Occupy Wall Street activists buy S$19m of Americans’ personal debt

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http://www.todayonline.com/world/americas/occupy-wall-street-activists-buy-s19m-americans-personal-debt

Launched on 15 Nov 2012, a group of Occupy Wall Street activists called Rolling Jubilee, has purchased almost US$15 million (S$19 million) of Americans’ personal debt over the last year at knockdown prices, mainly medical debt, spending only US$400,000.

The group is able to buy debt so cheaply due to the nature of the “secondary debt market”.

If individuals consistently fail to pay bills from credit cards, loans, or medical insurance the bank or lender that issued the funds will eventually cut its losses by selling that debt to a third party. These sales occur for a fraction of the debt’s true values — typically for five cents on the dollar — and debt-buying companies then attempt to recoup the debt from the individual debtor and thus make a profit.

“No one should have to go into debt or bankruptcy because they get sick,” said Ms Laura Hanna, an organiser with the group. Ms Hanna said 62 per cent of all personal bankruptcies have medical debt as a contributing factor.

Mr Andrew Ross, a member of Strike Debt and professor of social and cultural analysis at New York University, said the real victory was in spreading knowledge of the nature of the debt industry, he said.

“Very few people know how cheaply their debts have been bought by debt collectors. When you get called up by the debt collector, and you’re being asked to pay the full amount of your debt, you now know that the debt collector has bought your debt very, very cheaply. And that gives you moral ammunition to have a different conversation with the debt collector.”