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The People's Bailout

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Re: The People's Bailout

#31

Post by malandrew »

scrumper wrote: post #18
pooyak wrote: post #2

How does buying debt from creditors work? Would something like this actually cause buying debt more expensive and thus benefit creditors instead?

Generally, any time there is more demand for something the will increase. OWS entering the market for certain kinds of distressed debt would be expected to increase the price of that debt - the group of buyers in the market has increased by one, so there is more competition for the asset. There is absolutely nothing wrong with this at all. The creditors are simply selling the debt to try and recover something from th…

Question:

If OWS does this often enough to the point it becomes expected by debtors (i.e. "I won't pay because maybe I'll win in the OWS debt lottery"), wouldn't that in effect reduce the number of people that would actually pay back the $14k? And assuming it does have a global effect that should depress the market value of distressed debts further, right?

How can OWS depress the probability that creditors will get their money back enough so that the cost of buying debt becomes cheaper?

Re: The People's Bailout

#32

Post by washedup »

scrumper wrote: post #18
pooyak wrote: post #2

How does buying debt from creditors work? Would something like this actually cause buying debt more expensive and thus benefit creditors instead?

Generally, any time there is more demand for something the will increase. OWS entering the market for certain kinds of distressed debt would be expected to increase the price of that debt - the group of buyers in the market has increased by one, so there is more competition for the asset. There is absolutely nothing wrong with this at all. The creditors are simply selling the debt to try and recover something from th…

True, nothing wrong with this, but a repercussion would be increasing interest rates, which would undoubtedly drive some debtors to default on their loans.

Re: The People's Bailout

#33

Post by marklabedz »

abdurraheem wrote: post #4

someone should write a guide on how to buy up your own debt for 1/30th of the cost

At a very basic level, convince the credit card company (or hospital, bank, etc), that they will never collect even a penny from you and incur the hit to your credit rating that such activity entails. To actually purchase the debt, you'll likely need to be licensed according to your local jurisdiction.

Re: The People's Bailout

#35

Post by malandrew »

patio11 wrote: post #25

For the benefit of folks who might not understand how debt collection works, which may include OWS: if you buy $10,000 of an individual's debt for $500 and then forgive the debt, they have just incurred income of $10,000 and are obligated to pay taxes on it exactly as if you had handed them $10,000 in cash for services rendered. If you don't inform the IRS that you forgave the debt, via a 1099-C, you're going to get…

Couldn't OWS just hold it forever and not do anything with it? i.e. "Look I bought your debt, you don't have to pay me a penny for it ever, but I can't officially forgive you since to do so would subject you an income tax obligation. Just don't worry about it ever again and get on with your life."

Re: The People's Bailout

#36

Post by bendmorris »

unomateo wrote: post #29
marknutter wrote: post #19

How does OWS think this debt accumulated? Debt isn't some random accident like getting hit by a car while crossing the street. You have to get yourself into debt. It used to be taboo, but it's acceptable to get into debt these days and worse yet, walk away from it. OWS, to me, represents an entitled generation.

I was thinking the same thing... To make this a better program they should buy someones debt, in the example they bought a $14,000 debt for $500. The person that had the debt removed should pay $1,000 back to OWS. Then OWS can buy 2 more... and so on. Unfortunately, the person that had the debt removed will probably just create more debt for themselves

Buying someone's debt and hoping to make more than you paid is what any collection agency does.

Re: The People's Bailout

#37

Post by rdl »

It would be cool if someone created something like prosper, where I could see bad debt from people, and they could make pitches for why I should extinguish theirs. For $x, I could purchase and extinguish N x $x in debt, where N is some function of type, time to maturity, etc.

I personally would be more likely to buy deserving-seeming medical, failed business, etc. debt than car notes or whatever, but maybe others would have their own preferences.

Re: The People's Bailout

#38

Post by downandout »

heyrhett wrote: post #10

The problem that I see with this is that once your debt is sent to collections, that mark is already on your credit report for 7 years, even if you pay off the debt. So, "forgiving" the debt is pretty meaningless. People still have their credit report tarnished, which leads to higher interest rates, higher car insurance, and is basically another way to oppress people who are already poor. The only advantage to the de…

That isn't entirely true...if the owner of the debt (whether or not it is the original owner) decides to delete it from the credit record, then they can. In fact, many debt buyers act this way - they buy the debt for pennies on the dollar, and then offer to delete it if the person pays, for example, 25% of the amount owed. As mentioned elsewhere, this is know as PFD or "Pay for Delete".

Most of the major credit bureaus require that you own the debt of 5,000 or more people before they will accept payment history records and/or delete requests from the debt owner. That's the only restriction.

Re: The People's Bailout

#39

Post by paulhodge »

marknutter wrote: post #19

How does OWS think this debt accumulated? Debt isn't some random accident like getting hit by a car while crossing the street. You have to get yourself into debt. It used to be taboo, but it's acceptable to get into debt these days and worse yet, walk away from it. OWS, to me, represents an entitled generation.

You can read their whole explanation, it's an interesting read: http://strikedebt.org/debt/

Short answer: various methods of systematic trickery and financial booby-trapping perpetrated by, you guessed it, the 1%.

Re: The People's Bailout

#40

Post by patio11 »

HeyLaughingBoy wrote: post #11
cypherpunks01 wrote: post #6

This is a pretty interesting idea, economically speaking. Does anyone know what is necessary in order to become a debt broker? Being able to buy your own debt (by proxy) for pennies on the dollar might have pretty broad implications.

I think you just need to get a debt collector's license and that's not difficult. I'd ask my wife (used to be a collector), but she's asleep ATM. We did discuss starting a collection business years ago so I could learn the business and write software for it (apparently the tools they use are a royal pain), but she wasn't interested in getting back in the field and I lost interest. Bear in mind, though that to buy deb…

You dodged a bullet. It is soul-crushing work.

Your mission, should you choose to accept it: you buy $10,000 of, say, phone bill receivables, with the average in the $250 range, for $500 from the debt collection company which previously worked them for a year and got nothing. You use a commercial database and are able to identify phone numbers for half of the debtor. The "fun" now begins. You begin getting told that the debtor is deceased, told that the debtor ran out on her three years ago, told that the debtor owes $300,000 due to uninsured medical expenses, told that the debtor did not authorize the debt and that was in fact his ex-wife's cell phone, told that the debtor has to choose between paying for Christmas and paying this bill, etc etc etc. This is of the 10% of debtors who will speak to you and not just curse loudly into the telephone.

Some of those debtors are actually telling the truth, by the way.

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