Activists in an organization related to the Occupy Wall Street movement made the news this week when they successfully bought large amounts of debt from collections groups at a discounted rate and then forgave it. The group, called Strike Debt, acted the way that a typical debt collection company would when they purchased past-due debts for pennies on the dollar from entities that no longer thought they could collect on it successfully. However, instead of aggressively pursuing collections the way that a typical debt purchaser would, the group simply forgave the debt.

The plan effectively eliminated debt for over 1,000 people in an amount totaling more than $1 million, spending only $21,000 in donated money in the process. We wrote about this plan when it originally launched late last year.

The group will send out notices to the individuals whose debt they purchased and forgave. The goal was to help the uninsured and underinsured to get out from under crippling amounts of medical debt which negatively affect both hospitals and patients.

While this is a very admirable goal, having debt bought by a charitable organization and forgiven is unfortunately not a realistic way for most people to get out of debt. Many more people hold overwhelming medical debt than the organization will be able to reach through its debt buying efforts, so it is important that Florida borrowers consider their more feasible options, such as a bankruptcy filing, to discharge debts. Filing for bankruptcy and renegotiate debts or seeking a court ordered discharge can help eliminate debts that are simply un-payable given one’s financial situation.

Source: CNN, “Occupy offshoot forgives $1 million in random people’s debt,” Blake Ellis, March 15, 2013.