Occupy Wall Street is back with a brilliant idea

[J T]

Basically they are buying peoples' debt for less than it's worth, but they are forgiving people of what is owed. It's a rather brilliant charity idea for helping to get people back on their feet. Consider donating:

http://www.care2.com/causes/occupy-wall ... -debt.html

[Nemoide]

I'm really glad to see the Occupy folks doing something that will probably make a real difference. And I hope that this succeeds in improving the lives of many folks and even boosts the growth of the overall economy.

[Blu]

$500 to acquire $14,000 in debt? Wow, I need someone with a background in economics to explain why that's so cheap or how it makes sense. My only skepticism is the long-term ramifications of such an idea. That being said, it's a grand idea and a noble act.

EDIT: The actual jubilee website says $100 will buy $2,000 dollars of debt. I think I'm understanding this better as to how it actually pans out. You can make a quick buck by selling the debt in the sense that it's an opportunity for someone to go out and collect that debt? The thought of such a practice makes collection agencies look like organized crime. Pay up or we'll break your legs!

I liked the anecdotes about Iceland.

[fastbilly1]

That is actually a really really good idea.

[prfsnl_gmr]

$500 to acquire $14,000 in debt? Wow, I need someone with a background in economics to explain why that's so cheap or how it makes sense. My only skepticism is the long-term ramifications of such an idea. That being said, it's a grand idea and a noble act.

Distressed, unsecured debt - which is the kind that Occupy is apparently buying - is usually sold at a sharp discount because the likelihood of actually collecting it is very, very low and there is no security to sell in the event of a default.

Occupy's intentions are laudable, but general, unsecured debt (i.e., credit card debt, medical bills, etc.) can be discharged through bankruptcy. Accordingly, I am not sure how helpful Occupy's efforts will be in eliminating our nation's debt burden. (Filing for bankruptcy is usually disasterous to someone's credit rating, but - by the time someones's debt is so distressed that it is selling for pennies on the dollar - his or her credit is probably ruined anyway.) Accordingly, I think that Occupy would do more good if it focused on: (1) debt that cannot be discharged through bankruptcy (i.e., student loan debt); and (2) secured debt (i.e., home loans, car loans, etc.) where the creditor is entitled is sell the collateral regardless of whether the debtor has filed for bankruptcy. (These debts are generally much more expensive, however.)

[Blu]

Distressed, unsecured debt - which is the kind that Occupy is apparently buying - is usually sold at a sharp discount because the likelihood of actually collecting it is very, very low and there is no security to sell in the event of a default.

Occupy's intentions are laudable, but general, unsecured debt (i.e., credit card debt, medical bills, etc.) can be discharged through bankruptcy....

So in practice then, that money used to acquire this debt is going back into the hands of the creditor through the transaction. It's good on the principle of helping these people feel the burden lifted of their debts, but as you said their credit rating is already destroyed. Are the debts that are being forgiven those that have already filed for bankruptcy? It's hard to understand from the website because it's so general and they don't know the circumstances of whose debt it really is.

[prfsnl_gmr]

Distressed, unsecured debt - which is the kind that Occupy is apparently buying - is usually sold at a sharp discount because the likelihood of actually collecting it is very, very low and there is no security to sell in the event of a default.

Occupy's intentions are laudable, but general, unsecured debt (i.e., credit card debt, medical bills, etc.) can be discharged through bankruptcy....

So in practice then, that money used to acquire this debt is going back into the hands of the creditor through the transaction. It's good on the principle of helping these people feel the burden lifted of their debts, but as you said their credit rating is already destroyed. Are the debts that are being forgiven those that have already filed for bankruptcy? It's hard to understand from the website because it's so general and they don't know the circumstances of whose debt it really is.

It sounds like Occupy is buying the debt from the creditor; so, the creditor will be receiving the funds. Also, if someone proceeds through bankruptcy, the bankruptcy court will discharge his or her debts. Any debts discharged by the court are "wiped out" and there are sever penalties for trying to collect a debt that was discharged in bankruptcy. Accordingly, I very much doubt that Occupy would be buying "discharged" debts since they do not really exist any more.

That said - for a lot of people - it only takes one unexpected event to push them to insolvency. They may be perfectly able to keep up their car payment, house payment, etc. but if there is an emergency where they rack up medical bills, credit card debt, etc., the failure to stay current on the new debt might trigger defaults on the others. Accordingly, a person who is struggling to pay medical bills might lose his or her car, house, etc. Occupy would do well to help people in that situation.

That said - as a general rule - you should always pay your secured creditors first. Unsecured creditors can file liens, obtain judgments, etc., but it is much harder for them to take something away from you than it is for a secured creditor.

[Luke]

$500 to acquire $14,000 in debt? Wow, I need someone with a background in economics to explain why that's so cheap or how it makes sense. My only skepticism is the long-term ramifications of such an idea. That being said, it's a grand idea and a noble act.

Distressed, unsecured debt - <snip>

Exactly why I don't find this idea as brilliant, or possibly even making a considerable impact. People are paying for debts that not only would more than likely never have been resolved, also I'm sure some debts are legally required to be paid due to insolvency. When people do settle unsecured debt, it's usually already pennies on the dollar.

I bet the debt collection agency employees have popped a few bottles of champagne after hearing this news.

Not trying to torpedo this idea, but I'd allocate the money elsewhere.

[Hazerd]

What would the world be like if Banks and Credit card companies didnt collect interest.... would the banks and credit card companies go out of business?

must look more into this...

[Erik_Twice]

What would the world be like if Banks and Credit card companies didnt collect interest.... would the banks and credit card companies go out of business?

They simply wouldn't be banks and credit companies anymore. If there's no interest, why would they lend you money?