Rolling Jubilee: The Debt Warriors

[NikeShoes]

A group known as Rolling Jubilee purchases high risk "delinquent" debt from banks who write off the loans that students, patients, and other individuals have failed to pay off. Because this debt is high risk, it is severely discounted, often to the point of costing only pennies for a potential dollar payoff. Rather than collecting this debt, they simply forgive it. With this method, they have helped eliminate over 18 MILLION dollars of debt from only 700 thousand dollars of donations.


Their statement is:

"A bailout of the people by the people - Rolling Jubilee is a Strike Debt project that buys debt for pennies on the dollar, but instead of collecting it, abolishes it. Together we can liberate debtors at random through a campaign of mutual support, good will, and collective refusal. Debt resistance is just the beginning. Join us as we imagine and create a new world based on the common good, not Wall Street profits."​

You can learn more at http://rollingjubilee.org/.


What are your thoughts on this?


Personally, I believe debt is good. Lenders get way too much harassment for providing a service that is absolutely beneficial for those who choose to borrow responsibly. Many debt issues arise when people who don't understand the implications of taking a loan borrow more than they should for use on things that don't provide future payoffs. Sure, there is predatory lending out there and some people end up with debt because of accidents (like the medical ones discussed on Rolling Jubilee's website). But this is more of an issue of lack of insurance for the medical issues and lack of knowledge for those taking out loans when they shouldn't. I think this organization has good intentions, but their resources would be better spent educating people on how to borrow responsibly.

 

So people pool together to purchase debt at a discount with the hope that the debtor repays their debt? Sort of like gambling isn't it?

 

[NikeShoes]

So people pool together to purchase debt at a discount with the hope that the debtor repays their debt? Sort of like gambling isn't it?

No. I'll give an example to make it clearer.

Let's say Sally is a student and needs a loan. Sally goes to Lenders Inc. to take out a $10,000 loan. After graduating, Sally fails to repay any of her $10,000 on time.

Lenders Inc. knows that it is very unlikely that Sally will pay back any of the loan. So, Lenders Inc. decides to sell the debt to someone in the secondary markets. That is, Lenders Inc. is willing to sell the debt to people like you, me, or Rolling Jubilee.

So, Rolling Jubilee sees that Lenders Inc. is selling Sally's $10,000 debt contract for only $100 (the price is so low because it is extremely unlikely that Sally will repay the loan). Rolling Jubilee buys the debt from Lenders Inc. What this means is that Sally is now obligated to pay Rolling Jubilee the $10,000 instead of Lenders Inc. (if she sends any money to Lenders Inc. it will be forwarded to Rolling Jubilee).

Now Rolling Jubilee has Sally's debt contract. What they do next, is they TEAR UP that contract and tell Sally that she does not have to pay the $10,000. In other words, Sally is now debt free.

In summary, Rolling Jubilee generously paid off Sally's $10,000 debt for only $100 as an act of charity.​

EDIT: But yes, in general what you said is true. People in the secondary markets typically do buy the debt in the hopes that the debtor will repay it. You're spot on that such actions are just like gambling. However, the people buying these debts probably aren't just buying things willy nilly. It's likely that they're using the debt to hedge against risk or something like that.

 

No. I'll give an example to make it clearer.

Let's say Sally is a student and needs a loan. Sally goes to Lenders Inc. to take out a $10,000 loan. After graduating, Sally fails to repay any of her $10,000 on time.

Lenders Inc. knows that it is very unlikely that Sally will pay back any of the loan. So, Lenders Inc. decides to sell the debt to someone in the secondary markets. That is, Lenders Inc. is willing to sell the debt to people like you, me, or Rolling Jubilee.

So, Rolling Jubilee sees that Lenders Inc. is selling Sally's $10,000 debt contract for only $100 (the price is so low because it is extremely unlikely that Sally will repay the loan). Rolling Jubilee buys the debt from Lenders Inc. What this means is that Sally is now obligated to pay Rolling Jubilee the $10,000 instead of Lenders Inc. (if she sends any money to Lenders Inc. it will be forwarded to Rolling Jubilee).

Now Rolling Jubilee has Sally's debt contract. What they do next, is they TEAR UP that contract and tell Sally that she does not have to pay the $10,000. In other words, Sally is now debt free.

In summary, Rolling Jubilee generously paid off Sally's $10,000 debt for only $100 as an act of charity.​

EDIT: But yes, in general what you said is true. People in the secondary markets typically do buy the debt in the hopes that the debtor will repay it. You're spot on that such actions are just like gambling. However, the people buying these debts probably aren't just buying things willy nilly. It's likely that they're using the debt to hedge against risk or something like that.

Oh, I see. So it's basically a charity for generous people to help those fucked over by debt?

 

[NikeShoes]

Oh, I see. So it's basically a charity for generous people to help those fucked over by debt?

Yeah, it's a charity to pay off debt at a discount.

 

It's nice how people in trouble can come to this organization for solidarity to help their problematic situations.

 

Oh, I see. So it's basically a charity for generous people to help those fucked over by debt?

I wouldn't say got fucked over cause they knew what they were doing, they fucked themselves by borrowing what they later couldn't pay off...