After some months getting off the ground, Strike Debt, an offshoot of Occupy Wall Street, has grown fast in its efforts to alleviate poor communities from debt. The idea of tackling the issue of debt was first discussed at the encampment at Zuccotti Park, and since then has been developed by protesters including those with banking and legal backgrounds. The basic aim the campaign is to buy debt, which is split up, packaged and sold for much less than its’ worth, and forgive it.
Part of the reason for the slow start to the campaign was the consultation which had to be carried out with the tax department and legal advisors. Packaged debt is usually bought by debt collectors, after which the purchasers make every effort to see the debt repaid, with no thought of the welfare and personal circumstances of those owing money. Contrastingly, the campaign’s goal was to buy debt, but not to attempt to recover it, and through a legal loophole the purchase of debt with this intention was possible.
As a trial run, the campaign bought some of the cheapest debt, and wrote off $14,000 worth of medical loans which it had purchased for a mere $500. Organiser David Rees announced the financial viability of the action saying “as you can see from our test run, the return on investment approaches 30:1. That’s a crazy bargain!”
Since then, the movement has grown, and has been targeting communities hardest hit by the recession. With the donations of financial supporters, the movement managed to buy up and forgive further debt to the value of $500,000 by November 14th. This was the figure on the day before the campaign’s biggest fundraising effort.
On November 15th, Strike Debt held ‘The People’s Bail Out’, a telethon event of music, comedy and political commentary. Tickets to the sold out show had been available for $25, or $500 worth of debt, to $250, or $5000 in debt. By the end of the night ‘The People’s Bail Out’ had raised $250,000 – equivalent to $5 million of debt which it would forgive, far greater than their aim of $1 million.
This seems like an incredible achievement, especially considering the pervasive free market ideology in the US which considers debt to be a sign of personal failings or poor decisions on the part of the person owing money, but what is the value of paying banks for debt that is unlikely to be recoverable anyway?
In one way, the activism of Strike Debt is practising compassion. Debt collection agencies which traditionally are the purchasers of debt bundles are often relentless is pursuing what is ‘owed’ to them. People who owe money are tracked down by the agencies, and have their belongings repossessed to pay their debt. Owing money compounds the stress of living in poverty which many people in debt already experience.
The campaign is also succeeding in its aim to de-stigmatise debt, and is creating a space for counter-hegemonic understandings of debt to be nurtured. The average American’s debt is estimated to be around $47,000, and the consumer debt market is made up of about $11.4 trillion. These figures alone (which are becoming more referenced with media coverage of the movement growing) are enough to challenge the ideological stance that debt is a rare, individual failing, not a structural burden, however the campaign is also encouraging people in debt to share their stories.
The movement is drawing comparisons between itself and the gay rights activism focussed on supporting people to come out about their sexuality. People on the movement’s social media sites have commented “if you tell people about your debt, if you ‘come out,’ you take away the shame… your friends and family will realize they too have a reason to support [the] political movement”.
Finally, along with de-stigmatising debt and helping out those who owe money, the campaign serves as a starting point for broader discussion about the role of debt in society, and how we can create a system where people’s needs are met without resulting in their impoverishment and banks’ profit.
Journalise Lilly O’Donnell writes “banks want people to be in debt. We know this. It’s how they make their money. But after a certain period of time without repayment, debt stops being profitable.” It is at this point that they are on-sold to debt collectors.
Systemically, the money lending and debt buying process is driven by profit maximisation which is risky, sets borrowers up to fail, and lets the consequences fall heavily on them. Predatory lending by banks, such as that responsible for the housing crisis, is often the catalyst for people to find themselves in unmanageable debt. The prospect of profit also drives debt collectors and loan sharks to buy packaged debt for less than it’s worth, and gamble on their ability to retrieve this from those owing money.
One of the founders of Strike Debt, Astra Taylor, wrote in The Nation, “As individuals, many of us are in debt because we have to borrow to secure basic social goods — education, health care, housing and retirement — that should be publicly provided. Meanwhile, around the world, debt is used to justify cutting these very services, even as the game is further rigged so that the 1% continues to profit, raking in money from tax cuts, privatization schemes and interest on municipal and treasury bonds.”
The work of Strike Debt reminds us of broader political demands made by social movements in the past – ‘people before profit’. At the very least, the campaign has applied this philosophy to an issue burdening many people and communities, and makes us consider the need for reform. What Strike Debt is achieving, however, is likely to be greater than this. By avoiding placing demands on politicians and the system which protect capital, and by challenging debt through direct action, Strike Debt invites us to consider a kind of activism, and a future built on self-determination.