Buying Your Debt And Abolishing It - A Bail Out For The 99%

We need a jubilee, a clean slate, a cancellation of debt for the 99%.The Rolling Jubilee raises money to buy debt. But instead of collecting on the debt we buy, we're going to abolish it. It's time for a bailout of the people, by the people. -yt
www.rollingjubilee.orgwww.strikedebt.org
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messengersays...

Could I buy my own debt at that rate? How do they figure they could buy $1,000,000 for $50,000? That must be at the never-gonna-happen end of the spectrum. Most debts that creditors expect to get paid off they wouldn't sell for much less than the full value, no?

L0ckysays...

Also their assertion is that the debt is illegitimate because the cost of a decent living outweighs the average earnings.

While I agree with this (or at least it's extremely close for what is supposed to be a prosperous country) buying chunks of debt and cancelling them won't solve the root problem.

Even if you successfully bought and cancelled all personal debt, it will just start growing again.

You'd actually be doing the banks a favour.

criticalthudsays...

apparently, they will set up as a mortgage company and will avail themselves of the margins that banks can get, which is usually 10-1 (money lent to money actually in hand) for regular banks and up as high as 30-1 for investment banks (after glass-steaggal act was killed).

i don't really get it yet, but i understand the strategy of playing their game, and availing themselves of the ridiculously loose regulations and insider advantages that the industry enjoys.

Edgeman2112says...

Granted, I know little about this and someone please correct me if I'm wrong, but I'm pretty sure they're getting mortgages and mortgage-backed securities mixed up.

The mortgage is a loan. You owe 200,000 on the loan at 4% interest. This is debt.

The mortgage-backed security is a derivative; Theoretically it's a piece of paper whose value is derived based on that mortgage and the credit score associated with it. It's like stock in a company.

When they talk about doing away with debt, that's paying off the mortgage.

When they talk about buying 1,000,000$s worth of mortgages for 50,000$, they think they're also referring to the mortgage, but I'm pretty sure it's actually the leveraged mortgage-backed security. Buying those securities doesn't give you ownership of the loan. There is still 200,000$ that was lent by a bank out there. It doesn't just convert to 50,000$.

zorsays...

This is a fun idea but two things they better look out for:
1. forgiven debt is often counted as income by IRS and they will NOT forgive it if you don't pay your taxes.
2. they better watch out for financial privacy laws because if they cancel a person's debt then advertise their name and that they helped without consent then they could get in trouble.

yellowcsays...

This may be the case but it isn't what is going on here.

This initiative is buying distressed debt only, that is, the organisation who gave the loan has decided the cost of attempting to reclaim that loan or the chances of reclaiming a significant amount is futile. So they do sell the actual loan for cheap, to debt collectors, who employ more drastic measures than larger organisations want connected to them. (speculation, I'm not familiar with why these are more attractive to debt collectors).

Rolling Jubilee acts as the debt collector but doesn't collect, it buys the loan and cancels it. Then it hopes these people with cancelled debts, come back and donate a little, now that they have less burden.

That is the general idea, granted when people hear "loan", they think mortgage but this isn't the case here. Rolling Jubilee is unlikely (or never will) enter that area. They will be buying personal loans, medical loans etc. Smaller loans. It is already outlined how better performing loans, such as student loans, are off the table.

However from my understanding, it relies on the IRS remaining co-operative and for the regulations to stay within these bounds that keep it legal and charitable. So the cancelled loans are not counted as profit against Rolling Jubilee, at which point it all crumbles.

It has some merit but it also has a lot of downfalls and it also does jack shit to Wall St or banks, that is misdirected attention to garner support I gather.

(My understanding, could be incorrect)

P.S. Also it should be noted this is hardly for the 99%, it is for a much smaller percentage of the 99% who fail to pay their loans, good loans are not sold off. So really, this is the less troubled 99& bailing out the 99%'s further down on the scale. It basically boils down to a charity, it just abusing some loose regulations.

>> ^Edgeman2112:

Granted, I know little about this and someone please correct me if I'm wrong, but I'm pretty sure they're getting mortgages and mortgage-backed securities mixed up.
The mortgage is a loan. You owe 200,000 on the loan at 4% interest. This is debt.
The mortgage-backed security is a derivative; Theoretically it's a piece of paper whose value is derived based on that mortgage and the credit score associated with it. It's like stock in a company.
When they talk about doing away with debt, that's paying off the mortgage.
When they talk about buying 1,000,000$s worth of mortgages for 50,000$, they think they're also referring to the mortgage, but I'm pretty sure it's actually the leveraged mortgage-backed security. Buying those securities doesn't give you ownership of the loan. There is still 200,000$ that was lent by a bank out there. It doesn't just convert to 50,000$.

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