Thousands to be freed of debt by ‘people’s bailout’

New initiative from Occupy movement unites people in mutual support to buy up and write off millions of dollars worth of citizen debts

Billed as a ‘bailout of the people by the people’, Rolling Jubilee, a new campaign in the US, is calling for online donations in order to buy so-called ‘distressed’ debts, such as student loans or unpaid medical bills. It will then write off these debts, wiping the slate clean for thousands of people who had been struggling with debt burdens.

“Banks sell debt for pennies on the dollar, on a shadowy speculative market of debt buyers who then try to collect the full amount from debtors,” Occupy Wall Street organiser Ed Needham told Positive News. “The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it.

Rolling Jubilee states that while some work within the law, debt collection agencies often unduly hound debtors after purchasing their debts at knock-down prices from the lenders. “The debt industry is a destructive tool of economic oppression and part and parcel of the economic disparity that is fuelling resistance among the 99% around the world,” said Needham.

Organised by the Occupy offshoot and debt activist group Strike Debt, the project launched in New York City on 15 November 2012, with a telethon streamed live on the internet and hosted by performers and activists. Under the banner: ‘We don’t owe them anything. We owe each other everything’, they explained how $25 can abolish around $500 worth of debt and $100 could wipe out $2,000.

At the time of writing, the group has already collected $400,000, which could abolish $8.25m of debt.

The concept of a jubilee has roots in Judaism, Christianity and Islam, and describes an event in which all debts are cancelled and those in bondage set free. “It worked in biblical times and can still work today,” said Needham.

“For example, a kind of jubilee happened in Iceland after the 2008 economic crisis. Instead of bailing out their banks, Iceland cancelled a percentage of mortgage debt. What these examples show is that debts are just promises which can – and should – be renegotiated or cancelled when the circumstances warrant.”

The project has been lauded as one of the most inspiring to come out of the Occupy movement, with Charles Eisenstein, author of Sacred Economics, describing it as “a genius move” for helping de-stigmatise being in debt.

“Debts are just promises which can – and should – be renegotiated or cancelled when the circumstances warrant”

According to Rolling Jubilee, 77.5% of US households are in debt, with a fifth of indebted households using credit cards to pay for basic living expenses, while one in seven Americans are being pursued by a debt collector and 62% of all bankruptcies are caused by serious illness.

Critics, including Lawrence J White, professor of economics at New York University’s Stern school of business, have suggested the jubilee’s impact will be limited. Those who have run up debts are likely to have dismissed the debts in their minds, he said. Others have argued that those in debt are responsible for having lived beyond their means.

Needham said that while real wages have fallen, the costs of health, housing and education have risen sharply: “Where is the difference supposed to come from? Wall Street has stepped in and made itself essential to providing for the necessities of life – for a price.”

The British Bankers Association said writing off debts will affect borrowers credit histories, “which might make future borrowing difficult.”

But the project is more focused on addressing the debt system as a whole than individual circumstances, said Needham: “The objective is to raise awareness of how debt, as a financial instrument, has insinuated itself into so many facets of our lives, primarily between people and the necessities they need.”

Rolling Jubilee has had an “overwhelming,” public response, something Needham attributes to its simplicity: “This is a project of people helping other people. It’s organised acts of kindness and solidarity, inspiring like-actions and other innovative ways to build a more just and compassionate society. People realise we must come together if we are to change the status quo – there is no other way.”

Occupy groups in the UK said they are considering whether the project could be replicated in Britain, although no plans are currently in place.