Crowdsourced debt reduction for the 99% by the 99%

Banks sell debt for pennies on the dollar on a shadowy speculative market of debt buyers who then turn around and try to collect the full amount from debtors. The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it. We’re going into this market not to make a profit but to help each other out and highlight how the predatory debt system affects our families and communities. Think of it as a bailout of the 99% by the 99%. — ROLLINGJUBILEE.ORG

Once I read about and realized how brilliant it was, I laughed alone in my office for like, two minutes straight. Then I went straight to PayPal and sent them funds courtesy of Fractalspin.

Here’s a technical example, in case you’re not sure why I was laughing:

Say, Joe Average has $10,000 due in medical bills, but he just can’t pay it off. The hospital needs to get this outstanding balance off the books after 180 days, so it sells a note to collect that $10,000 to an Investor, at $500. Investor then hounds Joe for the original $10,000, and makes $9,500 from his initial investment.

If Investor does manage to collect that 10k back from Joe in one year (unlikely because he’s already in collections, but for the sake of this example), he’s scored himself a 1,800% return for his $500 investment. That’s $9,500, all coming from Joe, from Investor’s initial $500 (realistically: over time, in smaller payments).

In comparison, the current CD rates for one year at a bank is 1.10%. You could take that same $500 and only get $550 at the end of the year


Now do you see why it’s a bit screwy for Joe? He’s basically an indentured servant for some random debt-buyer.

My banjo-playing chiptune-musician friend, Bud Melvin, eloquently pointed out:

Well, there’s debt people get into because of stupidity or the impulse towards short-term gratification, there’s debt that people get into due to emergency circumstances (medical bills, home repairs) and there’s grey area stuff like student loans and adjustable mortgages. The rolling jubilee will not be able to differentiate but that does not make it a bad idea overall. The fact that banks and other companies can make ridiculous profits through usury while tax monies went to save their asses and they are borrowing money amongst themselves at bargain basement rates makes me ill. This is a good project in the right direction.

Its founders have stated they will start with medical bills, and maybe then go into student loans and credit card debt. Bud’s right in that the last two are “gray areas.” As for the credit card thing…will it encourage people just to snap up credit cards with no intention of paying them back? Well, I fall a bit onto the Libertarian side of things when I say why offer credit to people who can’t pay it back? I mean, that’s your basic business model! You’re clearly doing something wrong, right? But as the video points out, the target market of credit card vendors are people who have filed bankruptcy. This is because those people are so eager to move their credit score back up, they will max out their credit cards and then agree to pay back the balance in small amounts over time. This is an excellent long-term business goal for the creditors.

“The fact that banks and other companies can make ridiculous profits through usury while tax monies went to save their asses and they are borrowing money amongst themselves at bargain basement rates makes me ill.”

They also said that one of their intentions was to help *relieve* people from their burden of debt. First off, these debts are put on people who likely don’t know how to “create” these large sums of money in one fell swoop. They can “create” money, but the only way they know how to is in smaller amounts, over time, through physical labor (a paycheck at a job). And yes, when something huge lands on someone and it’s bigger their bank account, they can only start to pay it back through personal austerity measures, harder or more work, and over time. And all that stress and dissatisfaction becomes compounded like interest, but on their health and enjoyment of life. That’s a burden, for sure.

Banks and investors have figured out how to “create” money, and at far larger scales than physical work would permit–I just showed you one example previously. The fact that they “create” their money by extorting people (usury, as Bud Melvin correctly calls it what it is), and prevents people from enjoying life and health is what gets me. And the nerve of them to demand even more from people who they don’t even have a contractual relationship with (taxpayers)…

The most clever thing about is that they are using the same system, just in a positive instead of predatory way. Here’s a quote from NYT:

“[Co-founder] Mr. Gokey said he was initially wary when approaching professional debt buyers to help conduct the transactions.

“I said, look, we’re revolutionaries, you might not like what we’re trying to do,” he said. “And they said, ‘Well, I’ve got kids; they’re going to college; they’re winding up massively in debt.’ So they said they’d be happy to help us get started.”

Any weapon can be a tool, if you hold it right