If you have a job that does not allow you to be a slave to your Twitter feed, you may not yet be familiar with Strike Debt or the Rolling Jubilee. In which case, you’re welcome. It is potentially a very big deal and something brokesters in particular need to know about.
An offshoot of Occupy Wall Street, Strike Debt is an initiative seeking to build popular resistance to all forms of debt imposed by banks. Last week they announced a new project called “The Rolling Jubliee,” which aims to buy personal debt for pennies on the dollar and, instead of coming after you like collections companies, abolish it entirely.
The campaign officially launches on Thursday, Nov. 15, with The People’s Bailout: A Variety Show & Telethon at (le) Poisson Rogue featuring OWS supporting celebrities including Jeff Magnum and Janeane Garofalo (sold out but it will stream live). But as of press time they have already surpassed their $50,000 goal with almost $116,000 in crowd-funded donations, which equates to more than $2.5 million in debt that they can purchase and wipe out. How is this possible and what does it mean for us?
Contrary to what doubters might think, the activists of the Occupy movement have not just been camping and getting potted up all year. Instead they were working with lawyers and financial experts to put this specific plan into action.
Here’s how it works: Lenders can sell all kinds of defaulted debt – private student loans, mortgages, credit cards, medical, etc. – on a secondary market for significantly less than original value, sometimes pennies on the dollar. These defaulted loans are bundled into big anonymous groups and sold as securities on the open market. Generally the loans are purchased by collection agencies who go after debtors and profit off the interest payments on the loans for years to come. But credit agencies are not the only ones who can buy debt for just a few cents on the dollar. Anyone can buy those debts and the new owner can legally cancel them. So Strike Debt will use all the money raised through The Rolling Jubilee crowd-funding campaign and The People’s Bailout telethon to buy up debt and void it. (Check out The Rolling Jubilee PSA on YouTube for a more eloquent mission statement.)
The details:
- No, they cannot buy specific peoples’ debt. It’s like the lottery. Fifteen percent of Americans are currently being pursued by a debt collector. So your defaulted loan could be in that bundle of debts that was released for sale by the original lender and if Strike Debt purchases that bundle, you’ll officially be out of the red and into the black.
- Federally guaranteed student loans are exempt from the secondary market. On the one hand this is a good protection because we certainly don’t want the government trading for profit in our misfortune. But with more than $1 trillion in student loan debt in America, this is the debt that is crippling the youth of America.
- One hundred percent of money raised will go to the process of buying and abolishing debt – a process that includes some associated costs such as paperwork, accounting, and legal fees. The volunteers managing the fund receive no compensation. In the interest of transparency, a full accounting of funds received and spent will be reported on The Rolling Jubilee website.
The bigger picture: Occupy is staking itself out as the transpartisan third party we’ve all been waiting for; of the people, for the people. Their leadership in response to Hurricane Sandy and launch of The Rolling Jubilee has proven that this is an organization that knows how to get the job done for the people that need it without the red tape and politics of government and private organizations. The Guardian suggests that this unique model could help influence economic policy and fix the international fiscal crisis. Instead of continually bailing out creditors, instead central banks (“with their unlimited capacity to print money”) can buy delinquent loans and cancel them or at least reduce the amount borrowers owe. While this would cause inflation, the resulting surge in spending power from the newly debt-free will boost the economy, create jobs and balance out the effects of the inflation.
I’m no financial expert. But it’s pretty obvious that if not for the mountain of debt that casts a shadow over so many of our lives, we would definitely be injecting way more money into the economy. Splurge for a fancy cocktail bar for a change, maybe a vacation now and then, a piece of real estate someday. You know, normal stuff people should be able to spend on thereby keeping the economy afloat. Ironic that it took a group of “slackers” hanging out in a park outside the towering pedestals of the so-called financial experts to figure out how to fix the economy. The right thing is always much clearer when not clouded by greed and self interest.
We are not a loan anymore.
Follow Strike Debt on Twitter @StrikeDebt for updates about #peoplesbailout and The Rolling Jubilee. Follow Rachel @raeinbk for more need to know broke-style tips.
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Let me understand this:
– I owe $1,000 to a creditor (bank, credit card, store, etc)
– StrikeDebt buys the debt from the creditor for $100
– I am forgiven the entire $1,000 loan
Question: Where does the other $900 go? The creditor is just out the money?
@Charles – Essentially, yes, the original creditor is “out” $900. BUT they made the choice to bundle a bunch of defaulted loans together and put them up for sale for pennies on the dollar (they do this so they can be guaranteed some return on the loans without the expense and time of having to pursue delinquent debtors). The bundled loans can then be purchased at reduced prices, usually by collection agencies but Strike Debt in this case. So the $900 is not going anywhere really, it’s just that it’s not actually worth that much on the secondary market. If another company bought it for $100, you’d still owe the full amount. But Strike Debt is wiping it out instead.
So, the incentive is for people to default on their debt so that the money due is “eaten” by the creditor (as a bad loan) and the donated money to StrikeDebt (as a gift from donors)?