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Here’s how Occupy Wall Street freed Americans from millions in debt
Occupy Wall Street activists have canceled nearly $15 million in consumer debt in the first year of a program called Rolling Jubilee that uses crowd funding to buy up and then void consumers’ debt. The program spent just $400,000 of the roughly $620,000 it has raised to date to buy up medical debts that were far enough past due that they were being resold for pennies on the dollar, marking a first-ever incursion by populist activists into an industry dominated by unscrupulous private debt collectors.
The program works by taking advantage of the same business dynamics that fuel debt collection companies. When the firm that originally sought to collect a debt — a hospital, a bank, or a private education lending firm, for example — decides to cut its losses by selling debt on which the borrower has defaulted to a collector, it usually does so at alarmingly low rates. A Federal Trade Commission (FTC) study published in January found that consumer debt sells for about four cents on the dollar in this secondary market. While debt collectors pay that price and then try to force at least partial repayment by the borrower in order to turn a profit, Rolling Jubilee simply cancels the debt and hopes the beneficiaries might pay the kindness forward by helping to fund the program — that’s the “rolling” part of Rolling Jubilee.
The Occupy program, which kicked off in November of 2012, is paying an even lower rate than what the FTC report found to be typical. A spokesman told Reuters it was paying about two cents on the dollar for debt.