Occupy Wall Street

Last Easter i took a trip to New York with my family and the thing i can remember most was that on the side of a building near our hotel which had a National debt clock but what shocked me was that it was going up at an incredible speed. So earlier this week when I read an article online about the Occupy Wall Street movement who recently bought $15,000,000 of American Personal debt in an effort to free a number of people from their credit i was intrigued. At first I didn't quite understand what was going on, but when I looked more into it I realised it was something very inspiring.

The movement have set up something called the Royal Jubilee which is a strike debt project that buys debt for pennies on the dollar, but instead of collecting the debt it abolishes it. Royal Jubilee, set up by Occupy strike debt project following the street protests that swept the world in 2011, launched on 15 November 2012.

By purchasing the debt at knockdown prices the group has managed to free $14,734,569.87 of personal debt, mainly medical debt, spending only $400,000. "We thought that the ratio would be about 20 to 1," said Andrew Ross, a member of Strike Debt and professor of social and cultural analysis at New York University. He said the team initially envisaged raising $50,000, which would have enabled it to buy $1m in debt. "In fact we've been able to buy debt a lot more cheaply than that." The group is able to buy debt so cheaply due to the nature of the "secondary debt market". If individuals consistently fail to pay bills from credit cards, loans, or medical insurance the bank or lender that issued the funds will eventually cut its losses by selling that debt to a third party. These sales occur for a fraction of the debt’s true values – typically for five cents on the dollar – and debt-buying companies then attempt to recoup the debt from the individual debtor and thus make a profit.

The Rolling Jubilee project was mostly conceived as a "public education project", Ross said. "We're under no illusions that $15m is just a tiny drop in the secondary debt market. It doesn't make a dent in the amount of debt. "Our purpose in doing this, aside from helping some people along the way – there's certainly many, many people who are very thankful that their debts are abolished – our primary purpose was to spread information about the workings of this secondary debt market."

The group has focused on buying medical debt, and has acquired the $14.7m in three separate purchases, most recently purchasing the value of $13.5m on medical debt owed by 2,693 people across 45 states and Puerto Rico, Rolling Jubilee said in a press release.

“No one should have to go into debt or bankruptcy because they get sick,” said Laura Hanna, an organiser with the group. Hanna said 62% of all personal bankruptcies have medical debt as a contributing factor. Due to the nature of the debt market, the group is unable to specify whose debt it purchases, taking on the amounts before it discovers individuals’ identities.

When Rolling Jubilee has bought the debt they send notes to their debtors “telling them they’re off the hook”, Ross said.

Although a good act like this may encourage you to go and buy people out of debt, it isn’t as easy as that!

You can't pitch up at Lloyds and ask to help out its most vulnerable or heart-rending cases. The way this process works in the UK is that the banks will chase a debt multiple times – endless phone calls, scary letters, and threats of legal action and so on. Mostly, they get their money back. But around £8bn a year escapes them, and it is these hard core cases that are written off by selling the debt on to the highest bidder, who buys it at a reduced price, then puts the debtor through the wringer once again.

Typically, these third-party debt-chasers pay 10p for every £1 of debt bought and expect to claw back about 20% of the debt. It's a profitable business, worth around £800m a year and, largely, the banks only deal with big players who can buy up some of their toxic debt packages in one go.

The darkest corner of the debt market contains the bottom-fishers who buy the debt that the more visible and scrutinised players give up on. So the cycle of hassle begins yet again – from a firm the debtor has never heard of. In theory, a group of well-meaning individuals could at this point set up their own company, buy these debts and cancel them. Which means, finally, the indebted person would have the wolves called off – and the charitable group, such as Occupy Wall Street, could claim it is abolishing millions of pounds of debt for much much less.

 below is a link to the Royal Jubilee website

http://rollingjubilee.org/