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“People who borrow are often looked upon as lacking thrift and a sense of responsibility. But people with good credit ratings are viewed with respect — often even with envy. Yet, the transaction is the same — to obtain credit is to incur debt. Recognizing this identity
is the first step toward understanding debt and its function in our economy. ”

I agree. During the years that this publication was widely updated and circulated, our culture, for the most part, spurned the use of credit for personal uses other than buying a home or car. And then you were prompted to pay these off as soon as possible.

It has been a relatively recent phenomenon that the widespread use of credit for buying do-dads has been encouraged.

The Two Faces of Debt booklet gives us some clues as to why so many of us place our foot into the bear-trap. Having a credit line gives us instant status. In conveys a sense of wealth - albeit a false one.

If you use your credit for frivolous purposes, you’re testing the trap. I you’re able to keep from springing the trap, you’ll be a hero.

If you get caught by the trap but are able to get out before the bear comes back, you’ll be ok and will feel like Indiana Jones.

However, if you’re unable to free yourself, God help you. Too many people, today, are finding themselves unable to free themselves in time.

He and his wife had some work done on their roof late last year. He has been waiting on the invoice but, alas, no invoice has been forthcoming.

Yesterday, he received a notice from a debt collector referencing the roofer’s repair bill and stating that they have been given the responsibility of collecting the debt.

My buddy wanted to know what to do. Pay the bill that he’d been expecting? Call the roofer? Call the collector?

If you find yourself in this situation, I advise you to do what I advised him. When a third party calls or sends a notice informing you that they are collecting a debt on behalf of another party, don’t automatically believe that they are telling the truth - even if you know that you owe the debt.

Remember, your obligation is to pay the party with whom you have a business relationship with. You have no obligation to a third party debt collector unless they can show you documentation that they have been contracted by the original service provider. Otherwise, you have no proof that the money will reach the party that you originally hired.

It does happen that people have paid a third party debt colleciton agency only to find that that’s as far as their money goes. It never reaches the business that did the work!

What if the third party has purchased the debt? Again, you have no obligation to pay someone who has not provided the service. They may own the debt. But you have no obligation to them.

The bottom line is that if someone you don’t know comes asking for money, ask them to provide the documentation containing your wet-ink signature. If they can’t, you don’t pay.

He and his partners will, for a small fee, take a person’s unsecured debt and use the law and the court system to have it eliminated. The debt is reassigned to Mike’s group then, when the creditors try to collect, they get it tied up in court until the statute of limitations run out.

You can listen to the show by Clicking Here.

Irresponsible individuals and organizations claim that they can “cancel your mortgage administratively” or “non-judicially” and this is patently false.

When asked, none of these individuals has ever produced an actual release of mortgage lien or other record that the note has been eliminated using any method other than payment.

Only through the court system is it possible to cancel any mortgage, student loan or auto loan, and the probability that it will happen is miniscule. If you are in default on your mortgage, you must be able to prove fraud in order to win. Legally, this should be easy to do but, in actuality, you won’t be able to accomplish this without a tenacious effort.

Having said that, here is what you need to know to go forward.

Original Note

In order for the bank to win its case against you, they must be able to produce the original note as evidence in support of a mortgage foreclosure action or to foreclose on your property.

The truth is that most banks cannot produce the original note unless they trick the court into producing a new one or trick the defendant into certifying that a copy of the original is true.

Upon origination of the loan, the mortgage note is “securitized” by a third party for investors in the mortgage backed securities market. The bank is then required by the SEC to create a new entity (corporation or trust) to be the custodian of the original note.

After the note is transferred to the third party custodian, it cannot be recovered by the bank. That would be considered defrauding the investors.

Instead the bank defrauds the court and the defendant by obtaining the court’s permission to create a new note (asset). Only the original, endorsed note is the true note and only the true note gives the bank the right to foreclose.

You must make this clear to the court. This gives you your best chance of winning without having to prove fraud.

Please contact me if you wish to learn more.

If you are inundated with calls from collectors, the first thing to know is that you never want to discuss the account that they are calling about.

When you do receive one of these calls you’ll want to obtain the following information:

• Caller’s Full Name
• Caller’s Mailing Address
• Caller’s Phone Number

Make sure that you also note the date and time next to each call.

You will never, never, never give out any information about yourself to the caller – not your address, phone number, banking information, social security information, driver’s license number - nothing. Do not verify the accuracy or inaccuracy of any information they ask about.

What information they don’t have is their problem.

After you’ve written the above information in your phone log, inform the caller that the conversation is being recorded. Inform them that they have the right to remain silent and that anything they say may be used against them in a court of law. Expect them to end the call at that point, but be prepared to continue to explain that you do not want to receive any more calls from this organization and that any further calls will constitute harassment and a class 1 misdemeanor under state law.
Explain that if anyone calls you again from this organization, you will hold the caller personally responsible and file a written complaint for telephone harassment against them, individually, with the state attorney general’s office.

Next, inform the caller that you are requesting a validation of the disputed account. Never indicate that you refuse to pay and again, do not discuss anything specific about the account.
Next, request a copy of their “do not call policy” as required by the Federal Telephone Solicitations Act.

Next, send the collector the request for validation. This procedure stops about 99% of all unwanted phone calls no matter what the reason for the call.

Rarely will you have a collector who thinks that the law does not apply to them. If you receive another call from that collector’s company, you can pursue the complaint to the attorney general’s office, but there is one more thing you can do that is usually more effective.

Debt collectors and creditors calling to collect from you are trying to make a sale, just like with any other sales call. Legally, a collection call is considered soliciting. They are selling you on the benefits of paying them what they say you owe. In return they promise to stop harassing you, quit making any more claims on your credit history and/or not suing you. Consequently, the callers are monitored for their productivity. A call without a “sale” (your verbal commitment to make payments) is not productive and they might call you again. However, a call without a sale that substantially exceeds the average call time for most calls of this nature will result in your account being placed on the “do not call” list or listed as “uncollectible,” in which case you will no longer receive any calls.
This will be time consuming for you but it works very well and can be fun. Your objective is to keep the caller on the phone for as long as possible. The trick is to never discuss the collection account and make it appear as if you are sincere.

Talk about American Idol, politics, collection laws, the evil banking system and your political opinion about the Federal Reserve Board. Talk as if you are not listening to them, or that you are not smart enough to address their specific questions.

For example,

Caller: “Sir, I need to know when you intend on paying this bill.”
You: “You people are all the same, you called me last week. You know, this banking system has to go, it’s nothing but evil.”

It does not really matter what you say, but make sure you avoid discussing the collection account , do not give any payment information, do not make any commitments to pay, and, most of all, sound sincere.

If it sounds like the caller is going to end the call, ask for a supervisor. This should double the call time, in many cases.

If this doesn’t work, contact their company in writing.

If that doesn’t stop the calls write to your state attorney general’s office.

Click here for samples of both letters.

You may be able to file the complaint with the attorney general’s office via the internet. Just do a keyword search under your state’s name, and “attorney general”.

Today’s banks only buy and sell receivables, notes, or paper. Sometimes they’re called negotiable instruments. Your payment authorization for each credit card purchase, along with your credit application, is used to create new currency to pay the merchants. This makes you, the bank customer, the lender!

That makes the bank the borrower.

These transactions look just like counterfeiting, except the banks call it “originating.”

In any case, the banks benefit from money they did not have prior to accepting their customers’ applications or notes. Their customers’ applications or notes are used to pay for purchases or collateralized property.

The Federal Reserve Bank of Chicago publishes “Two Faces of Debt” which explains the process:

“Debt does more than simply transfer idle funds to where they can be put to use — merely reshuffling existing funds in the form of credit. It also provides a means of creating entirely new funds — funds needed to finance the greater volume of new projects and spending that contribute to economic growth.

But a depositor’s balance also rises when the depository institution extends credit — either by granting a loan to or buying securities from the depositor. In exchange for the note or security, the lending or investing institution credits the depositor’s account or gives a check that can be deposited at yet another depository institution. In this case, no one else loses a deposit. The total of currency and checkable deposits — the money supply — is increased. New money has been brought into existence by expansion of depository institution credit. Such newly created funds are in addition to funds that all financial institutions provide in their operations as intermediaries between savers and users of savings.”

A Congressional Subcommittee on Domestic Finance explains the process in very much the same manner, in its publication “Money Facts.”

“33. Do private banks issue money today?

It doesn’t ‘get’ the money, it creates it. When the Federal Reserve writes a check, it is creating money. This can result in an increase in bank reserves—a demand deposit—or in cash; if the customer prefers cash he can demand Federal Reserve notes, and the Federal Reserve will have the Treasury Department print them. The Federal Reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $5 and $10 bills necessary to cover its check simply by asking the Treasury Department’s Bureau of Engraving to print them.”

You can use this information to protect yourself from creditors. The rules require creditors and collectors to prove that money was lent, or that they in fact paid the merchants for purchases you made, and that the arrangement was not fraudulent.

(You can learn more by reading G. Edward Griffin’s book, The Creature from Jekyll Island: A Second Look at the Federal Reserveand an excerpt from it called “The Mandrake Mechanism.”)

If you don’t have the means to write the big check and you’re falling behind on your payments, don’t think you can wish your debt problems away.

We talk to people all the time who thought their debt problems would go away by ignoring them. They usually find that they just get worse!

It’s only when the pain gets too unbearable that they do anything.

If you’re one of these people and you think you’re about to get sued, there are methods that are tried and proven to be successful to help you. You have to do a little work but the time and effort expended will be worth it to you. Do not give up on yourself.

For you, what is the first step? If you have a checking and/or a saving account at the same bank that issued your credit cards, MOVE THE MONEY NOW!

While your creditors may not legally be able to freeze your accounts, they may do it anyway. And if they do, suing them to release the funds will be expensive at the least. In the end, they may not be required to do it. So, do the common sense thing and move the money somewhere they can’t get at it.

This next step will involve a little more time and preparation. Your chances of avoiding a lawsuit are improved if you get this done quickly. Your mailing address determines which law firm or attorney will handle the suit against you. Therefore, you are going to want to move! Don’t panic. You’re just going to change your mailing address which, in these days of internet access, is very easy to do.

The bank must file in the county in which you reside. And since it’s assumed that your residence is your mailing residence, this is where the law firm will be located that will file the suit.

If your mailing address is in Houston, for example, the bank will look for a firm in Houston to file the suit. After all, that’s where they think you live. If you’d filed a change of address notice to the credit card company letting them know you now receive your mail in Houston rather than Peoria, Illinois, how would they know that you didn’t physically move?

As long as you ultimately receive all your mail and you pay your bills online, who’s going to know the difference? (Just make sure you’re paying your bills online.)

The third thing you will do is change your phone number to stop the harassing phone calls and to confirm that you have moved. This, too, is easier than it sounds. If you are familiar with VOIP, technology, you know that you can get a phone number in any area you wish. And that number is not tied to the location that is associated with that area code but to a router which can be located anywhere in the world!

Of course, there is more detail behind this. And you’re going to need the help of experienced professionals to take it from this point. But, I’ve laid out the first steps to putting yourself on even ground with your creditors so that they will be willing to negotiate with you.

We’ve read books and attended seminars saying that the way to become wealthy was to leverage “other people’s money.” Those “other people,” the banks and credit card companies, have been sending us offers for low interest money for years.

So we followed the advice of the wealth building gurus and put that “free money” to work for us. But we found out the money was lazy and not only didn’t it go to work, it died! And now the “other people” want their money back. But all we can do is shrug and say, “sorry, we don’t have it. That guy does,” as we point to the wealth building gurus. And “the other people” won’t accept that.

Are we to feel sorry for the “other people”? I don’t. They knew the risks they were taking. They knew that the people they were lending the money to may not be able to pay it back. In their rush over each other to shovel the money out to the consumer, they forgot about those pesky laws. Those pesky laws I refer to are the ones that state that when “the other people” lend money, they are to do so to the benefit of the clients, not just their own.

So don’t feel sorry for “the other people.” And don’t feel bad if you can’t pay them back on their schedule.

The 77% drop in Bank of America’s earnings in the first quarter is their problem. The $393 million dollar first quarter drop for Wachovia is their problem. Wells Fargos’ 11 percent drop and the 50% shortfall for JP Morgan is their problem.

Your concern is to feed and clothe your family and keep a roof over their head. Like cockroaches, the banks and credit card companies will survive.