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Occupy Wall Street activists announce new elimination of $13mn of Americans’ debt

Occupy Wall Street activists announce new elimination of $13mn of Americans’ debt
The Rolling Jubilee project has announced that it has helped eliminate an additional $13 million of Americans’ personal debt, bringing its total to nearly $15 million in the past year. The project is run by Occupy Wall Street activists.

According to a group press release, the $14.7 million in eliminated debt came from three different purchases. The most recent buy was announced this week. The group bought $13.5 million of medical debt held by 2,693 people across 45 states and Puerto Rico.

The Strike Debt group - hatched by activists from Occupy Wall Street (OWS) - created Rolling Jubilee on November 15, 2012, following the protest movement’s heyday in 2011. The purpose of the project is to purchase personal debt, especially medical debt, from banks at low prices before “abolishing” it for the individuals.

By sweeping up debt at cheap prices in the “secondary debt market,” the project has freed $14,734,569.87 of personal debt to date, while only spending $400,000.

“No one should have to go into debt or bankruptcy because they get sick,” said Laura Hanna, an organizer for the group.

"We thought that the ratio would be about 20 to 1," Andrew Ross, a member of Strike Debt, told the Guardian. He said the group first aimed to raise $50,000, or to eliminate $1 million in debt at the 20 to 1 ratio.

"In fact we've been able to buy debt a lot more cheaply than that,” Ross said.

The secondary market occurs when bills, loans and the like are consistently unpaid, and the initial lender or bank releases the debt to a third party to cut its own losses. The sale of such debt is usually around five cents for every dollar.  The debt-buying entity often attempts to recoup the difference from the individual debtor for a profit.

Ross, also a professor of social and cultural analysis at New York University, says the Rolling Jubilee project started as a “public education project” that later bloomed into a focus on medical debt.

"We're under no illusions that $15 million 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, which has raised over $622,000, has no control over whose debt it purchases, given how the secondary market works. But once the debt is purchased, the group sends the individual debtors notices informing them that they no longer have to worry about the debt.

In December 2012, the group sent out its first notices to debtors.

"We write with good news: the above referenced account has been purchased by the Rolling Jubilee Fund, a 501(c)(4) non-profit organization. The Rolling Jubilee Fund is a project of Strike Debt. The mission of this project is to buy and abolish personal debt. We believe that no one should have to go into debt for the basic things in our lives, like healthcare, housing, and education.”

“You no longer owe the balance of this debt. It is gone, a gift with no strings attached. You are no longer any obligation to settle this account with the original creditor, the bill collector, or anyone else.”

Ross says the group has received letters from thankful former debtors, but that the larger victory is empowering debt holders to understand the nature of the debt industry.

"Very few people know how cheaply their debts have been bought by collectors. It changes the psychology of the debtor, knowing this,” he told the Guardian.

“So when you get called up by the debt collector, and you're being asked to pay the full amount of your debt, you now know that the debt collector has bought your debt very, very cheaply. As cheaply as we bought it. And that gives you moral ammunition to have a different conversation with the debt collector."

The group has not been without controversy. Financial blogger Susan Webber, using the pen name Yves Smith on her blog “Naked Capitalism,”criticized the group for a lack of transparency and improper operational oversight in September.

The group denied the charges, writing, “Nobody writes a check or spends money, even for a dollar, without the input and approval of the entire group.”

Smith replied in October, saying, “Rolling Jubilee’s replies to our questions were and remain evasive, legalistic, and incomplete. Now they may redeem themselves with their promised November release of their financials and the information about the debt purchases they say they have made. But the jury remains out.”