Forums: Discussions for entrepreneurs and small business.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

Apropos this topic, I heard yet another commercial on the radio, today, and I think I understand where you`re coming from James.

It was one of many that says, "If you have debt, you have a RIGHT to renegotiate... This is bad news for the credit card companies, good news for you."

It pisses me off hearing these. No, they do NOT have a "right" to renegotiate, and in particular they do not have the "right" to force a lender into a position of any kind.

If that`s what you`re point to in your arguments, then we have no argument at all. It`s only the blanket statement that all renegotiation is immoral that I`m objecting to.

As for the fungible skill of renegotiating a debt versus coming up with the money, I`ll give you that on a very constrained basis. If someone has ANY ongoing and/or new income, then you may be right. But if all income stops (suddenly), then no, they may have skills to negotiate but no money to pay back a debt.

For my part, I`m quite pleased that the original post, the Top 5 Things to
Know about renegotiating credit card debt, has stimulated such a spirited
debate. I`ve missed "debate" in America the past eight years.

So, I might as well throw a new log on the cozy flames. James, have you
heard the terms "flexible currency," the "15% rule," or "bank of issue?"

In America (and, I believe worldwide though the percentage may change),
a bank is required to have cash deposits equal to only 15% of the loans it
makes. That means that if a bank has $150 million in deposits it can
make $1 billion in loans. This formula comes from the days or early
banking when banks realized that only 10-20% of the people who had
deposits with them actually came and asked for their money at any one
time, so they loaned out the rest. That made sense in the days of hard
currency, gold and gold certificates, but when the U.S. went off the hard
currency standard, money became, essentially, an agreement, not a
tangible asset. The dollars in your pocket only mean anything because
enough people agree they do. They have no intrinsic value (such as gold
certificates did).

In the soft currency era, with the aid of computers, the 15% rule took on
a new twist. A bank didn`t need to have $1 billion in deposits to loan out
$850 million and keep $150 million on hand, it could now take in $150
million in deposits and then loan out the other $850 million. But where
does that $850 million come from?

They create it. That is the definition of a bank of issue. That is the basic
concept behind "flexible currency." As the world increases in population,
we cannot keep a fixed amount of total money in the world. New money
needs to be created for their to be enough to go around. What kept gold
at a relatively stable intrinsic value for years what that the amount of gold
in the world couldn`t be increased arbitrarily. It had to be dug from the
ground and refined. But currency doesn`t even have to be printed to
increase its circulation. All that has to happen is a bank enters a debit
into a computer.

A person wants to buy a home. They put 15% down, say $150,000. The
bank enters a debit into their account for $850,000 (debit because they
owe the bank that money,) and voila, the global pool of dollars has just
increased by $850,000.

The Federal Reserve Bank has two primary functions (besides earning
profits). To set the value of money (interest rates) and to control the
circulation of money, which means the actual amount of American dollars
that exist in all forms of circulation, printed Federal Reserve Notes and
bank debits and credits.

So, when a bank loans "money" via a credit card, it is not actually loaning
anything tangible. It is taking advantage of a banking law that says it is
allowed to create money in the form of computer credits and debits which
(because money is an "agreement`) have value because other banks,
vendors and individuals agree to honor those credits and debits.

When a person pays back on such a loan, the bank not only makes the
interest as profit, but 85% of the loan as well. When a person settle a
credit card at 35%, plus whatever interest was paid along the way, the
bank actually still makes a profit. And the Federal Reserve takes note
that the general circulation of agreed upon dollars has decreased by that
amount. When they add it all up, if the general circulation has decreased
more than they would like to preserve the "health" of the economy (in
their judgment and not always correctly), then they put more money into
circulation which allows banks to loan up to six times what they receive
and the economy expands again.

Alan Greenspan`s philosophy for twenty years was to let banks regulate
this creation and uncreation of money themselves, and he recently
admitted to Congress that such a philosophy didn`t work because, as it
turns out, the banks didn`t regulate themselves. They just kept lending
and lending and lending to earn more and more interest without ever
really considering the overall "health" of the economy.

Prior to computerized debits and credits governments understood that
they couldn`t just print paper money at will because if there was too much
in circulation, if it was too easy to get, it would lose value (gold had to be
dug from the ground). Same with computerized credits. With too many
in circulation they lose value. A large, underlying current of the failing
economy is that the "agreement" has broken down. Banks no longer
agree on the value of each others debits and credits, so they`ve stopped
lending to each other, and thus stopped lending to other businesses and
individuals. For the economy to truly "heal," we not only need to get the
world to the point where it puts value in America debits and credits
("money") again, but we need to change the general attitude of bankers
toward the creation of money so that they manage money for the benefit
of all and not just for their own profit. The Federal Reserve chose to take
on the advantages of having a monopoly on money. When do we get to
see them take on the responsibility that goes with that power?

All together, thousands of pages have been written on the above concept.
Everything from underground pamphlets like "The Legalized Crime of
Banking" to major tomes, published by national book publishers and
praised by the New York Times, like "Secrets of the Temple."

It is a large system of money-in and money-out, money created and
money (literally) un-created. We are all a part of that system. There`s a
great little cartoon that came out in the forties about America getting into
WWII. It showed four men in a row boat that was sinking at 45 degrees.
Two were at the bottom bailing out water and two were at the top, dry,
saying "I`m sure glad our end isn`t sinking."

It was a metaphor to express why America should get into the war but it
applies to our economy. We`re all sinking together.

If you own a small grocery store and the teamsters go on strike, causing
the suppliers to ship less so you have less product on your shelves and
cannot make the same profit you made last month to meet your own bills
what do you do? You raise the prices on the product you have. So your
customer is now paying more for her basic groceries, so she raises the
hourly rate she charges to her customers, etc. etc.

But there isn`t an unlimited number of people who can keep up (the
people at the top of the boat). Somewhere along the line, someone is not
going to be able to pay the higher prices, period. They are at the bottom
of the boat, bailing for their life.

So what do they do? Jump out? Drown? When they took out their credit
card loan or home loan they didn`t know the teamsters were going to go
on strike (a metaphor for much larger, colossal economic changes beyond
their control). They might have even thought that, in the event of some
economic shift, that they`d be at the top of the boat, but circumstances
didn`t play out that way. I`m saying, when those people are doing
everything they can to keep from drowning under forces way beyond their
control, that debt settlement is a viable option. Not lying. Not cheating or
stealing. Not even shameful. It is a part of the big machine, a cog in the
massive assemblage that is our global economy, a piece of the whole,
ying and yang, we cannot have great excess without great loss.

And we are all sinking. You, too, my friend. That`s the irony of the boat
analogy. Pretty soon it`s not going to matter how much the people who
found themselves at the bottom keep bailing, the people at the top are
going to slide toward the water with the sinking boat.

That`s why bankers are asking for bailout money. They can`t believe the
water is splashing up at their feet. I respect that you have continued to
make a living in this economy. I admire that you are still paying your bills
and debts and not feeling the water splash at your feet.

My head was underwater. The events of my life that I describe in "The
Do-It-Yourself Bailout" were real, life and death, survival or destitution.
Financial drowning due to yes, some choices (I did choose to be a
filmmaker) and yes, many events beyond my control (I didn`t choose for
the banking laws to be changed that allowed banks to throw the 15% rule
out the window, start making zero money down loans and expand credit
so much that the "agreement" contract broke down).

But we`re all sinking. So instead of sitting at the top of the boat telling me
and everyone else in my position that we`re dishonest for settling our
debts, how about helping us figure out how to stop the leak, because you
might we waist deep in the water pretty soon, too.

Kenny Golde
"The Do-It-Yourself Bailout"
http://www.SettleYourCreditCards.com

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

Totally agreed. And where`s the question, "At whose expense?" Of course it`s never asked.

I have a pre trial hearing on the 3rd of June about a crdit card bought by a third party. Is there anything I should know or do? What can they do to me? Please help

I just settled another credit card account — for 22%. $5000 full settlement on a $22,500 balance. Read on to learn how I did it because this could help you reduce your own debt without paying thousands of dollars to a third party company to do it for you.

In "The Do-It-Yourself Bailout," I tell the story of how I settled five of my seven credit card accounts, reducing my debt from $212,000 to $30,000 in about six months and having $115,000 in debt written off entirely.

At the time of writing, I still had two open accounts, "Yellow Bank" with a $17,500 balance and "White Bank" with a $12,500 balance. With added interest during the months I was not making payments, the balances increased to $22,500 and $15,000 respectively.

Last Friday, I settled the Yellow Bank account for only 22%. That's right, 22%!

If you're still working on settling your own credit card accounts, read on because there is great information here that you can use to settle your own credit card debt for far less than you owe, without paying a third party company to do it for you.

For many months, Yellow bank was offering to settle for 40%, or about $8000 when the balance of the account was around $20,000. I didn't have $8000 and was offering $5000, which they consistently refused with the patent answer, "we have never gone that low and never will." At the time, a $5000 settlement would have been 25% of the current balance.

After about six months the account went into charge-off and I began speaking with a collection agent working on behalf of the bank. The balance had increased to its current level and 40% was now $9000. I still offered the $5000 and they still refused.

Over the next few weeks, the collection agent called three or four times a week. Sometimes I would speak to him. Others I would not. In all, the conversations were the same. They offered 40%. I offered $5000.

Just last Thursday, as I was out looking for a Halloween costume, I had something very new happen. Usually, whenever a collection agent would call me and leave a message, the message would never contain details. They would leave their name, company and phone number and ask me to return the call. That was it. This time, he actually left a message saying he had "good news." It occurred to me that it might just be a ploy to get me to return his call. In the end, I figured if it was a ploy, we'd just have the same conversation and leave it at that. I might as well see if he really did have good news.

I phoned back and, sure enough, he said he got approval from the bank to accept my $5000 offer. A 22% settlement.

Of course, you know what I asked for next. A settlement agreement in writing. It was already Thursday afternoon, October 29, and he said the one condition of this settlement was that I had to make the payment during October so it could go on the bank's books for the month.

I said that if they could get me the letter that day, I could overnight a certified check. Or, if they got me the letter the next day (Friday, October 30), I could do a wire transfer.

The letter came in at 8:15 a.m. on Friday morning, but there was a catch. They said they needed the payment by 11 a.m. Central Standard Time, which is 9 a.m. Pacific Standard Time where I am. I said it would be impossible. I couldn't do a wire transfer until my bank opened at 9 a.m., which would be past their deadline. They suggested doing a check-by-phone. I had never done a check-by-phone before and, frankly, I didn't feel comfortable giving a collection agent my primary bank account number with nothing more than a phone authorization to make a withdrawal. I wanted to move the $5000 into a temporary account, and I had to go into my bank to do it.

They then launched into the "sell" again. This offer is only good today. On Monday it will be 40% again. Etc. etc.

There was a lot of pressure here and I knew they were trying to get me emotionally off balance so I would make the check-by-phone payment right then and they would get their money while I was still on the phone and not give me the chance to back out.

I wasn't having it. I said, "what if I wanted to send this settlement agreement to my attorney to look over before making payment? He doesn't get into his office until after 9 a.m. Would you tell me that I had to send in a payment on a business deal without the benefit of having my attorney look over the documents? I'm sorry," I said. "I'm ready, willing and able to make this payment, but I do not like receiving a letter at 8:15 a.m. and hearing that I must make a payment inside of 45 minutes before the start of business, when my bank isn't open, my attorney isn't available, and that if I don't comply the deal is dead. It's a red flag for me and I'm not going to fall to the pressure."

So they did! The collection agent put a manager on the phone who said, "let me call the bank and see if I can extend the deadline." And guess what? I got two extra hours, which allowed me to go to my bank, move the money between accounts, satisfy my concerns about a check-by-phone payment, and close the deal on my terms without fear or anxiety.

Now I can say that I have reduced my credit card debt from $212,000 to $15,000 and saved almost $133,000!

To read "The Do-It-Yourself Bailout," visit http://www.SettleYourCreditCards.com.

Interesting topic Kenny.  Can you, or have you addressed these Credit Card companies suing the cardholders for the balance owed and attaching wages or other assets, including real estate?  Or, if you settle a debt, the financial institution reporting the "forgiven" debt as income to the IRS, thus creating more financial problems for the cardholder as he/she now owes taxes on the unpaid portion of the debt?

Hawk

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Plenty of people actually use pay day loans rather than settle credit card debt - 5 top things to know. It sounds more expensive, however they make sure that consumers are less likely to roll-over their debt than with credit cards. The annual percentage rate sort of provides warning to repay on time.

 

If you want to be safe while applying for a payday loan, it’s important to check the details of the company. Make sure you can actually contact them, and ideally be able to speak to a real person. You’ll also want to check that they have a company registration number and an actual address.

iloan

 

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