Crowdsourcing Our Debt

You’ve heard of Kickstarter where budding entrepreneurs and artists reach out via the internet to regular folk to get them to fund their idea in return for swag or just a thank you? Well now, a group of Occupy Wall Street people are using that idea to get people out of debt. Strike Debt is the organization and their central front against financial ruin is called the Rolling Jubilee fund.

Here’s how their website describes it: “Banks sell debt for pennies on the dollar on a shadowy speculative market of debt buyers who then turn around and try to collect the full amount from debtors. The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it. We’re going into this market not to make a profit but to help each other out and highlight how the predatory debt system affects our families and communities. Think of it as a bailout of the 99% by the 99%.” The Rolling Jubilee Fund is a non-profit 501c4 (“an organization whose primary activity is the promotion of social welfare”), so it’s not a charity. So,  contributions cannot be written off against taxes. This is a very fine use of social media and certainly American altruism at its most innovative.  There’s been some carping that getting people to buy others out of debt exemplifies the whole concept of moral hazard (the situation where people make foolish financial plays knowing others will bail them out) but that really doesn’t apply here. Soaring debt isn’t a consequence of lavish spending; it’s largely because of medical debt (the cause of 60% of bankruptcies) or unemployment. And it’s not high rollers who are buried in bills but the middle class.

Here’s how newly elected Senator Elizabeth Warren put it in a 2004 interview:

“Seventy percent of American families last year said that they are carrying so much debt that it is making their family lives unhappy. Middle-class Americans, hardworking, play-by-the-rules Americans, Americans who lost a job, Americans who don’t have health insurance, Americans who are in the middle of a divorce, Americans who are trying to take care of elderly parents, … those are the Americans who are carrying enormous credit card debts. Those are the ones who are handing over every eighth paycheck just to make the interest payments on their outstanding credit card bills. That’s who’s paying the real price of a deregulated credit industry and unleashing a monster that says 9.9 percent interest for most of you guys, but once you’re in a little trouble … 29.9 percent.”