Strike Debt!

Commonly asked questions: Why does it take so long to buy debt?

[We get a lot of questions by email, and we do our best to respond to each and every one personally. Though we have a short FAQ on the Rolling Jubilee website, many questions deserve more in-depth responses. We’ve decided to post longer answers to some of the more common questions on this blog, in a regular feature titled ‘Commonly asked questions’. Check back regularly for updates!]

Why does it take so long to buy debt?

The purchase of each debt portfolio can take weeks or months to complete, as the debt-buying industry is incredibly complex. We are taking time to learn the ins and outs of the market so that we can spend the money most effectively.

The debt-buying world is a shadowy, speculative market where delinquent and charged-off debts are bundled into large portfolios and sold as a whole for pennies on the dollar. It is largely unregulated and filled with shady characters, many of whom are actively trying to rip each other off. We are taking care to be sure that we aren’t taken advantage of, that our deals are good, and at market value. We think it’s far more important to be certain that we spend your donations accurately, on real debts that help real people, than quickly, on debts of dubious nature.

Additionally, we want all of our debt buys to be strategic and effective. We want to buy debt that will provide the most mutual aid possible and debt that will highlight specific injustices within our economy. Currently, we are focusing on medical debt in order to call attention to the profound inhumanity and inequality in our healthcare system. Medical debt, however, is particularly difficult to purchase; unlike credit card and payday loan debt, it is usually sold to local debt collectors. Because we don’t want our purchases limited to New York, this means working locally and regionally rather than in the national market. The debt industry is also a surprisingly small world, based on personal relationships. We are working to build those relationships, but it takes time.

We are also taking care not to buy bad debt—debt that is considered uncollectable. Bad debts have already done their damage, whereas newer debts that still might be collected have not. Because of this, newer debts more effectively maximize mutual aid. In order to be sure our purchases are effective, a significant amount of due diligence must be done on each portfolio. This can be quite involved and includes running a variety of reports and asking numerous follow-up questions.

We are fully committed to transparency and will always post information about each purchase as soon as our lawyers finish reviewing the documents and our privacy committee has ensured that the debtors’ identifying information has been removed. Additionally, we are hiring a CPA and plan to announce our financial reporting policy in March. Currently, our first purchase, completed November 12th, is documented on our website. Our next purchase is well underway and should be completed and announced in mid-March.