John Oliver buys and forgives $15M in medical debt, illustrates horrors of America's debt-collectors

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So, can we donate to CARP and have them forgive more debt? Maybe Oliver and crew could combine his previous church and CARP?

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So this is interesting; he purchased the debt for less than half a cent on the dollar. What would it take to do this for all medical and student debt? Could someone form a “collective” to allow people to purchase their own debt at the same kind of discount, allowing people to fix their credit and move on with their lives rather than being saddled with an unpayable debt?

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John Oliver is fast becoming a national treasure. I will be deeply saddened when his rampant and unrepentant cannibalism eventually becomes public knowledge.

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Rolling Jubilee is a charity that already does this.

Edit: or was, their twitter feed looks a little quiet

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From their website:

We have always said that Rolling Jubilee is not a solution to the debt crisis. We will continue using the funds collected by Rolling Jubilee to conduct debt purchases that highlight different aspects of the debt system. But as of December 31st, 2013, we have stopped accepting new donations.

We have launched [the Debt Collective] (http://debtcollective.org/) to move beyond individual tactics, and build a debt resistance movement. This is the second phase of our movement work. By banding together, we can strike a better deal for everyone.

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Pass legislation that says that if you are going to sell debt off, you have to offer first refusal at that price to the debtor first?

Edit: or y’know, make debt unsellable.

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Here Here, old chap!

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Only debts that have passed through multiple collection agencies, and are considered essentially uncollectable, can be had for that price.

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IIRC, This American Life also purchased some housing debt for pennies on the dollar.

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Called it last month:

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The problem here is that if you aren’t careful you’ll just wind up injecting more money into the industry.

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That’s the part that gets me.

First I want to make sure I understand all this. So, the debt has already been written off as a loss. But what they then do is sell it for in this case less than a penny on the dollar, to a company who then attempts to collect the debt; then, once it’s collected, keeps the money.

Do I have it?

If so, then yes. I agree, that should be illegal.

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Fantastic idea! But I wonder if it would be practical/doable to seek out the individual debts of the members of the co-op? It seems that Rolling Jubilee which daneel mentioned has stopped buying up debt and is focusing on “awareness” (sigh…). They were a 501©(4), so maybe they have to, but couldn’t one set up a 501©(3) to do the same thing CARP did? Rich people could donate to get a tax deduction; debtors get their debts forgiven; seems like a win-win.

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I will never understand this.

I have an agreement with company A. I owe them x dollars.

Something goes wrong and I am unable to pay them what I owe (or compound interest gets out of hand or whatever).

So they write the debt off and sell it to company B who now chase me for money.

I have no agreement with company B, I have never dealt with them, they provided me with no goods or services. I can’t owe them any money, and any system that says I do is broken. And when it gets down to company M or N or whatever, it’s ludicrous (and I think the same is true of things like mortgages. If my lender decides to sell the debt on, I think the debt should be null and void).

Touch wood, I’ve never been involved with these sharks directly, although I did get assigned a phone number previously used by someone who was clearly in some debt, because I got an awful lot of calls from shady sounding companies looking for them (and weirdly, friends and family members even years after they couldn’t have been using the number).

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If I recall, Occupy Wall Street did the same thing. Or am I confused?

I wonder if Oliver’s accountant mentioned to him that a forgiven debt is taxed like ordinary income, and he might have just put a lot of people in trouble with the IRS? There are remedies, but it’s still a problem.

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They said they were working through a charity (RIP Medical Debt, whose site seems to have crashed), who could manage this so that it didn’t have tax implications?

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I think bankruptcy is the only way out, but there might be other circumstances. It’s not an area for do-it-yourselfers.

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Yeah, it seems like (in theory) if the debt can still be collected on, they shouldn’t be able to write it off as a loss.

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Take this one step further, and as outrageously improbable as it should be, I’d be surprised if it hasn’t happened already.

  • You’re falsely accused of owing a debt, as John Oliver documented. This was also common in the “robo-signing” scandal. You get taken to court.

  • If you don’t spend a fortune fighting it in court, they get a default judgement and garnishee your wages.

  • So you do spend a fortune fighting it in court, and win.

  • So the company holding the debt sells it (again) for pennies on the dollar to another company.

  • That company then takes you to court. If you don’t spend a fortune fighting it in court AGAIN, they get a default judgement and garnishee your wages…

  • And so on.

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