Occupy Wall Street, a grassroots movement that sought to spotlight corporate corruption and greed in the wake of the 2008 housing market implosion, is now taking a new tactic: buying and "forgiving" peoples' debts.
Our Modesto bankruptcy lawyers understand that the effort is part of what the Occupy movement's leaders call "The People's Bailout."
It's a simple premise: Purchase old debt from those who owe it - whether old medical bills or an unpaid credit card. Then rather than try to collect on that debt, as many debt-buying firms now do, the Occupiers forgive it.
But how can they afford it?
The group started this month with a telethon variety show, hosted in New York City, called the Rolling Jubilee. We don't know exactly how much this effort raised, but it's a fair guess to say it was nowhere near the approximately $ 1 billion in old debt that is bought and traded every year by banks and those companies with whom they contract with to buy this debt for pennies on the dollar.
As one JMP Securities analyst put it: The Jubilee's efforts, while noble, at this point "don't qualify as a rounding error."
That's harsh. But the fact is, unless this movement truly gains some amazing momentum, it would be unwise to ignore your debt problem, assuming that you're going to eventually get an Occupy bailout!
The fact is, as of right now, a Chapter 7 bankruptcy is the closest thing to a bailout in that it will wipe your debts clean and allow you to start fresh on a clean slate. These debt-collection agencies can be persistent, often hounding a debtor long past the time when a debt would otherwise be written off a company's books and forgiven. In either case, a consumer's credit rating continues to be damaged by negative reporting involving old debt.
With the "Peoples' Bailout," some have wondered whether it's better to buy old debts than to just give a struggling family money. And the answer is that it would really depend on the individual situation. First of all, some old debts may be past the statute of limitations, and therefore, you may be reviving a payment that you may not have had to make under the statute of limitations. Secondly, for many people, forgiveness of one single debt may not be enough. If it doesn't address the underlying problem, a consumer is going to be no better off.
Finally, most of these banks and creditors only sell the old debt to certain debt-buying companies with whom they've had long-standing contracts. Breaking through that bubble is going to be difficult for Occupy, particularly on a wider scale.
The organizers of Occupy have even come out and said that the real purpose behind the effort is not necessarily to buy up all the debt and allow everyone to walk away. Rather, it's a means to kick-start the national dialogue about how debt stemming from predatory lending practices can fester and become like a cancer - one that is fast evolving into an epidemic in this country.
In that sense, we can agreel. We're talking about it now, aren't we?
However, your life and your debt are going to require more than a gimmick to deal with bad debt.
Call us today to see how we can help.