This article must be addressed! Many consumers are confused about what to do about their finances, in particular Unsecured Debt.
Without any wasted time, I will get to the point.
What Mr. Detweiler and Bob Markoff, a collection attorney tells us below leads to confusion, distortion and mis-representation. Sadly the sources we have look to for truth have and are using their positions in media and high office to lie to us. The bigger the big the lie, the better the out come for the liars. Below each of their statement, I will present my view with supporting research.
Novation: Don't fall for this credit scam!
Novation is a term used in contract law and business law to describe the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party. In contrast to an assignment, a novation must be agreed upon by all the parties to the original agreement.[1] The obligee, the person receiving the benefit of the bargain, must only be given notice. The obligor, the party making the novation, must only make the new obligor aware and receive consent from the new obligor. A contract transferred by the novation process transfers all duties and obligations from the original obligor to the new obligor. Complete Wikipedia Definition – Click Here
Novation -
As defined above, Novation is the substitution of a new contract for an old one; or the substitution of one party in a contract with another party. I one sentence it is the replacement of existing debt or obligation with a new one.
You can use the same process to enter into a new agreement with your card company, which it can accept with an act, such as cashing a check. When the credit card company accepts the Novation and cashes your check, they have agreed to the terms and conditions of your Novation contract.
How then is this a Credit Scam which is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also an adjunct to identity theft.
11.16.08
By Gerri Detweiler
If you are deep in debt, the idea of being able to eliminate your debts without filing for bankruptcy is pretty attractive. That's why it's so easy to fall prey to programs that sound too good to be true -- to everyone but the consumer who buys into them.
When you look at what the new Bankruptcy Law offers, I can understand why consumers look for another why out. Given the number of folks that file for BK and fall out – not able to complete the process, doing nothing seems attractive.
NACBA Surveys 700 U.S. Bankruptcy Attorneys on Eve of October 17, 2006 Anniversary of Controversial Law Change; Over Nine Out of 10 Say Law Has "Simply Increased the Costs of Bankruptcy," With No Benefits.
http://www.nacba.org/s/8_212def15fe76ed2/
Why I Hate Pre-Bankruptcy Credit Counseling
http://www.bankruptcylawnetwork.com/2007/04/06/why-i-hate-pre-bankruptcy-credit-counseling/
A case in point: A website I came across recently promises to "legally get rid of 100% of your unsecured debt."
Don't worry, they say, "This is not a "Do It Yourself" program." They will "handle everything for you, every step of the way. No Sending Letters, No Conference Calls -- just RESULTS!"
The company provides an audio recording that explains how they will use contract law to alter your contract with the creditor so that you don't ever have to pay back what you owe. You just assign your debts to them (the firm) and if the creditor protests, they will have to come after the firm for payment, not you.
Ok …Sound good to me! What is there track record? Who are they? How long have they been in business? Since we live in the USA the lawsuit capitol of the world, where any one can be sued, how is that handles by this company considering that the debt has been Novated to them? What happens to the original account holder if they get sued anyway?
Gee, I think this would be something that if answered in this article would clear up this matter. You know, something called Do Diligence.
To get to the bottom of this scheme, I consulted Bob Markoff. Bob is a collection attorney with Markoff & Krasny. He has years of experience, and he is also serving as president of the National Association of Retail Collection Attorneys (NARCA) a group that represents law firms that collect debts. Yes, it's true he collects on the part of creditors and is going to side with them when it comes to being repaid. But he is also an attorney who has seen plenty of scams over the years.
Gee I’m Impressed! Like the Fox reporting on the hen house.
Here is what Bob had to say about this debt elimination program:
"The overriding premise here is that they can unilaterally amend a pre-existing contract by sending new contract terms to the creditor with a payment referencing the new terms. If the payment is accepted, so are the new terms. The new terms are utterly ridiculous…as is their premise."
The overriding premise is Contract Law
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"Legally binding" redirects here. For other uses, see wikt:legally binding.
The legal term for changing a contract is "novation." Most, if not all, credit card companies are wise to these tricks and have terms in the original credit card agreements to prevent such "tricks."
Yes, they are familiar and use it to their advantage adding fees, raise interest rates and add Mandatory Arbitration Clauses to their Contracts.
There ridiculous interest rates that have been compare to the rate charged by LOAN SHARKS.
Credit card agreements now have terms to the following effect:
1. All payments marked "Paid” or “Settled in Full" must be sent to a different address than the usual payment address, if the payment is for a sum differing from the balance due on the last statement. This prevents such payments being sent to the lock box at the bill payment center where they may be processed without review. (This trick is so old that I know of an Illinois attorney who tried to pay his American Express bill with a check for $1.00 marked “Payment in Full”. He was disbarred over fifteen years ago!)
Oh Yes! I recognize this argument…The straw man. He builds an argument that has no or little relationship to the core of the discussion. But what happens when the minimum payment is sent with the new terms including the statement. Not as he says, with $1 and a statement marked Paid or Settled in Full. I’ll tell you the Credit Card Co. cashes the minimum payments. They have done so for 7 plus years.
Too bad about that Illinois attorney, - I think the problem with
the attorney who was disbarred for the "Paid in Full:
on Amex suit is that he was committing a fraud, because he knew that Amex was not "Paid in Full". I do not think a contract is binding on the basis of a fraud--and the attorney really should have known better. The Novation concept, is not what the attorney used.
I think he might enjoy the company of these Bankers who have created a ponzi scheme that has created such a financial mess.
2. The agreements also state that any attempt to change terms of the contract must be sent in accordance with specific instructions set forth in the agreement. If the process is not followed, the attempts to change terms are not effective.
Ok …is that the Customer Service Address? A 7 years + history says it must be cause they cash the checks. But just to be clear, does he imply that if the Novation and Payments are “sent in accordance with specific instructions set forth in the agreement” then the novated contract is binding. I guess so. His statements are sounding more and more like nonsense.
Now, to some of the debt elimination program’s nonsense statements:
1. "Other repayment plans can EASILY last 7 to 10 years..." In reality, few repayment plans last that long. Generally, if they last longer than 3 to 5 years, they fail!
No, No, No…what nonsense …the 7 to 10 years refers to how long derogatory items remain on the credit reports with the Big 3 not repayment plans. Repayment plans last 1 to 5 years…most programs are structured for repayment over 1,2 or 3 years. Yes, repayment plan for 3 to 5 years have a high failure rate. There qualification are also are very difficult to meet.
2. "We assume debt...it is now OURS, not YOURS!" Think again: There is no legal basis for this.
SEE NOVATION –
Novation is a term used in contract law and business law to describe the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party.
3. "We include Student Loans." Better luck next time! They may include such loans, but Federal law and regulation govern those loans, and no one but the government can change their terms.
Really? How does Federal law trump Contract law? What about Federally Insured Mortgage loans which were cut up and re-sold to others?
4. They make "Consideration" payments...Watch out! I have no idea what this means. It is not a legal concept.
I’ll help you. See
http://en.wikipedia.org/wiki/Consideration
Consideration is a concept of legal value in contract law. It is a promised action, or omission of action, that the promisee did not already have a pre-existing duty to abide by. It can take the form of money, physical objects, services, or a forbearance of action. Both parties to a contract must pass consideration to the other party for there to be a valid contract.
However, even if a court decides there is no contract, there might be a possible recovery under Quantum meruit (sometimes referred to as a Quasi-contract) or promissory estoppel.
5. "The creditors must now send all statements to us and not you." No! This is simply not true.
If the original debt holder completes a change of address form or given Power of Attorney to another to change the bill address what is the difference? The Billing address is changed otherwise the statement would go to the wrong address and would not get paid. Yes it is simply true.
6. The debt elimination program’s restatement of contract law: The way they describe the fact that a contract must include an offer, terms, and acceptance is correct, but they then distort it to overlook or ignore the original offer, terms, and acceptance underlying the original agreement the consumer signed!
Do they also cheat on their wife? I am reminded of Bush/Chaney assertions “If the executive says it’s so it is Constitutional”. The Novation of the original contact changes that terms, offer, and acceptance issues. Statement 6 makes no sense, is circular and only leads to confusion!
Explain “but they then distort it to overlook or ignore the original offer, terms, and acceptance underlying the original agreement the consumer signed!”
7. "Suits on the accounts that we take over must be against us and we have never been sued." However, what they don’t tell you is that the reason they may never have been sued is only because no creditor has ever switched an account into their name!
Oh come on. How long have they been in Business? How many accounts do they claim to have? Even if it were only 100, they would see law suits. If they lost the suit, the judgments’ and publicity would put them out of business.
8. "The law says that collection agencies must provide written documentation of a disputed debt." This is not a correct statement of law under the Fair Debt Collection Practices Act (FDCPA). Under this Act, a collection agency must provide written verification of the debt.
Documentation: Noun documents supplied as proof or evidence of something
a. A written or printed paper that bears the original, official, or legal form of something and can be used to furnish decisive evidence or information.
b. Something, such as a recording or a photograph that can be used to furnish evidence or information.
c. A writing that contains information.
Verification: Noun.
1. The act of verifying or the state of being verified.
2.
a. A confirmation of truth or authority.
b. The evidence for such a confirmation.
3. Law An affidavit that attests to the truth of a pleading.
Taken from:
http://www.lsem-mi.org/pdf/FDCPA.pdf
Your Right To Dispute Your Debt
llection agency or collection attorney, must notify you that you can dispute your debt and that you have a certain time period (30 days by law) to do so before the agency/attorney can report the past due debt to any collection agency. Collection agencies and collection attorneys are required by law to investigate disputed debt and to report back to you concerning the validity of any disputed debt. If you do dispute the debt, for example, you think you do not owe all or part of the money demanded, do not ignore the deadline for telling the attorney/collection agency about your dispute. The agency/attorney cannot legally report the debt if the law is not followed.
9. Don't talk to debt collectors because they are there to trick and scare you..."
Don’t listen to this bad advice! Collectors call to work out payment arrangements. If you don't talk with them, you can't work out a repayment schedule.
Taken from:
http://www.lsem-mi.org/pdf/FDCPA.pdf
In an effort to collect debts, credit collection agencies and the attorneys who represent creditors and collections agencies, may make demands on debtors (people who owe money) in order to collect delinquent debts. Some demands are legal and others are not. Some agencies and their counsel may play on peoples guilt feelings and may attempt to persuade people who are struggling to pay their bills, to pay bills that creditors have little or no chance to collect in any other way. They may attempt to get debtors to forget their good judgment and to pay bills out of the order of their importance or in a manner not in the debtor's best interest. (For example creditors may try talking a debtor into making credit card payments when the debtor is more importantly attempting to avoid a possible utility shut off, eviction from their residence, or land contract or mortgage foreclosure.)
10. "Banks sell the bad debt to collection agencies five to six months down the road and the agencies must send a letter within 10 days of buying the debt." That is just plain wrong. There is no such requirement.
Taken from:
http://www.fair-debt-collection.com/rules/validating-debts-9.html
1. Section 809(a) requires a collector, within 5 days of the first communication, to provide the consumer a written notice (if not provided in that communication) containing
(1) the amount of the debt and
(2) the name of the creditor, along with a statement that he will
(3) assume the debt's validity unless the consumer disputes it within 30 days,
(4) send a verification or copy of the judgment if the consumer timely disputes the debt, and
(5) identify the original creditor upon written request.
11. "Expect some negatives on your credit bureau report for 6 to 10 months." Finally a true statement with an exception: Negative listings will last longer than 10 months! In fact, late payments, charged-off accounts and collection listings may be reported for up to seven and a half years under the federal Fair Credit Reporting Act.
This type of nonsense is a fraud upon the public and our economic system. It is an attempt to cheat the system instead of promoting fair dealings between the parties. It creates unreasonable expectations for the consumers, who will end up being sued and garnished.
Another Straw man Argument… The time frame is more like 12 to 18 months on average but could be longer as Collection Company re-sell the debt over and over.
The point is how long will it take to REMOVE derogatory items from your credit history.
Errors on Credit Report Costing Consumers Billions Per Year.
LOS ANGELES, April 7, 2009 — Over 100 million Americans are overpaying on their loans because of errors on their credit report. Worst of all, these errors are fixable and consumers don’t even realize it. Click here for the article:
http://www.ereleases.com/pr/errors-credit-report-costing-consumers-billions-year-18456
Mistakes Do Happen: A Look at Errors in Consumer Credit Reports
2004-06-17
Executive Summary
The most valuable thing we have is our good name. The most common reflection of our reputation as a trustworthy consumer is our credit report. Unfortunately, the information contained in our credit reports, which are bought and sold daily to nearly anyone who requests and pays for them, does not always tell a true story.
Click here for the article
My best advice to anyone concerned with their financial condition is to seek the advice of an attorney licensed to practice law in their local community. At the very least, the attorney should be able to assist in sorting through the various programs being offered to consumers. Talking with an attorney does not mean you must file for bankruptcy.
Well there you have it, but one last word. Talking to an attorney may be a good idea IF he in consumer oriented, has fought the Credit Card industry and does not immediately steer you to file for bankruptcy.
Sad to say if you don’t do your own research, Do Diligence you are heading for more problems and hard financial times. The judicial system is alien territory. You or your counsel must know the law and assert it or you get what you get, which as the team of Mr. Detweiler and Bob Markoff state is that you “will end up being sued and garnished”.
Your comments on this article are greatly welcomed.
I spent many hours reading the links, leaned much and tried to make then valuable and pertinent to this discussion.
Thank you for taking the time to read it.
