I think it is a great ROI on donated funds. Using $200k to wipe out potentially $4 million in debt. I like the randomness because then the people associated with the non-profit can’t be accused of helping themselves and their friends over the general public. Hopefully as this progresses, they get more publicity and the funding grows so that they can wipe out even more debt.
It would also be nice if they did set up a system where they buy the debt and ‘settle it’ for the amount paid w/out profit for those that could afford it. If you had a $10k bill that was sold for only $100, most people would find a way to pay that instantly. That would make their money go even farther.
So people rack up debt and then walk away from it. Learning nothing about how to handle money, how to save and not spend. Learning only that there are no consequences in this world. Lather, rinse and repeat every 5 years or so?
I think the point of the Occupy movement is that the economy got flushed (it isn’t exactly unflushed at this point). Many people went under (look at how many 99 weekers there were). So, they are bringing attention to how the banks were bailed out, but the people are left screwed.
It works for Banks, Governments and Auto companies. But you’re right, it wouldn’t do to let normal people think that way.
But seriously, people graduating with a massive student loan during a big economic slump or needing massive medical intervention while not fully insured don’t necessarily require a lesson in saving.
Debt that is written off is not necessarily worthless; it just isn’t worth it to the company to collect it. There’s a certain dollar figure where, under that, it costs more for the company to continue to chase it than the debt is worth, so they write it off and move on to other, more profitable things.
I don’t necessarily agree with this, either. Some people will never learn, and they will spend their lives in debt and poor and never learn anything or get anywhere. Other people will find that a forgiven debt is the one break they need to finally start to get somewhere. I don’t think the Occupy people will be able to pick and choose which type they help, but if they manage to help anyone in the second category, it seems worth it to me.
This sort of seems to me like the micro-loans that organizations like Kiva do. My husband and I loaned $25 to Kiva years ago; we’re on our fourth loan now, to the fourth group of very poor people who need just a little bit to help them get somewhere. Minimal outlay from people who can afford it, and maximum benefit to people who need it.
Cat Whisperer - If I were working with the people requesting debt repayment by a 3rd party, I would make it conditional upon taking at least 20 hours of financial management classes. Sure, some of these folks had bad luck, medical bills, etc. But the classes wouldn’t hurt for any adult, let alone someone with a proven track record of walking away from their obligations. In fact, I’d make it mandatory for all HS students (and maybe middle school, too) to take a one semester course in budgeting and money management. You can’t teach someone how to be abstemious and to delay gratification, but you could at least give them the knowledge to read a contract, understand interest, etc.
This is what I see the problem is. The people whose debt is erased are deadbeats. They aren’t hard-working people who have fallen on hard times; they are folks that have decided that they don’t have to pay debts they rightfully owe; money they told people they would pay, but now don’t want to.
People who want to pay what they owe work things out with their debtors. It’s the people who think they shouldn’t have to pay what they owe that go to collections. Sure, there are a small percentage that don’t follow this rule, but they are the exception.
People who think they shouldn’t have to pay what they owe are also going to think they don’t have to pass it on. If this was not the case, they would have taken care of their responsibilities and not defaulted in the first place.
The bail-out of the banks, and auto companies (which was really a bail-out of the unions, since the unions would have failed if the auto companies did) was revenue positive for the government, as has been mentioned. Buying-up the bad loans of deadbeats does nothing but drive-up the cost of bad loans. That is, more competition for the bad loans will just make the debt collectors have to work harder to collect for the loans they can buy. Which makes it more likely the deadbeats whose loans aren’t bought by “Rolling Jubilee” will have a harder time of it (and will be more likely to pay, albeit only slightly).
I like this, it could recycle itself.
Say I owe 5,000 on a student loan* and it was sold for 1,000. It gets bought up by the charity, which lets the debtor know it’s been taken care of, and the debtor can donate or repay whatever they want, or nothing.
It wouldn’t be self-sustaining, but it could go a lot further that way.
For some reason I don’t think student loans would come into this; they are always full-price what you owe, never reduced. At least mine never have been. This may be part of the reason it’s never covered by bankruptcy…?
There’s one consideration I haven’t seen addressed: debts forgiven are treated as taxable income by the IRS. So, if you purchase a $10K debt and discharge the debt, the debtor will be liable for taxes on that income. So, the relief of having a debt wiped out is tempered by the knowledge that you’ll be on the hook come April 15th.
On the hook for 10k, or for the 1k it was purchased for? I have to assume the 1k, since if it went to regular debt collectors, there is no ‘you still gotta pay taxes <again> on the other 9,000’ afterwards.
Parent organization: http://strikedebt.org/
IMHO, the parent’s grasp isn’t as solid as that of Occupy the SEC. Still, they do have an informative financial guide, though it is a little dubious in parts.
ETA:
Does the ~$13,000 (or whatever) annual gift waiver apply?
Your on the hook when it is writen off (so bank X sells off your debt of $10k in 2007, then you have the $10k income in 2007).
I doubt they’re buying those ‘fresh’ debts because they are more expensive. And even if they were buying those, the IRS ‘income’ happened because bank X wrote it off.
Their original goal was $50k. They hit $200k before the telethon started, so raised their goal to $250k (to retire $5 million in debt). Right now, they’re within $2.5k of making that goal and they still have at least an hour (maybe 2?) left in the telethon.
Obviously, some people don’t agree with their approach, but clearly there are others who do support what they’re doing.
They’ve been mixing interesting musical guests with educational guests.
So if we are going to be serious about my comment, are you then assuming any normal person bailed out by this scheme couldn’t become a more productive member of society afterwards? Because you are basically saying they all will idiotically assume they’ll get bailed out every five years.
Oh, by definition. And 40-60% of all bankruptcies in the US are medical related. It’s not unusual for somebody to become sick or injured, rack up high medical bills and find themselves deep in debt. Citation.
Cite? It seems to me that high debt follows avalanches of credit offers. Cite.
Yes, only slightly, given the extremely minimal dent this puts in a very large problem. Meanwhile hundreds get a 2nd chance. In fact on a cost benefit basis you are comparing molecules to mountains.
CarnalK - The difference between the big business bailout and this, is the bailees have been expected to pay back their loans with interest. What’s being proposed here is that someone else pays back your loan, and if you feel like it, you might throw a few bucks in the donation jar. No accountability, and you’re not required to repay it in full, let alone add interest to it.