Debt and the Rolling Jubilee

If yours is among the 77.5% of households in America that are in debt, you might be able to imagine this scenario: Something bad happens in your life. You fall behind in your monthly payments. One day, you receive a notice in the mail that a collections agency, which bought your debt from your bank, has decided to sue you. You have no money to pay hundreds of dollars an hour for a lawyer. You must answer the lawsuit, be prepared to attend multiple hearings, craft legal arguments and stand alone in court.

Most likely, you will join the roughly 90% of people sued by creditors who receive this type of lawsuit, take no action, and get hit with a default judgment. Soon, you may begin to receive notices that your bank account will be levied, your wages garnished, or a lien put on your home. Your credit will suffer tremendously, making it difficult to take out important loans or find new housing should you need it.

Now imagine the alternative made possible by the new “Rolling Jubilee” movement: You receive a letter in the mail stating that a group of strangers, who bought your debt from a collections agency, has decided that your debt no longer exists.

Thanks to the generosity of small-scale donors who are in comparable financial straits to you, you join a lucky few whose debt was bought by the only force of good in that market. This may not be the solution to all of your problems, but it at least offers some glimmer of hope, of mutual support.

I help coordinate and manage the Consumer Debt Defense Clinic at the East Bay Community Law Center (EBCLC), a non-profit in Berkeley, CA. In our office, we sit down and speak with hundreds of people each month from all over Alameda County who are facing down some of our society’s most powerful players--major banks and creditors--with no one to back them up. For so many of these people who have lost their homes due to predatory lending, lost their jobs in this economic downturn, graduated college without a job market to help them pay their bills, or experienced illness without medical insurance, taking on debt is not an investment in the future. It is a lifeline to stay afloat.

Every day people bring us the summonses they received from collections agencies they’ve never heard of, for relatively small debts. We get panicked phone calls from folks who get notice of a wage garnishment for lawsuits they didn’t know they had lost. Most of these lawsuits don’t come from major banks, but rather from collections agencies who have bought bundles of their debts for pennies on the dollar. The collections agencies and their attorneys typically have very little legitimate information about the debt itself to bring to trial, but it hardly matters: they rely on the fact that almost all of the lawsuits go unanswered and end in default judgements. 

In the context of this ongoing financial disaster, with predatory lending continuing at every level, from payday lenders to the nation’s largest banks, Rolling Jubilee offers the crucial hope of an alternative way things could be. “The peoples’ bailout,” its organizers call it. But critics and fans alike have voiced their concerns about Rolling Jubilee--chief among them, that the campaign’s efforts are unlikely to make a significant impact in reducing the total debt that families and individuals in our nation are facing. This is undoubtedly true. There is over $8.5 billion of debt being sold in the secondary debt market in the United States, and Strike Debt would have to amass incredible amounts of cash to even make a dent in it.

At EBCLC, we sometimes get a similar feeling about our own work defending consumers in debt lawsuits. Even as we help folks settle their cases, get the suits dismissed in court, or protect the clients’ assets post-judgment--all very impactful to people in vulnerable situations--the cases keep coming in the doors every day. We would need hundreds of times our current staffing to address them all. In an effort to head off some of this suffering further upstream, we’re brainstorming up some proactive steps we can take, including an exciting new financial empowerment program for immigrant consumers that we’ll be rolling out soon.

Just as our frustration with our overwhelming caseload is leading our organization to large-scale policy advocacy and broader consumer protection work, so could the symbolic force of Rolling Jubilee give new energy and spirit  to the anti-debt movement, leading to greater public awareness and, eventually, new long-term strategies for curtailing these extremely harmful, predatory practices.

Aside from Rolling Jubilee’s exciting and heartening project of debt forgiveness, there are people already thinking about what kind of policy changes we need. Legislation, like California’s SB 890, could tighten the requirements on what information debt collectors are required to turn over before they can win judgments in court. We could better regulate the illegal levies, liens and garnishments that snatch protected forms of income, including public benefits and some wages, that are by law exempt from collection because people need them to survive.

Solutions are out there; they will just require a realignment of our priorities to regulate these rogue players and protect individual consumers. History proves this difficult (to say the least). But with the combination of the type of organizing made possible by the connections created through new, digital Occupy-era organizing coupled with “old-school” advocacy and resistance by community organizations on the ground, we can begin to imagine a very real path to pursue.

For more information, also see EBCLC’s 2011 Report Past Due: Why Debt Collection Practices and the Debt Buying Industry Need Reform Now.

Mari Castaldi works as the Program Coordinator of the East Bay Community Law Center's Neighborhood Justice Clinic, a barrier-free legal center serving low-income clients in Alameda County, California. She has previously worked doing community organizing with rural immigrants in Ohio and migrant families in Central America. Mari graduated from Oberlin College in 2011, where she studied Politics and Latin American Studies and was active in the community advocating for public education and immigrant rights. She currently resides in Oakland.