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general overall idea: OWS raises money to purchase debt for pennies on the dollar, marks it paid in full and relieves whoever had debt that was under their umbrella no longer does. they did a test run of $500 and bought / erased $14,000 in debt. they want to raise $50,000 and say they can erase $1million in debt.
now, i don't know much about finance and debt. on the surface, this seems like a great idea. however the criticisms i've heard is that the debt being bought is considered un-recoupable, which then would basically be giving money to debt collectors while doing very little other than helping someone's credit.
anybody out there know how this works more specifically who could shine a light on it? i generally support OWS and their ideas, but i try to not fall to a conclusion without getting as informed as possible.
- Continuity 0
'... doing very little other than helping someone's credit.'
Which is already a huge thing, when you consider that people in this Western system of liberal capitalism are nobodies, unless their credit is good.
I like this idea.
- i_monk 0
How fucked up is our system that you can sell money owed, and sell it for a fraction of its face value?
- scarabin 0
that's a cool idea
- uuuuuu 0
it doesn't do anything to address the real problems around debt creation . But I don't really see it as a proper solution so much as a symbolical gesture, a way of generating awareness through action.
- albums 0
This is a bad idea. As uuuuuuu stated, it doesn't solve where the debt is generated. Who can you trust to pay their debt if there are groups popping up to to pay your debt for you? What keeps someone from buying too much on credit then resorting to these tactics?
Since 1967, the debt held by the American public has increased from $1.4 billion to $972 billion in 2007. That's an increase on average of $24.265 billion per year. If you look at those numbers more recently, from 1997 (when that debt totaled $597 billion) to 2007, it is averaging an increase each year of $41.7 billion.
Using the last set of numbers, not accounting for inflation or market implications, that puts the American public's debt at an approximate $1.18 trillion as of today.
According to the numbers listed in the article above, $500 is 3.57% of $14,000 and $50,000 is 5% of $1,000,000 with an average buy of 4.29%.
4.29% of the aforementioned $1.18 trillion is $50,592,857,142.86.
That's $50.6 billion dollars that would need to be raised to buy out the current debt owed by the America credit card holders.
More info on credit card holders in the US: There are approximately 609.8 million credit cards in the US. Considering that each credit card holder owns on average 3.5 credit cards, you can deduce an approximate number of credit card users in America at 174,228,571. This equals out to $ $1,935.88 per credit card or $6,775.58 per person.
When you realize that large number of $1+ trillion gets spread so thin through roughly 175 million people, I see no need for another person or organization to pay your debt off for you, especially at a rate of only 5% of what money was actually spent. If you want to own a $20,000 boat you should pay $20,000, not $1,000 as this model is showing.
The money is not free, it does not appear out of thin air nor is the credit card issuer forcing anyone to spend beyond their means. If the credit card company is left holding the bag, expect them to dry up and go away, no credit for anyone, regardless of your credit score. If the boat retailer is left holding the bag, don't expect them to stay in business for more than a season.