The People's Bailout • Hacker News Board

Re: The People's Bailout

#251

Post by philwelch » Fri, Nov 09, 2012, 5:08 PM UTC

potatolicious wrote: post #229

philwelch wrote: post #150

Earlier quoted context omitted.

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.

Perhaps not home ownership - but in many (most?) parts of this country a reliable vehicle is an absolute requirement for holding down a job. A bankrupt person, if anything, is in greatest need of a trustworthy car, and is also the most likely to require a loan to do so. There's also the notion of rent - people who've always had good credit don't really know how different renting is like for people who have bad credit…

Used cars are widely available for relatively low prices.

Re: The People's Bailout

#252

Post by philwelch » Fri, Nov 09, 2012, 5:17 PM UTC

elemenohpee wrote: post #223

greedo wrote: post #217

Earlier quoted context omitted.

Teaching someone to measure risk is part of parenting, and a good sign of maturity. Driving without insurance is strike one in that calculus, and then hitting a pedestrian is strike two. Helping them out of debt is merely enabling strike three in this scenario. Take a look at your local newspapers mugshot section. Ours publishes them online, and when bored, it's a fun diversion. The majority of the arrests are for DU…

Not sure what DUIs have to do with this. I'm thinking about the guy who lost his job, and the closest position he could find was 50 miles away from his home, which he can't move out of without losing a lot of money. He's exhausted from the long commute each day and the stress of being up to his neck in debt, which is what he's distracted by when he doesn't see the pedestrian step out from behind a parked car. It's go…

Funny. I was thinking of the guy who lost his job, lost his wife to leukemia and has all of her medical bills left over, had his car repossessed and his house foreclosed upon, and was just crossing the street to stay the night at his cousin's house when an uninsured driver puts him into the hospital by crushing his body with 2000 pounds of speeding steel.

Re: The People's Bailout

#253

Post by greedo » Fri, Nov 09, 2012, 6:02 PM UTC

mkr-hn wrote: post #248

greedo wrote: post #247

Earlier quoted context omitted.

Really? The sentence the judge imposed might be extraordinary, but you can't believe idiotic driving is unusual.

You linked that in response to elemenohpee arguing that debt is not always, or even often, a result of irresponsibility. What exactly are you arguing? What was your goal in linking to that?

Elemenohpee was trying to argue that someone who drives without insurance and hits someone wasn't responsible for their actions. If that's an argument you want to back, have at it.

Re: The People's Bailout

#254

Post by tsotha » Fri, Nov 09, 2012, 6:21 PM UTC

eli_gottlieb wrote: post #195

tsotha wrote: post #168

Earlier quoted context omitted.

>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. No, but he was talking about the majority of jobs. I understand people get unlucky. That's life. But there's a huge disconnect between what the population of college students is paying for degrees and what the job market is paying for labor. This isn't a question of some small percentage of p…

Dumb decisions like becoming a medical doctor ? This isn't a matter of what decision someone's wife made. You just like blaming the victim by default and forcing them to defend themselves before your imagined seat of justice.

Try to read every sentence.

Re: The People's Bailout

#255

Post by downandout » Fri, Nov 09, 2012, 6:22 PM UTC

hnal943 wrote: post #233

downandout wrote: post #193

Earlier quoted context omitted.

Why not ask the people to make nominal payments, and use those payments to purchase additional discounted debt? This would both solve the IRS problem and potentially make this a self-sustaining venture.

...because this is the debt of people who don't pay their debts?

Well, you could actually use the tax issue as a powerful incentive to pay. "You have a choice: you can pay a small amount every month, or we can write your debt off in full. However, if you choose the write-off, please be aware that you will be liable to the IRS for the full amount of the taxes. You may find it easier to work with us rather than them".

Re: The People's Bailout

#256

Post by mseebach » Fri, Nov 09, 2012, 6:29 PM UTC

potatolicious wrote: post #234

mseebach wrote: post #116

Earlier quoted context omitted.

In shock revelation, OWS blames all ills of world on "the 1%". Film at, you guessed it, 11. One of the reasons OWS isn't more popular is that 99% of the 99% understands that the vast majority of personal debt was and is incurred by regular people living beyond their means, and not by nefarious schemes by nefarious monocle-wearing capitalists. Unsympathetic as it might be, they merely provided the rope.

You would be well served to based your world view around observable fact instead of tired stereotypes. http://www.washingtonpost.com/wp-srv/politics/documents/amer... 62% of all bankruptcies in the US have a direct medical cause, a sharp rise from only 8% in 1980. "Vast majority" of debt incurred by lavish living indeed! It must be a surreal world for you, one where it's okay to heap blame upon tens of millions of Am…

From the linked website ("Why we strike debt"):

$1 trillion of student debt. 64% of all bankruptcies caused by medical debt. 5 million homes foreclosed already, another 5 million in default or foreclosure. Credit card debt is $800 billion, generating an average 16.24% interest on money banks borrow at 3.25%.

First, they seem to fail to understand that the reason credit card debt is marked up from bank debt is that there's a fairly significant risk it's not getting paid back. Later on the same page, they state that 10% is written off as irrecoverable.

Second, "Vast majority" might have been artistic license, and I meant to refer to distressed debt - plenty of people use credit for completely reasonable things and service those loans, or have them restructured in good faith. Student debt is also mostly in that category. In other words, those loans will never be available for OWS to purchase for cents on the dollar.

That said, I'm not at all sure bankruptcies are a meaningful proxy for what kinds of debts are outstanding. Certainly, loans bankrupted on aren't included in this project, as they will already have been "forgiven". I couldn't find a good source (indeed, any source), but I would be very surprised if various bits of consumer credit (credit cards, car loans, store credit etc) aren't a very major chunk of the debt available for OWS to buy.

If OWS singled out medical debt and perhaps even some student loans, or made some other effort to review them to make sure they fit a moral prerequisite for having been screwed by "the 1%", I'd be sympathetic to the project. Instead, they are paying off random strangers credit card bill, while honest people who pay off their credit cards, even when it hurts, are passed over.

Re: The People's Bailout

#257

Post by btilly » Fri, Nov 09, 2012, 6:31 PM UTC

tsotha wrote: post #168

btilly wrote: post #156

Earlier quoted context omitted.

>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…

>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. No, but he was talking about the majority of jobs. I understand people get unlucky. That's life. But there's a huge disconnect between what the population of college students is paying for degrees and what the job market is paying for labor. This isn't a question of some small percentage of p…

No, but he was talking about the majority of jobs.

You're making the exact same logic error, but this time talking about majorities, so in addition to failing at logic you're failing at statistics.

Let me point you again at the law student example. All jobs as a lawyer require law school. About 70% of people who get law degrees will successfully pass the bar, and get a high paying job they otherwise couldn't and be able to pay their debts. About 30% will fail to pass a bar, and be put on that track, with the result that their best available jobs are much lower paying and they are hosed.

Did that 30% make a bad decision to go to law school? If so, then so did a lot of the other 70%, because it is not obvious going in who will and won't succeed. Most of the time, law school is a good choice. Some of the time it is a terrible choice.

Complicating the issue even farther, very few people going into law school are aware of how high the odds are of getting into serious debt problems. Until recently there was little public awareness of it, and marketing materials from law schools certainly make no mention of the issue.

(I'm pulling up this particular example because unsuccessful law graduates make up a high portion of seriously distressed student debt, and there have been lawsuits about false advertising around this issue.)

Re: The People's Bailout

#258

Post by rprasad » Fri, Nov 09, 2012, 6:41 PM UTC

benmmurphy wrote: post #180

rprasad wrote: post #88

Earlier quoted context omitted.

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…

Forgetting the law but looking at this from the governments tax collecting point of view the bank has incurred a loss which they deduct from their taxes and this needs to be offset by income from the person who has their loan forgiven. If this doesn't happen then the government loses revenue and it also opens up the possibility of people using loan forgiveness to dodge taxes.

Occupy Wall Street is not a bank. They are purchasing the loan from the bank. The bank may be able to take a loss on the sale of the loan to OWS, but that is irrelevant to what OWS does with the loan once it is their property.

If this doesn't happen then the government loses revenue and it also opens up the possibility of people using loan forgiveness to dodge taxes.

Well, yes. And the IRS will certainly pursue cases where it is clear that loan forgiveness is used to dodge taxes. But that is not what is happening here. OWS is purchasing loans to help people get out from crushing insolvency. The alternative is the debtor's declaring bankruptcy, in which case no one--not the government, nor the private creditors--gets anything. Note also that OWS is a non-profit entity, so issues of tax revenue loss are generally irrelevant.

Re: The People's Bailout

#259

Post by rprasad » Fri, Nov 09, 2012, 6:46 PM UTC

saraid216 wrote: post #124

rprasad wrote: post #88

Earlier quoted context omitted.

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?

It is my understanding that this is how it works: OWS volunteers will buy the loan (not OWS itself, I use OWS in the collective sense). They will then collectively forgive the loan. Since each loan is held and forgiven by a group of people, no one individual is likely to come close to the yearly gift cap. Individuals can participate in the OWS loan purchases until they run into the wall (i.e., their ability to participate in the purchase or to make further gifts). Note that this is why I assume the OWS loan forgiveness is treated as a gift--because in the above scenario, that is clearly the intent.

Alternatively, OWS would purchase the loan itself and then forgive the loan. OWS is a non-profit entity, so there would not appear to be any tax issues arising from this (or at least, if there are, the IRS has already indicated that such issues will ignored).

Re: The People's Bailout

#260

Post by mkr-hn » Fri, Nov 09, 2012, 6:46 PM UTC

greedo wrote: post #253

mkr-hn wrote: post #248

Earlier quoted context omitted.

You linked that in response to elemenohpee arguing that debt is not always, or even often, a result of irresponsibility. What exactly are you arguing? What was your goal in linking to that?

Elemenohpee was trying to argue that someone who drives without insurance and hits someone wasn't responsible for their actions. If that's an argument you want to back, have at it.

It's amazing how two people can read the same thing and come to wildly different conclusions.