Instead of operating this as a charity (doesn't scale), why not sell the debt back to the original lendees at face value. (Buy back your $15k loan for $500.)
I guess that wouldn't be legal, though?
The People's Bailout
121–130 of 323 posts
Re: The People's Bailout
#122Earlier quoted context omitted.
Hi everyone. I want to assure you all that we are aware of the tax implications. We are working with a pro-bono tax lawyer and have called the IRS several times. The IRS informed us that we do not meet the requirements to file a 1099-c (we are not a bank, credit union, etc.) Our tax lawyer has written some technical langue for our website. The bottom line is that we will be purchasing debt of people who are most like…
If these people are insolvent, why can't they just declare bankruptcy?
Bankruptcy was 'reformed' while no one was paying attention and now some debt follows a person after a BK.
Some people still have land line phones and don't know how to fire bill collectors.
A BK also costs several hundreds of dollars now.
Re: The People's Bailout
#123Earlier quoted context omitted.
>Except debt can be exactly due to some random accident like getting hit by a car while crossing the street and you don't have the insurance to pay for the medical bills. That's why we have bankruptcy laws. From what I heard at the time, the big hobby horse for the OWS people was student debt, which can't be forgiven in bankruptcy. And that kind of debt is entirely optional.
That's why we have bankruptcy laws. Yes - bankruptcy laws that were passed in 2005 which made it significantly harder to get debt forgiven in bankruptcy, and also removed some forms of debt from being able to be discharged in bankruptcy: https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an... It was widely claimed by advocates of BAPCPA that its passage would reduce losses to creditors such as credit card com…
>Not when the majority of jobs that create a vibrant middle class in the post-industrial United States require at least a college degree.
That's a self-refuting argument. If your degree was really the ticket to a "vibrant middle class" job you'd be able to pay off your student debt.
The reality is not all degrees are created equal, and people should think a little bit before they go $200k into debt for a degree that's going lead to a $40k job. Granted, 18 year olds aren't very good at this kind of reasoning, but that's what parents are for.
On top of that, for a lot of fields a degree from a public university is just as good as one from an Ivy. Nobody is entitled to a pricy private college education. Either you go on family money or you think very carefully about how those loans are going to get repaid.
Re: The People's Bailout
#124For 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…
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. It could alternatively be characterized as a gift, in which case it is not income to the recipient (but could incur gift taxes to the "gifter"). If you don't inform the IRS that you forgave…
But gifts are capped at $12,000 per year, which puts something of a damper on the whole point of this, unless they've figured out a legal way to farm out who gets credit. So either they've promised not to go after these cases, or ... something else?
Re: The People's Bailout
#125Earlier quoted context omitted.
Much appreciated! Now I'm wondering what kind of business model Agency Y and Z operate on
A variation of "Buy debt at 25 cents on the dollar, collect 40 cents on the dollar in interest and fees, spend 8 cents on the dollar for high school graduates to man the phones and 5 cents on the dollar for overhead.", with numbers adjusted depending on how toxic their average pool of receivables is.
Interesting, thanks.
Re: The People's Bailout
#126I detect the possibility of a closed debt-like loop. There must be a way in this system to buy my own $14,000 debt for $500 and forgive myself. Its just a matter of path-finding.
So theoretically, I can travel backwards in debt... Profit!
Re: The People's Bailout
#127For me the big question is whose debt do you forgive first?
You are making a political statement here - great.
You are making an even bigger one if you choose to forgive the debt of White folks before black, black before White, republicans and democrats, short v tall and fat v thin
even a lottery seems to send the wrong message
And doing it blind by just buying anonymous tranches will reveal the biases of the original moggage sellers.
A mess I would not like to sort through
ps at 30:1 anyone have an idea total needed to be raised to forgive everyones debt? Even ignoring Market reproving to take this into account?
Re: The People's Bailout
#128Earlier quoted context omitted.
Bankruptcy ruins your credit. It disqualifies you from holding certain jobs (such as in a company requiring people handling cash to be bonded), not to mention that credit checks are part of background checks these days. Some debt is difficult to discharge in bankruptcy (student loans). It can hurt chances of getting security clearance. What the OP is offering seems to be a nice alternative.
Isn't this also bad for your credit? Well, I guess maybe it's just less bad than bankruptcy or not paying anything at all.
Not only is it bad, a BK on your file means you will have to use 'special' finance to get a car loan and it will be impossible to find a bank to underwrite a sub-prime loan for a house (for seven years). You would also have to pay a higher rent security deposit on an apartment.
Re: The People's Bailout
#129Earlier quoted context omitted.
I'm not 100% sure, but I'd be completely shocked if the banks and credit card companies (or whoever) that sell the debt didn't have to report the sale to some government agency, or even the IRS itself, so the IRS could probably find out that way. And now that OWS has announced they're buying up debt and forgiving it, the IRS is going to have a pretty good idea what's going on...
Yes the IRS knows what we are doing. We called them up and told them. They thought it was pretty cool. w00t!
Sorry I have to ask - "we called them up and told them" rarely works with my insurance company so ...
whom did you talk to at the IRS - what's their seniority and pay grade and did they reply in writing?
Re: The People's Bailout
#130Earlier quoted context omitted.
it's expensive and means-tested. You don't get to keep everything, even if everything doesn't amount to much.
Expensive in this case (for the US) meaning $700 to $2000. Which is rather a lot for the insolvent. Not to mention the paperwork sounds like an ordeal. I think there is a psychological block for a lot of people too. It takes a certain point-of-view and education to be able to enter into lending arrangements with creditors with the perspective: "I believe I am going to make a profit and we will both win. But there is…
Donald trump has -- TWICE!