
Debt Strike and Debt Forgiveness - Debt Strike /Kick-Stopper - jchrisa
http://groups.google.com/group/debt-strike-kick-stopper/browse_thread/thread/542fde5207d2d3fa
======
ThomasGokey
Sorry everyone, I took down the original link because I wasn't sure everyone
in our conversation about debt forgiveness/debt strike would feel comfortable
having a wider audience read it. But I've added all the relevant info about
our project below. We'll be launching it soon and could use your help
spreading the word when we do. I also welcome any feedback/criticism that you
might have. Thanks. \-------------

Our Story

The banks got bailed out and we got sold out. It’s time for a bailout of the
99% by the 99% for the 99%. Help us raise $5,000 to launch a large-scale debt
forgiveness project.

Banks sell defaulted charged-off debt as a commodity for pennies on the
dollar. The banks make so much money charging interest and imposing fees that
they don’t mind selling some debts to collectors at a significant loss
provided that the debtors are financially ruined in the process. So here's our
plan: We're going to raise as much money as possible, buy as much debt as
possible, and then forgive the debt outright. If we can raise $5,000 we will
be able to launch the project by forgiving $100,000-$500,000 worth of personal
debt. This project is 100% legal.

The Impact

The 1% gets rich by keeping millions of hardworking people poor and in debt.
Over three quarters of all Americans are in debt and one out of every seven is
currently being pursued by a debt collector. Debt Fairy liberates people from
some of their debt by forgiving it outright.

But the real impact will come through non-cooperation with our own oppression.
Nonviolent direct action searches for the point of contact between our lives
and the unjust systems which exploit us. One point of contact can be found
every month when we dutifully pay the banks money they didn’t earn. The 1%
could not exploit us without our cooperation. If millions of us organized to
refuse to pay our debts we could bring this unjust system to a grinding halt
and demand real changes. Go to the Occupy Student Debt Campaign and sign the
Debtor’s Pledge of Refusal.

Other Ways You Can Help

Spread the word! Educate yourself about how debt works and how we can liberate
ourselves from debt by fighting back. Attend a GA at your local occupation and
join a working group.

FAQ

Q. Is this legal? A. Yes. After the savings and loan crisis in the 1980’s the
government made it legal to buy and sell debt as a commodity. As the legal
owner of this debt the Debt Fairy has the legal power to forgive this debt.

Q. Can you forgive my debt? A. Unfortunately there is no way to seek out a
specific person and buy their debt. Before purchasing the debt there is very
limited information as to whose debt it is. The Debt Fairy is a playful
creature and liberates people out of the blue.

Q. Can the Debt Fairy forgive student debt? A. No. The government guarantees
student loans made by private lenders like Sallie Mae which means that these
private lenders will always make a profit no matter what and have no incentive
to lend responsibly or to sell these debts at a discounted rate. Sometimes a
private lender will lend directly to a student in excess of the amount that
the government will guarantee. This usually happens under highly predatory
circumstances like for-profit scam schools such as the University of Phoenix.
It is somewhat hard to find, but this highly predatory kind of student loan
can be purchased and forgiven.

However, we are looking in to other ways we might be able to aquire and
forgive student loans. We'll keep you posted.

Q. But shouldn’t we all pay our debts? Isn’t it unfair to forgive some
people’s debt? A. The 1% can always get their debts forgiven, even as they
rewrite the laws to make it nearly impossible for the 99% to get out from
under their debt. The 1% profits without working by keeping the rest of us in
debt. The undemocratic system the 1% have built is unfair and unjust. The Debt
Fairy is a small intervention to set people free from from their debt and give
them a fresh start. Debt refusal or a debt strike is a way to directly
confront the whole unjust system and replace it with a just system.

Q. Who/what is the Debt Fairy?

A. The Debt Fairy is a mysterious, anonymous, magical creature who playfully
liberates people from their debt.

~~~
smsm42
"$100,000-$500,000 worth of personal debt" is in no way something that 99% of
people do. I can not think how one could get $500K of personal debt (excluding
mortgages, etc.) without either multiple major catastrophic coincidences (by
definition can't be 99%) or some very serious bad decisions going on for
years. I do not buy that people owing 100-500K in personal debt are being
"exploited" as a rule. This reminds me of this Person of the Year:
[http://blogs.laweekly.com/informer/2011/12/sarah_mason_time_...](http://blogs.laweekly.com/informer/2011/12/sarah_mason_time_protester_photos_occupy_la.php)
who raked up debts by going on random shopping trips at the malls and then
blames the evil 1% for it. I do not buy it and I would not buy it.

As for the 1%-vs-99% rhetoric, it is kind of cute that people try to raise
money using slogan-de-jour, but for me this sounds as a baloney. One can march
on a street with slogans based on nothing but emotions and deep
misunderstanding of economics, but as a business plan that does not sound
good.

Personally, I don't understand why I would give any money to selectively bail
out worst debtors and thus incentivize their behavior. I'd rather give the
same money to a local charity or local Red Cross - I know they help real
people in dire need and I can be reasonable sure I'm not just financing some
loan sharks and some innumerates with appetites exceeding their capacities to
pay.

~~~
throw_away
I think you may have misunderstood. I don't think that the $100k–$500k figures
refers to the debt of one single particular person, but rather a bunch of
individual debts sold as a block by the creditor. Also, I don't think that
this is meant as a business plan. As far as I can tell, the OP doesn't plan on
making any money on this.

~~~
smsm42
Even if you plan to run a non-profit, you still need a plan. Charities and
nonprofits have business plans too.

~~~
throw_away
I don't see anything wrong with the plan—solicit donations & use them to
forgive debt randomly with pennies on the dollar while spreading an anti-bank
message. arguably, the tax implications could be problematic to the overall
plan, but this doesn't seem to be your argument. Yours seems to be akin to
saying Planned Parenthood doesn't have a business plan because you disagree
with birth control.

~~~
smsm42
If you say "I'm gonna fight the evil 1% by educating people how to lead lives
without debt" - that sounds like plan. If you say "I'm gonna fight the evil 1%
by giving them money so people in bad debt can take more debt and
irresponsible lenders could recover their costs, all while creating tax
problems for the recipients of my charity" - that doesn't sound like a good
plan. It's like AA giving out free beers, if I'm allowed to use analogies too.

BTW, if you look at what Planned Parenthood does, abortions are about 3% of
what they do. So if their model would have 70% prevention, 25% counseling and
3% debt forgiveness, as PP does, I'd say it makes much more sense.

------
rdl
While you can forgive debts you've purchased, and report that on the credit
account, it doesn't help credit scores -- only precludes bad things from
collection activity by the others who might have purchased the debt. I guess
you can choose not to report a collection account on the credit report, which
would help, but I think most of the time people negotiate to remove paid
collection accounts on payment of a reduced debt settlement.

The original creditor (OC) continues to report payment history on the original
account tradeline. This will include, 30, 60, 90+ day late, and account
closed/charge-off.

Stopping future collection actions might be worthwhile, but once your credit
is already ruined, it's often worth just waiting out the 7 years from date of
original delinquency to have the entire account fall off the credit report.
Credit card debt sold at 10% is probably close to the 7 year mark already.

The only way I've seen anyone really fix credit is to either dispute items for
accuracy (getting them to drop), or writing a goodwill letter to the original
creditor, offering full payment, explaining mitigating circumstances, and
requesting deletion of the entire account from credit reports. I actually had
a few very small bills go >90 days late (I wasn't getting mail while overseas,
and a wire transfer got sent to savings vs. checking..), and when I found out
~6 months later, my credit score had dropped a lot. I was able to write to the
creditors and get them to fix it all.

~~~
joe_the_user
Doesn't that mean that paying a collection agency is a waste of time also?

~~~
rdl
Yes, generally.

Unless they're going to actually take legal action against you, the generally
correct thing to do is send them a polite letter, not affirming the debt,
requesting that under FCPA all communications be in writing.

If it's <$10k, the odds they'll do anything are exceptionally low. If it's
$10-100k, it really depends. >$100k, maybe there will be a lawsuit.

Child support, tax debt, HOA dues, student loans, secured debt, etc. are all
different, but unsecured consumer debt (credit cards) is really unlikely to
result in effective collection actions.

Assuming you have money, you should pay the original creditor in full in
exchange for getting the entire thing removed; then, provide documentation of
that to the collections agency, which then can't report on your credit (or,
show it to the credit bureaus if they don't respond); FCPA covers all of this
in detail.

If you can't pay, it's probably not worth paying the collections agency.

(This is of course not legal advice; I'm not a lawyer.)

------
zred
One thing that should be noted: if the debt is forgiven, the IRS counts it as
income for tax purposes. As such, if you buy $5,000 worth of debt for $150 and
forgive the debt, that $5,000 generally gets added onto their gross income.

[http://en.wikipedia.org/wiki/Cancellation_of_Debt_(COD)_Inco...](http://en.wikipedia.org/wiki/Cancellation_of_Debt_\(COD\)_Income)

Taxes are complicated enough that I wouldn't presume to say that this applies
in all or most cases, but it's something to be aware of. I was only aware of
it due to a USA Today article a while back mentioning it
([http://www.usatoday.com/money/perfi/taxes/story/2012-03-02/i...](http://www.usatoday.com/money/perfi/taxes/story/2012-03-02/irs-
taxes-on-forgiven-debt/53357844/1)). It's something to think about if you're
interested in this topic.

~~~
ThomasGokey
My understanding is that this is different than a COD. From the perspective of
the credit reporting agencies it will be considered the same thing as paying
the debt in full. From the perspective of the government it will just look
like someone paid their debt, not that they got extra money. But I'm not a tax
expert or lawyer, this is just my best understanding after talking to a lot of
people about it.

~~~
smsm42
I'd suggest you hire one, because it certainly looks like what IRS would
consider income. If somebody - no matter who - forgives a loan for you, it is
considered income. Otherwise nobody would pay any income tax as they would not
have any income - they'd just have some loans that by some miracle are
regularly forgiven. Every employer would have a loan forgiveness program
instead of salary. I don't think IRS can be cheated as easily as that.

------
mmphosis
By buying up peoples' debt, and clearing their credit history, then they are
free to run up yet more debt. I really don't care if people don't pay off
onerous debts. And, I could care less about credit ratings which are total
bunk anyways -- I've seen people's dogs get credit card applications.

I don't think it is ethical to mortgage your great grandchildren. I think it
was the Mayans that used to wiped out all debts every 52 years. I really feel
that it would be beneficial to once again make usury illegal.

What is the purpose of doing this? Other than giving away your money to
creditors, what is the benefit?

As long as the debt was not onerous, I could see benefit in paying off
peoples' homes if it was about to be foreclosed, and they had no means to
continue making payments.

~~~
scarmig
Not just the Mayans.

The Babylonians, Assyrians, Egyptians, Chinese, medieval Christians... all of
those civilizations would periodically wipe all debt away. If you have heard
about Jubilee years, in large part they involved all debts being forgiven.

See the truly excellent book Debt by David Graeber for a very analytical take
on debt and how our modern understanding of it varies greatly from how it was
originally conceived.

~~~
anamax
> If you have heard about Jubilee years, in large part they involved all debts
> being forgiven.

Why would I loan you any money if I anticipate a "Jubilee" year?

~~~
scarmig
Because the idea that "the only reason to lend money is to make more money off
of interest" is a modern innovation and very much out of line with how people
have thought historically.

It's interesting to think about how much contemporary civilization has
convinced us that certain things are universal absolutes when in fact they are
fairly odd cultural tics in the broad view of history.

Seriously, if that question interests you, check out the book I mentioned.
Debt has always existed, but it has meant a very different thing to the 95% of
people who have ever been born than the concept you or I grew up with.

~~~
anamax
> Because the idea that "the only reason to lend money is to make more money
> off of interest" is a modern innovation and very much out of line with how
> people have thought historically.

Jubilee isn't about interest, it's about principle.

If you're not going to pay me back, it's a gift, not a loan.

I'm pretty sure that "pre-moderns" understood the difference. In fact, the
whole idea of Jubilee assumes understanding of the difference.

------
redslazer
Why if lenders are willing to sell the debt at cents to the dollar, dont they
just offer that deal directly to the person who is in default? They may be
able to earn more that way.

~~~
jmaygarden
You could ask the same question about why restaurants don't give away their
leftover food directly to customers. It sets a bad precedent from their point
of view.

------
dkrich
This is interesting but I don't think it would work for student debt because
it is guaranteed by the Federal Government, thus giving the lender no
incentive to sell the debt at a discount.

~~~
ThomasGokey
Student debt is different. Because it is backed by the federal government
there is no incentive for private lenders to sell defaulted debt. In fact they
end up making even more money off of defaults. There are some student loans
that are made outside of the federal government's system, and these can be
bought and sold. These are usually made under highly predatory circumstances
like for profit scam schools.

We are looking at other ways to forgive student debt. I don't know much about
it yet so I shouldn't say anything. It might not pan out, but I'm looking into
it.

------
grinich
Interesting connection: _The Point_ was founded by Andrew Mason before he
started Groupon.

<http://www.thepoint.com/doc/about>

------
SkyMarshal
Whole thread was deleted, submission link just redirects to group's main page
now.

Ah... <http://news.ycombinator.com/item?id=4000244>

Assuming it's legal, awesome hack.

