The Truth About Banks
The Truth About Banks
We deal with the debt itself in two ways. We go after both the original creditor that issued the debt and we go after the debt collector that ends up with the debt. We have a proprietary letter that we send out to your original creditor. We challenge them on the validity of the debt, we also challenge them to prove that they ever loaned you money using generally accepted accounting principles.
This is something that the banks absolutely cannot do! The following will help you understand further. Banks works very differently than people understand. Banks work very differently than they represent, in terms of what they actually do. Banks don’t lend money, banks create money.
This is an entirely different kind of process. In this country under the Federal Reserve System we operate with what’s known as a Fractional Reserve Lending System. This works as follows; Lets say you have a $1,000.00 CD in a bank (a bank these days may pay you approx. 5% interest.) Most people think the bank takes their money (from $1,000.00 CD) and loans it out to someone else at maybe 10-15% interest or whatever the bank can get. Therefore the bank makes their money or their profit in the spread (the difference between what it pays for the money and what it can lend the money out for.) This is ABSOLUTELY NOT how it works! Under the Fractional Reserve Lending System a bank is allowed to lend 10 times its reserves. So here’s what they do; they take your $1,000.00 and reclassify it as a reserve that now allows them to make $10,000.00 in loans on your $1,000.00 which literally creates $9,000.00 in brand new money. The money that you borrow from a bank doesn’t even exist until the moment you borrow it and ceases to exist when you’ve paid it off. But while in existence they’re charging you all kinds of interest and fees.
Now you can begin to get a picture of how banks are highly profitable and why they’re being built on every corner! If you and I could do what banks do, we could become rich, but if you and I attempt to do what banks do we would be put in prison because that would be fraud! You can’t lend something you don’t have unless you’re a bank!
The banks certainly don’t disclose all this to you. Please know that this information we are sharing with you is very much public information it’s just simply not common knowledge and the banks do their best to keep it that way to protect their interest. Banks don’t want you to understand this process because they know if people understood how their system works they would be outraged with banks as well as outraged by the fact that banks charge people 20% plus interest on money that was literally created out of no where! We challenge the bank under the Truth In Lending Act and The Fair Credit Billing Act.
Sometimes when the bank receives our letters they will zero your debt out and that’s the end of it. However that’s not normally how it works and that’s not what we expect to happen. We send the letters for two reasons; 1) we’re establishing legal grounds that are going to benefit us later. 2) to hasten a natural process. What we expect the bank to do is to simply get rid of your debt, which is what they’re going to do anyway. By law when you cease paying the bank for 6 months they have to write your debt off and they have to take it off of their books as a performing loan. Once they write off your loan the bank suffers no financial detriment because the bank has insurance on your debt and YOU have paid the premium for that insurance by paying your annual fee (another fee the bank makes additional money on).
They also receive a generous tax credit for the bad debt and then they turn around and sell the collection rights for the debt off to a debt collector or a collection agency or collection attorney for pennies on the dollar. At this point the bank has been made whole and is out of the picture and in comes the debt collector.
Third Party Debt Collector & The Fair Debt Collection Practices Act
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When the debt collector enters the picture there’s another federal law that comes into play, it’s called the Fair Debt Collection Practices Act (FDCPA.) It’s a law designed to prevent abuses in the collection industry. But it’s a law that collectors ignore them, they ignore them because they know that you don’t know the law or maybe if you know a little about the law. You have no means to enforce the law and they also ignore it because there’s a lot of money in debt collection.
Debt collection is a highly profitable business. They buy your debt for 2-10 cents on the dollar then they come to you looking to collect more than 100% of what the debt originally was because they’re going to add their own interest, fees, and penalties and they’re going to want to collect 120%-150% maybe even 200% or more of the original debt! When you pay a debt collector you’re not paying your creditor. Your creditor has already been paid by the insurance company and is out of the picture.
You’re simply putting profit in the hands of the debt collector. That’s why they’re so aggressive and why they’ll literally lie, cheat, steel, they’ll use fear harassment and intimidation or do whatever they can do to get you to pay because it goes in their pockets. But may of the things that they do are violations of this federal law (FDCPA) and they can be held accountable. They all violate the law, there’s no such thing as a debt collector that doesn’t violate the FDCPA.
Here’s an example of a violation they all do; Let’s say one of your accounts is with Bank of America. You quit paying BofA , then they write off your debt, and then they sell the collection rights to your debt to a debt collector and the debt collector calls you and says, “Mr. Jones I’m calling you about this money you owe BofA . Well just right there he is lying to you; he’s violating the FDCPA because the truth is you no longer owe BofA anything. BofA has been paid off by the insurance company and they have been given their tax credit for your debt and they have sold the collection rights to the debt collector. On their books your account will now show a zero balance.
In fact if you were to call BofA at this point and say “I have won the lotto and would like to pay off my debt.’ They would tell you that they could not take your money and they would refer you to the debt collector. And that’s because you don’t owe them anything. The debt collector doesn’t want you to know that nor does he want you to know that he bought your $10,000.00 debt for $300.00-$500.00! Because he’s going to come to you and say, “Mr. Jones your debt was $10,000.00 but now it’s $12,000.00, $15,000.00, because of late fees, interest charges, penalties, and whatever else they come up with. At the same time they’ll say that they can offer to settle the debt for $9,000.00, $10,000.00 or whatever they come up with IF you are able to come up with the cash in the next few days!
Obviously if you could buy something for $300-500 and sell it for $9,000 or more that would be a pretty good profit margin, right? Well that’s exactly how the debt collectors operate!
Third Party Debt Collector’s & The Fair Debt Collection Practices Act
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The debt collector’s standard method of operation is in direct violation of the FDCPA. Here are some additional specific violations of the FDPCA and how we hold the debt collectors accountable.
When the debt collector lies to you, when he misrepresents who he’s collecting for bank as opposed to collecting for himself he violates the FDCPA. There are so many other things that he does that are in violation of this law. Such as when he calls you multiple times a day to the point of harassment, every single one of those calls can be a violation of the FDCPA. When he calls you too early in the morning, too late at night, when he calls you at work after you’ve asked him not to, when he calls your friends and neighbors asking them to give you messages, those are violations of the FDCPA.
When the debt collector becomes abusive on the phone even though they started off being nice after they see that you don’t pay they become abusive, and abusive language is a violation of the FDCPA. When the debt collector threatens you with something that he is not legally empowered to do such as garnishing your wages, taking your house from you, or getting you fired…there are all kinds of different things that they may come up to threaten you with.
Until he is legally empowered to do so it is a violation of the FDCPA. He may even threaten to put you in jail, well rest assured that he cannot do that, there are no debtor prisons in this country, its not against the law not to pay your credit card debt, but a lot of times the debt collectors will threaten you with something like that because its effective at scaring people and that’s not only a violation of the FDCPA that’s actually against criminal law.
When they don’t properly respond to our letters those are violations of the FDCPA. When the debt collector continues to call you and try to collect from you after they have received our letter asking them to validate your debt and not properly validating your debt those are additional violations of the FDCPA. Every single time the debt collector violates the law no matter how small or technical it’s worth a minimum of $1000.00 plus attorney fees plus damages and that’s just on the federal level there are corresponding state laws in most states where we can sue the debt collector on the state level as well. So here’s what we do …we document everything that the debt collector does that he’s not supposed to do, obviously you have to participate in this process, you have to fax to us any correspondence you get from the debt collector, we want you to talk to the debt collector (we will tell you what to say and how to handle the phone call). Every time you talk to the debt collector he will violate the law, you can either record the phone conversation or simply take notes.
We will build a violations file that we will turn over to an attorney who is a member of our network that’s in your area who will then file a federal law suit against the debt collector, they will file what’s known as a federal complaint, we will sue the debt collector in federal court and perhaps in state court as well. Once the federal law suit has been filed now the tables have been turned on the debt collector and the debt collector is now calling us wanting to know how they can settle this. The debt collectors are highly motivated to get rid of these federal complaints. Remember he buys your debt for pennies on the dollar, he’s bought lots of debt on lots of people and he’s looking to collect on as many people as he can for as cheaply as he can. Well when we’ve taken your case to federal court to sue him all of he sudden your case becomes very expensive and very complex, plus he can’t defend himself because he knows he’s broken the law. So he’s calling us wanting to know how he can settle it.
These federal complaints also negatively impact the debt collector state licensing requirements and other aspects of his business, so he just wants us to go away. In fact many of these cases once the federal law suit has been filed we settle within 30 to 60 days from when they are filed. Once the debt collector contacts us wanting to know how to settle, we can settle and here’s how we do it; #1 the clients debt (your debt) is reduced to zero, #2 the client (you) are marked as paid as agreed to the credit bureaus , #3 there are no tax consequences so there are to be no 1099‘s issued.
Finally by the time this process is over (which could be up to 6-12 months.) Your debt is gone, you have an excellent credit rating again and most importantly you’ve got your financial life back in order.
