Occupy launches ‘Rolling Jubilee’ debt forgiveness programme

The Guardian – by Adam Gabbatt

After months out of the limelight Occupy Wall Street is launching its latest venture on Thursday: a bid to buy up tens of thousands of dollars of personal debt.

Rolling Jubilee, an offshoot of the street protests that saw thousands demonstrate across the world in 2011, will ‘forgive’ people of their debt once it is purchased.  

The project, created by Occupy’s Strike Debt group, says it will help people by paying off outstanding debt, although some have warned that there are obstacles that will prevent the Rolling Jubilee from having a substantial impact on people’s lives.

“Banks sell debt for pennies on the dollar on a shadowy speculative market of debt buyers who then turn around and try to collect the full amount from debtors,” reads the organisation’s website. “The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it.”

Laura Hanna, an organiser with Rolling Jubilee, said the idea had been around for some time before activists began working on it in earnest this summer.

“I remember first hearing about it about three years ago, about the basic concept,” she said. “But that basic concept was really just: ‘Oh, look at this, did you know you can by debt for pennies on the dollar and help someone out by getting them out of their own debt?'”

It was around five months ago that the Strike Debt group began specifically working towards the Rolling Jubilee project, Hanna said. It will officially launch on Thursday with a telethon event in Manhattan which will be livestreamed on the internet. The group hopes to raise money through donations – it has already garnered more than $180,000 – which it will use to buy up debt at knockdown prices.

If individuals fail to repay their debt from credit cards, medical bills and other expenses, the bank that issued the funds will eventually decide to cut its losses and sell off their debt for a fraction of its true value. Debt-buying companies purchase these debt portfolios for as little as five cents on the dollar, meaning $1,000 worth of debt can be purchased for around $50.

Having made the purchase, debt buying companies will typically try and reclaim it, sending letters to the people who ran up the debt, sending in bailiffs, or going to court.

Rolling Jubilee, however, will ‘forgive’ that debt, sending letters out to the people who ran up the deficits to tell them that their debt is repaid.

But Lawrence J White, professor of economics at New York University’s Stern school of business, predicted the scheme would have limited impact.

For debt to have fallen so much in value the individual who ran up the total will likely already have dismissed it, he said.

“How much psychological relief will that provide to the borrowers? I’m not a psychologist, [but] my guess is not very much, because if it’s gotten to the five cents on the dollar point the borrowers will have psychologically distanced themselves I’m guessing.”

White said while he believes those involved in the Rolling Jubilee “have good intentions in all of this”, it is unlikely to have a huge impact.

“The other thing that this doesn’t do for the borrower is improve their credit score. Because they got a black mark when they stopped paying the loan. That is when the lender would report to the data gathering agencies ‘We lent money to this borrower and we haven’t been able to collect, you ought to know that.'”

“I truly believe the Occupy Wall Street people have good intentions in all of this,” he said. “It’s good PR, it’s good theatrics, but in terms of actual accomplishment, it’s pretty small.”

Debt buyers are being unfairly maligned, said Jan Stiegel, from DBA International – a trade association which represents some 600 debt buying companies.

“Debt buyers, although obviously the press and the media love to make them out as villains, they actually do provide a service to consumers,” said Jan Stieger.

She said debt buyers can work with borrowers to arrange ways they can pay off less of the debt, or pay it over a period of time. “If you can’t collect debt there will be no extension of credit, so you’re going to harm those that pay their bills, and you’re going to harm those that don’t anyway.”

Rolling Jubilee activists are unlikely to be too concerned about upsetting people in the debt buying industry, however. Ed Needham, who has acted as a spokesman for Occupy Wall Street since September last year, said it was one of the most exciting projects the group had been involved with.

“It’s a truly inspired project,” Needham said. “It’s a fantastic way to both alleviate some debt but even more so to show the whole system of debt and how financial institutions have insinuated themselves in our lives to such an extent over the last 20 or 30 years that the American dream now is basically getting out of debt.”

The Rolling Jubilee has already made its first debt purchase, Hanna said, spending $5,000 to acquire around $100,000 of debt. It will send out letters to the lucky borrowers, telling them the debt is abolished. Hanna said the project is as much about raising awareness of debt and how it is handled as buying people out of their debt.

“The reason it’s called the Rolling Jubilee is that the project is meant to roll,” Hanna said. “It will change over time. For the beginning at least what we intended to do was shine a spotlight on an otherwise rather opaque industry.”

She added: “This is both symbolic and real in the sense that people are actually being relieved of their debt, but it’s also stimulating a conversation about hasn’t been had.”

http://www.theguardian.com/world/2012/nov/15/occupy-rolling-jubilee-debt-forgiveness