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Consumers Find Power in Debtor’s Unions

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All kinds of ideas have been tried to take on student loan creditors and banks. Most of those ideas have involved the legal system, with borrowers and their attorneys coming up with new and novel ways to combat the student loan collectors, or through filing lawsuits to enforce debt forgiveness programs.

Unionizing Borrowers

A recent article highlights a new, innovative way to take on student loan creditors: Why not copy the model of union workers, and use the power of collectivization to take on the banks? That idea eventually because the Debt Collective, an organization/union made up of student loan borrowers, as well as other members of the community, such as activists and professors. Like a union, they use their collective power to help student loan debtors.

The logic is innovative but the concept is relatively simple. One debtor who owes money is generally powerless against a student loan creditor. Even if the debtor owes a lot of money —say, $100,000—that’s small change to the bank. The bank (or creditor) is in control.

But what if the debtors worked together and pooled their debt, in an effort to get the bank or creditor to negotiate? Now, the bank or creditor is not dealing with one debtor with one relatively small debt, but rather thousands of them, who owe a collective amount in the millions of dollars that can do real damage to a creditor if that amount is unpaid. That threat brings the creditors to the negotiating table.

Group Has Made Strides

The movement began when it worked with borrowers of now-defunct private college Corinthian College. By helping borrowers strike, they managed to get the Obama administration in 2015 to grant loan forgiveness.

The organization now has its own website, where it provides tools to debtors to help them fight back against banks and creditors. It also has branched out beyond student loans, now fighting against payday loans, court fees and fines, and medical debt.

Consumer Power and Debt

The potential power of debtors unions is huge. It is estimated that 77% of U.S. families have consumer debt, and that 40% of families need and use credit cards to pay for basic living necessities. Every year, there are 1.1million new student loan defaults.

The Debt Collective points out that minority groups face particular problems, as they are more likely to be the victims of abusive, subprime loans, and at the same time are more likely to be the victim of discriminatory employment practices which reduce their employment changes, and lower their pay when they do find work.

For example, four years after graduation, black students have four times the student loan debt as white students do. Minorities who are in prison and face fees from the criminal system find their families on the hook to pay an average $13,607 in criminal fees.

The collective is a great idea, but even as an individual, you can fight against abusive and predatory lenders. Contact the Miami consumer rights attorneys at Jacobs Legal today to see how you can take control of creditors and borrowers.

Resource:

gq.com/story/debt-collective-union-organizing

https://www.jakelegal.com/the-benefits-of-class-action-lawsuits/

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