Buying distressed debt and then cancelling it

Hootanany

http://www.theguardian.com/world/2013/nov/12/occupy-wall-street-activists-15m-personal-debt



A group of Occupy Wall Street activists has bought almost $15m of Americans' personal debt over the last year as part of the Rolling Jubilee project to help people pay off their outstanding credit.

Rolling Jubilee, set up by Occupy's Strike Debt group following the street protests that swept the world in 2011, launched on 15 November 2012. The group purchases personal debt cheaply from banks before "abolishing" it, freeing individuals from their bills.

By purchasing the debt at knockdown prices the group has managed to free $14,734,569.87 of personal debt, mainly medical debt, spending only $400,000.




Ummmmmm if we all got together this might work over here!

uch

Cant afford me own mortgage without worrying about someone elses

dr.bollocko

I do have 15 million euro to spare but I kinda wanted to buy a solid gold yacht full of cocaine and hooker tears.

P_1

dr.bollocko wrote: »

I do have 15 million euro to spare but I kinda wanted to buy a solid gold yacht full of cocaine and hooker tears.

Just as well they only paid 400k for the debt so then

It's amazing how that industry came to be though, bank has a bad debt of say 100k, they sell it on to a collection company for 5k and the collection company just needs to collect a percentage of the original debt to turn over a profit, madness ted

dr.bollocko

dr.bollocko wrote: »

I do have 15 million euro to spare but I kinda wanted to buy a solid gold yacht full of cocaine and hooker tears.

You don't really have it to spare then do you?

kumate_champ07

in theory you could pay off your own depts if you knew the group. dept collectors will negotiate what they can get back anyway, you dont always have to pay them what they ask for

Hootanany

$400,00 for 15m what is the %?

P_1

Hootanany wrote: »

$400,00 for 15m what is the %?

37.5% unless my maths have gone horribly wrong, seems they could have got a better deal for themselves

NakedMonkey

P_1 wrote: »

37.5% unless my maths have gone horribly wrong, seems they could have got a better deal for themselves

2.66%

7.3%

P_1

NakedMonkey wrote: »

2.66%

Back to the drawing board with my maths so, that is a frankly astonishing deal. Hell they could even ask the people who's debt they were getting rid of to just pay back 5% and plough that back into the idea to get more people out of it @5%

MadsL

P_1 wrote: »

37.5%

NakedMonkey wrote: »

2.66%

Deleted User wrote: »

7.3%

Do I hear 10.6%?

username123

MadsL wrote: »

Do I hear 10.6%?

42?

NakedMonkey

P_1 wrote: »

37.5% unless my maths have gone horribly wrong, seems they could have got a better deal for themselves

NakedMonkey wrote: »

2.66%

Deleted User wrote: »

7.3%

MadsL wrote: »

Do I hear 10.6%?

Now I'm doubting my maths!

What's the actual figure?

The Dom

Seen a few Lamborghinis out the back of Mabs alright.

P_1

NakedMonkey wrote: »

Now I'm doubting my maths!

What's the actual figure?

Right so 400,000 / 15,000,000 = 0.026667 which leads me to believe that 2.6% is actually the right figure

Gloomtastic!

NakedMonkey wrote: »

Now I'm doubting my maths!

What's the actual figure?

My money's on 2.66%

Hootanany

11.2

Gloomtastic!

Who would have thought, all of Ireland's top economists posting in one thread!

oakshade

Good lord, we wont be getting on countdown any time soon.... and the winner is.....

Deleted User wrote: »

7.3%

NakedMonkey

NakedMonkey wrote: »

Now I'm doubting my maths!

What's the actual figure?

I dunno, I thought we were guessing.

oakshade wrote: »

Good lord, we wont be getting on countdown any time soon.... and the winner is.....

Yaaaaaaaay I won I won \o/

NakedMonkey

oakshade wrote: »

Good lord, we wont be getting on countdown any time soon.... and the winner is.....

Deleted User wrote: »

I dunno, I thought we were guessing.



Yaaaaaaaay I won I won \o/

Don't be giving her false hope!

MadsL

oakshade wrote: »

Good lord, we wont be getting on countdown any time soon.... and the winner is.....

Are we showing our work for extra credit?

Him?

I'm bad at maths and I'm a boy?

My life has been a lie

uch

The Dom wrote: »

Seen a few Porches out the back of Mabs alright.

I've a Porch at the front of my house too

petes

dr.bollocko wrote: »

I do have 15 million euro to spare but I kinda wanted to buy a solid gold yacht full of cocaine and hooker tears.

You don't want the hookers, just their tears?

Much of a market?

NakedMonkey

Deleted User wrote: »

Him?

I'm bad at maths and I'm a boy?

My life has been a lie

Sorry about that. Just typed without even checking.

IK09

God some people are simple. 2.66%

2.71%, I suppose

razorblunt

Well this thread was nothing like I expected when i clicked on it.

Gloomtastic!

IK09 wrote: »

God some people are simple. 2.66%

Are you calling a Mod stupid?

NakedMonkey

Gloomtastic! wrote: »

Are you calling a Mod stupid?

I believe they said simple...

This needs to get back on track!

Gloomtastic!

NakedMonkey wrote: »

I believe they said simple...

Simple/stupid, she's still a Mod.....

I'm not stupid. I'm smrt.

returnNull

Gloomtastic! wrote: »

Who would have thought, all of Ireland's top economists posting in one thread!

and most of them getting it wrong

NakedMonkey

Gloomtastic! wrote: »

Simple/stupid, she's still a Mod.....

At least they didn't call her a him!

returnNull

returnNull wrote: »

and most of them getting it wrong

hmmmm

General General

oakshade wrote: »

Good lord, we wont be getting on countdown any time soon.... and the winner is.....

Deleted User wrote: »

7.3%

On what planet is the answer 7.3%?

stoneill

So does that mean you can buy your own debt at a fraction of what you owe and then give yourself debt forgiveness?

Wacker The Attacker

dr.bollocko wrote: »

I do have 15 million euro to spare but I kinda wanted to buy a solid gold yacht full of cocaine and hooker tears.

Translated to "customers **** droplets"

NakedMonkey

stoneill wrote: »

So does that mean you can buy your own debt at a fraction of what you owe and then give yourself debt forgiveness?

If you know it's going to be in the group of debt you buy then yes, but you won't know, so no.

P_1

stoneill wrote: »

So does that mean you can buy your own debt at a fraction of what you owe and then give yourself debt forgiveness?

I don't think it would work in Ireland seeing as banks are reluctant to sell on mortgage debt to third parties. Theoretically though I guess you could get a 200k mortgage for about 25k by:

1 - Taking out a mortgage for 200k and buy a house with it
2 - Set up a debt collection agency
3 - Default on your mortgage payments
4 - Approach bank (as debt collection agency) and offer to buy the 200k mortgage debt at a rate of 5c on the Euro
5 - Debt collection agency 'forgives' debt
6 - Wind up debt collection agency
7 - Hope you don't get done for fraud

The Dom

The only thing distressed that I'm likely to buy and make money on is a pair of fcuking jeans.

stoneill

P_1 wrote: »

I don't think it would work in Ireland seeing as banks are reluctant to sell on mortgage debt to third parties. Theoretically though I guess you could get a 200k mortgage for about 25k by:

1 - Taking out a mortgage for 200k and buy a house with it
2 - Set up a debt collection agency
3 - Default on your mortgage payments
4 - Approach bank (as debt collection agency) and offer to buy the 200k mortgage debt at a rate of 5c on the Euro
5 - Debt collection agency 'forgives' debt
6 - Wind up debt collection agency
7 - Hope you don't get done for fraud

Seems legit - or as legit as most of the banking procedures going on here for the last few years.

NakedMonkey

P_1 wrote: »

I don't think it would work in Ireland seeing as banks are reluctant to sell on mortgage debt to third parties. Theoretically though I guess you could get a 200k mortgage for about 25k by:

1 - Taking out a mortgage for 200k and buy a house with it
2 - Set up a debt collection agency
3 - Default on your mortgage payments
4 - Approach bank (as debt collection agency) and offer to buy the 200k mortgage debt at a rate of 5c on the Euro
5 - Debt collection agency 'forgives' debt
6 - Wind up debt collection agency
7 - Hope you don't get done for fraud

They don't sell the debt of an individual and you wouldn't know who the debt belonged to until you bought it.

Impossible without any fraudulent activity.

P_1

NakedMonkey wrote: »

They don't sell the debt of an individual and you wouldn't know who the debt belonged to until you bought it.

Impossible without any fraudulent activity.

It's only fraud if you get caught though

NuckingFacker

P_1 wrote: »

It's only fraud if you get caught though

Nonsense. It's only fraud when they convict you and all your appeals fail. Otherwise, it was a misguided commecial transaction sadly unattributable to any one individual. That's if they bother prosecuting in the first place(unlikly) and you're dumb enough to hire a crap lawyer.

ofcork

I assume all these people in the op would still be left with a bad credit rating.

IK09

I deal with this on a regular basis. It is generally HedgeFunds that buy up these "distressed loans". What happens is the Institution or Bank that have a number of these loans create an internal "Bad Bank". The Bank then put together a Loan Book, which consists of any amount of loans that are not, and most likely will never perform. This book is then sold to the HedgeFund.

What does this mean for the AccountHolder? Usually, everything carries on as usual...for a while. I deal with distressed loans/mortgages. If a HedgeFund has recently purchased a Book and my clients loan is included, an "early settlement" can be made. The tricky part is putting forward a proposal that the client AND the HedgeFund can both live with, where the HedgeFund will make a profit AND the client will receive a write-off of overhanging debt. If you have information about the price the book was purchased for, issues become much clearer(e.g 25c to the €1).

The deal we see here, is a dream case where I would be concerned, yet had it not been the occupy movement who purchased such loans,each individual would have had to put forward a restructuring proposal.

Hootanany

So where will AIB be selling their bad debts?

IK09

From what I know AIB are going to be employing Certus in the near future to handle a portion of their "Bad Bank". The same people who are currently dealing with Bank Of Scotland Ireland.

Its more usual to see an exiting Bank (a bank that are leaving the country e.g. Danske Bank) start to sell loans. AIB arent going anywhere, so it is more likely they will not be selling any loan books.