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The People's Bailout

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Re: The People's Bailout

#151

Post by philwelch »

eupharis wrote: post #102
RyJones wrote: post #93

Earlier 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…

Part of interest compensates the lender for risk, but the rest of it--most of it, in fact, if you have good credit--is just time value of money.

Re: The People's Bailout

#152

Post by forrestthewoods »

RollingJubilee wrote: post #74
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…

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…

This sounds outrageously risky. Unless you have written, signed approval from the IRS for your plan I wouldn't dare make a move. Once you're in their sights it's damn near impossible to get away. In the current economic climate it doesn't take much to convince a jury you deserve to go to prison for tax evasion and/or fraud. A pro-bono lawyer can not stand against the legions of the IRS.

Re: The People's Bailout

#153

Post by philwelch »

intended wrote: post #133
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.

Yeah I can get behind that people should have known. But in the case of the Mortgage Market prior to the crash I can't - simply because it wasn't an equal/level playing field. In brief 1) CDOs => Mortgage Origniators no longer held back by their risk levels. CDOs can just offset it. 2) MOs incentives are now drastically different - Incentive now entirely to generate as many mortgages as possible, whatever the risk pr…

The fact that lenders were able to win short term profits from the ignorant and irresponsible does not exonerate the ignorant and irresponsible.

Re: The People's Bailout

#154

Post by bo1024 »

vinhboy wrote: post #61
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.

Buying a random stranger's debt with your own money, with no expectations of re-payment or even a personal thank you is entitlement?

I'm not much of an OWS supporter, but a lot of the criticism of it really bothers me. Just a lot of hypocrisy to be frank.

- This entitlement thing. I don't see what's entitled about giving one's own time or money to a cause you believe in, to go camp out for weeks or whatever. It seems like a lot of criticism of OWS centers on them acting like they deserve to be given jobs, but I have trouble taking this seriously when the same pundits complain about slow growth in their stocks/financials due to decreased consumer spending and unemployment, and want to know what the government's going to do about it.

- Civil liberties and free speech are supposed to be the cornerstone of American democracy and yada yada, but people suddenly feel extremely threatened when people want to exercise them. Who cares, let the hippies have their say and their signs. Why let it bother you?

- Loan forgiveness, bank bailouts. This is the one that really annoys me because criticisms of OWS on this front tend to be so inconsistent. If a student gets over their head in debt trying to earn a degree, we shouldn't think of helping her out because that's a terrible case of moral hazard, and we'll only encourage that sort of risk-taking behavior. But if bank executives commit fraud and bet against their customers, then get multi-billion bailouts for their companies and multi-million severance checks for themselves, well, you know how business is, these things just happen, there's no help for it.

Anyway sorry for the rant, but I just think if you disagree with what OWS proposes, you should make an argument against it (or even better, just ignore it) rather than resorting to personal attacks or condescending catchphrases like "entitlement".

Re: The People's Bailout

#155

Post by wheelerwj »

RollingJubilee wrote: post #74
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…

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…

hey, do you know if it is possible to buy up a specific person debt? or just general debt contracts?

Re: The People's Bailout

#156

Post by btilly »

tsotha wrote: post #123
sc68cal wrote: post #95

Earlier quoted context omitted.

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'…

>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.

You just failed at basic logic.

Saying that jobs of type X require a degree IS NOT saying that getting a degree guarantees that you will get a job of type X. As an example, a law degree is required to become a lawyer. But only something like 70% of people graduating with law degrees will pass the bar, and be put on a track to a job where they can reasonably expect to pay back their debts.

I also see that you are happy to blame the victim. Yet many victims are not to blame. Let me take a real example, my wife. She got an MD. She went into residency. She got injured, had to take time off then leave residency. She is in another residency now. She still does not make enough to contribute towards her debts, I've been doing it instead.

She did nothing wrong. Yes, the degree was expensive, but an MD is generally a worthwhile investment. Yes, she got injured. But that was not her fault. There are no guarantees in life. Bad luck will happen to a certain fraction of people. It happened to her.

Now you have a lot to say about planning. Well back when she took on that debt, bankruptcy could discharge it. It was not until after she had the MD that the rules changed on her. Thanks to me, she's not in trouble. But when she took on the debt, the bank agreed to one set of risks, and then Congress changed the terms of the contract out from under her later. In what world is it fair that you sign one thing, and then because the right politicians got bribed, you're bound to a different thing?

Re: The People's Bailout

#157

Post by rdl »

pmorici wrote: post #115
rdl wrote: post #37

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 wou…

When you invest in debt via peer to per lenders like Prosper and Lending Club you aren't actually buying the persons debt you are purchasing a registered security from the respective p2p company who is the actual holder of the debt. The security is structured in such a way that only the p2p company has the right to collect on the debt should the debtor default.

Yeah, that's why I stopped using them -- their collection agencies were horrible.

Re: The People's Bailout

#158

Post by marvin »

philwelch wrote: post #150
lifeguard wrote: post #128

Earlier quoted context omitted.

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.

If you lose badly enough at credit that you end up declaring bankruptcy, maybe homeownership or car loans aren't for you. Just a thought.

Could be. But there are some unlucky people in there as well - single parents who bought a house at the peak of the housing bubble because they were afraid that home prices would keep rising and leave them without a place to live. And then promptly lost their job in the recession.

Re: The People's Bailout

#159

Post by zanny »

tsotha wrote: post #123
sc68cal wrote: post #95

Earlier quoted context omitted.

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'…

> 18 year olds aren't very good at this kind of reasoning, but that's what parents are for.

It is a dangerous assumption to think it is the place for a parent to judge if their children should incur the equivalent of half a decades debt when they themselves may have no comprehension of the value of a degree their kid is thinking of.

Re: The People's Bailout

#160

Post by zanny »

joe_the_user wrote: post #83

The reason that any bank that sells debt would attempt to avoid this kind of thing happening should obvious. Moral hazard. If a debtor can refuse to pay and then only pay what the bank really then thinks the loan is worth (with few if any penalties), then every debtor is going to do that . Obviously, OWS is doing this as a political statement that the debt system in the US is corrupt, unjust or something. It does see…

> The student loan system today generates a huge number of defaults.

Too bad you can't default on student loans. I'm lucky I have 7k in the bank and 10k in student loans to pay off since I'm unemployed. I've heard horror stories of people working minimum wage service jobs with 40% of their wages garnished for student debt for an art degree.

It is their faults they did it, but its also the faults of colleges and institutionalized higher education creating a culture of dependent debtors when young people leave high school.

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