financial groups who will offer to buy that loan, but at a much reduced rate.

 

Say a credit card company has a debtor who owes them principle + interest, totally about $10,000. After so many months of no collection, the credit card company seeks to sell it off. Anther bank comes along and offers to buy it for $1,000. The credit card company writes it off as a loss, and the new bank begins collection proceedings to make good on their own transaction, by offering the person a discounted settlement--say, for $3,500.

 

If the person actually pays, then the new owner of the debt has just made a profit.

 

Many of these bad loans, or even loans that are in good standing, get sold all the time to different banks and finance companies.

 

What Strike Debt! is doing is acting like a collection agency, buying up these old bad debts that are already written off by the businesses, and instead of hounding the debtors, they simply cancel the debt.

[Aelwydd]

I did not and do not disagree with this. (However, I agree with the poster who said that they should also do the needful to get the debt off of the person's credit record so the person can start fresh.)

 

I would also note that forgiveness from debt is a taxable event. It could create another short-term debt for the debtor.

 

That's a good point, and one that perhaps should be addressed. Alas, if I only had faith in Congress to do something sensible about it. :tongue_smilie:

[goldberry]

But I think a key to being given a chance to renegotiate / seek forgiveness is that the debtor needs to be the one to approach the creditor, before the creditor has had a lot of grief from said debtor. People know if they are going to be unable to meet their bills in a given month.

 

You would think that would influence the decision, but in the cases I know of the debtors did everything I would have done myself and were still treated with contempt.

[Aelwydd]

This is true, but at the same time, people planned for it. If the years of forgiveness were, say, every 50 years, then the deals people cut in 2049 would be different from those cut in 2001 or 2025.

 

Charity is always a good thing, but by definition, it's voluntary and from the heart of the giver. There are other names for amounts given due to demands, expectations, laws, or public pressure.

 

If it's law that debts are forgiven every so often in a society, than it's just the way business is done. These ancient societies understood a simple truth, too: once the imbalance between the haves and the have-nots reached a certain point, the economy and business was simply no longer sustainable. If there are not enough people with resources to make contracts and to have purchasing power, there is no more business to be done.

 

So, they sort of did a reset. They rebooted their economies by starting over with no debt.

 

In truth, many in our society have realized the same thing. Business is no longer sustainable in several sectors without many of its debts being forgiven and being "bailed out." The problem is, there's not been an equal effort to bail out private individuals; that is, cancel their debts.

 

Where's this group getting the money for this operation? Just curious. Is there a donation mechanism on their website, or does some rich person run it, or what?

 

They raise money through events such as benefit dinners and through private donations, such as through their web site.

[SKL]

You would think that would influence the decision, but in the cases I know of the debtors did everything I would have done myself and were still treated with contempt.

 

It's in the creditor's best interest to find out how much can realistically be collected, collect that amount, and move on.

 

However, I do think some bank employees get on a power trip and abuse their position with people who are humiliated financially. I don't know why it doesn't seem to have happened in my family over the years. Obviously I cannot say what percentage of people have had a good vs. bad experience with this, but in my personal observation, if you go to them first, they will work with you in a civil way. (Given that they won't be thrilled to write off your debt.) Maybe long-term credit records or the like are taken into account. If your history suggests you never were great about paying your bills, or if you seem to be meeting some bills while ignoring others, then maybe a little mild intimidation or lack of trust comes into play. I dunno.

[SKL]

So, they sort of did a reset. They rebooted their economies by starting over with no debt.

 

 

 

I do like the idea of the "reset" - start fresh. It's a way to prevent one generation's foolishness from costing the younger generations ad infinitum. The intention was not to force a transfer of wealth by canceling past transactions, but to prevent a transfer of future ownership (mainly of real property) by preventing its permanent transfer.

 

So a person who inherited a nice piece of land could lease it out and squander the lease income. But on reset day, the property went back to the original family. Knowing this, a lessee would only pay for the value through reset day.

[Aelwydd]

I do like the idea of the "reset" - start fresh. It's a way to prevent one generation's foolishness from costing the younger generations ad infinitum. The intention was not to force a transfer of wealth by canceling past transactions, but to prevent a transfer of future ownership (mainly of real property) by preventing its permanent transfer.

 

So a person who inherited a nice piece of land could lease it out and squander the lease income. But on reset day, the property went back to the original family. Knowing this, a lessee would only pay for the value through reset day.

 

Yeah, such a system might have also disabused some people of the foolish idea, too, it's a good idea buy a house or piece of real estate that they know is beyond their ability to afford. They had the intention of just flipping it, and going on to the next house, so they can make themselves a fortune. They acted as if they believed that the ceiling in the housing market would just keep rising without end.

 

That game is what ruined many, many Americans.

[SKL]

Yeah, such a system might have also disabused some people of the foolish idea, too, it's a good idea buy a house or piece of real estate that they know is beyond their ability to afford. They had the intention of just flipping it, and going on to the next house, so they can make themselves a fortune. They acted as if they believed that the ceiling in the housing market would just keep rising without end.

 

That game is what ruined many, many Americans.

 

Yeah, almost like a pyramid scheme.

 

And frankly, that's the real reason a lot of people became "underwater" with their house mortgages. Which are now in need of loan modifications and/or forgiveness.

[JumpyTheFrog]

I do like the idea of the "reset" - start fresh. It's a way to prevent one generation's foolishness from costing the younger generations ad infinitum.

 

This is a great way of looking at it.