Bank Attorney Reveals

BANK ATTORNEY REVEALS DEBT FREEDOM SECRETS
Published by DUE PROCESS LTD an international business corporation All Rights Reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any scanning, storage, or retrieval system without permission from the publisher, except by a reviewer who may quote brief passages in a review. This publication is informational and not advisory. This publication does not constitute legal advice nor is it an attempt to solicit clients. No person or entity should act or forbear any act based on the information contained herein. YOU SHOULD ALWAYS CONTACT AN ATTORNEY AUTHORIZED TO PRACTICE LAW IN YOUR STATE FOR SPECIFIC LEGAL ADVICE. The information and materials contained in this publication are provided by the publisher. The member providing such information and materials represents that such information and materials are true to the best of each such member's knowledge. Any member, governor, manager and agent providing information is not responsible for inaccuracies with respect to such information and materials and nothing in this site constitutes legal advice by any members, governors, managers or agents. The purpose of this publication is to inform, educate, and entertain, and it is not intended to support, induce, or condone any activity that might violate local, state, or federal law, nor to deprive any company of its lawful income. Neither the author nor publisher or copyright holder shall have any liability to any person or entity derived from any alleged loss or damage arising from the use or misuse of the information contained herein. The author and the publisher have exerted their best efforts to ensure the accuracy of the information presented herein, yet there are no doubt errors – which are sincerely regretted. Copyright © 2004 by John Gliha ISBN: 1-930420-29-3

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BANK ATTORNEY REVEALS DEBT FREEDOM SECRETS Copyright © 2004 by John Gliha

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BANK ATTORNEY REVEALS DEBT FREEDOM SECRETS Copyright © 2004 by John Gliha

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INTRODUCTION ......................................................................................................................................... 5 QUICK START CHECKLIST ..................................................................................................................... 6 FREQUENTLY ASKED QUESTIONS ..................................................................................................... 8 WHAT IS YOUR RISK TO COLLECTION? .......................................................................................... 14 QUICKLY END HARRASING COLLECTION CALLS ........................................................................ 18 CREDIT FILE CORRECTION STRATEGIES ....................................................................................... 22 SUCCESSFUL DEFENSES TO COLLECTION LAWSUITS ............................................................. 26
THE MILLION DOLLAR LETTER ........................................................................................................

26 46 49 50 51

CHANGE OF ADDRESS ................................................................................................................. 39
FACTS YOU SHOULD KNOW ABOUT SETTLEMENT OFFERS ............................................................... UNFAIR AND ILLEGAL BINDING ARBITRATION ................................................................................. CORRESPONDING WITH THE CREDITOR’S ATTORNEY....................................................................... LEGALLYH IMPEDING THE GARNISHMENT OR LEVY ..........................................................................

UNDERSTANDING THE FAIR DEBT COLLECTION PRACTICES ACT ....................................... 54 BIBLIOGRAPHY ....................................................................................................................................... 63 APPENDIX.................................................................................................................................................. 64

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BANK ATTORNEY REVEALS DEBT FREEDOM SECRETS Copyright © 2004 by John Gliha

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INTRODUCTION
Congratulations on taking the first step to learning the secrets of the debt collection system and how you can apply them to your advantage in resolving collection problems. This text is a complete course by itself, but it is an introduction into the technical strategies of Winning The Collection Game®; an advanced college-style curriculum that will help you learn how to resolve your credit card debt by forcing the creditors to settle each account for very little if nothing. In years past, most attorneys would not assist consumers in resolving collection problems, simply because there was no money in it for them. The consumer has no money to pay their retainer fee, which can be high because of anticipated litigation. Attorneys are trained to do only one thing in a debt collection case, figure out how much you must pay to settle the account. Recently, a growing number of attorneys and large law firms have begun adopting these strategies and those in Winning The Collection Game, into their practices and representing consumers against creditors and debt collectors. These strategies are finding absolute credibility among attorneys of all experience and educational levels. This text is the result of ten years or thousands upon thousands of hours of research in all fifty states. It is an essential learning step in the process of debt elimination, and I strongly recommend that everyone begin here. You have made a good choice. This unique course has been published for nearly ten years. Its system of strategies has been tested over ten thousand times and has literally created the market which has become known as “debt elimination.” No other organization or publication is qualified to provide the same or similar strategies and many have tried to copy it, making even more outrageous claims than what you might read in this text. The claims made in this publication accurately reflect the results experienced by our subscribers over the last ten years. Other claims made by organizations or individuals that are not authorized distributors for Due Process LTD have not been shown to be true by our statistics. Due Process LTD has the most comprehensive and time-tested strategies and results in this market.

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QUICK START CHECKLIST
This Abbreviated list is designed to quickly get you started in the right direction as you begin to learn the different stages of Winning The Collection Game. 1. Do not enter into any payment or settlement agreements with any third party debt collector. You may discontinue making payments if have already been doing that, and if you intend to use your credit history for one or two last credit applications in the next several months and your credit is still good, you can continue making payments until your contract is closed. After you pass the grace period in your credit account, it will begin to appear on as a late payment on your credit history. 2. Immediately follow the change of address procedure. In fact, you should change your mailing address now, and then change it again in two months. You will only need to notify each credit account to which you are applying these strategies and not everyone who sends you a bill. You will instruct the mail box service to forward your mail back to you every two weeks. 3. If you upgrade to the attorney services program, you will have the immediate benefits of a local attorney or law firm which it trained in the proper application of Winning The Collection Game®. Check with your sales agent at this time to determine if the attorney services program is currently available in your county. If not, we will work with you in finding a local attorney to join our network and represent you if you decide to upgrade. Otherwise, you should assess your individual collection risks by listing all personal bank accounts for which you or the credit account holder(s) are the only signer(s). List all documents appearing on the public records in the county were you have been receiving statements from the creditors that show your name and property. List all automobile titles registered in your name in that same county. List all sources of income where you receive regular payments from employment or investments in your name and under your social security number. This is a fairly comprehensive risk and it shows you with property can be discovered by a creditor. While most if not all unsecured credit accounts never permit the creditor to attach real property or automobiles, it does provide creditors with information about your ability to pay should they decide to sue you. As a general rule, the more property you have in your name, the greater probability you have of being sued. 4. Locate or prepare a paper file for each credit account for which you will be applying these strategies. Each statement should be filed in reverse chronological order so that the oldest statement is filed on the bottom and the most recent appears at the top of the file.
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5. Keep a pen and paper next to the phone so that you can follow the procedure to stop harassing phone calls. 6. Review the request for validation procedures so that you can respond properly to any third party debt collectors. This is also a proper response to creditors.

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FREQUENTLY ASKED QUESTIONS
Q. What is “Winning The Collection Game®”? A. Winning The Collection Game® (WTCG) is the copyrighted work of John Gliha and includes the strategies and methods of legally avoiding payment of account balances claimed to be owed to creditors and/or debt collectors. It is also the trade mark of John Gliha and Due Process LTD. It does not include negotiating for a reduced payment or settlement, consolidation, or bankruptcy. It involves the method of deliberately not making voluntary payments to creditors or debt collectors and taking every legal defense against whatever collection process may result. It also includes an unpublished Reference Library which contains a proprietary collection of work product and trade secrets that consists of legal memoranda, legal arguments, legal metaphors and analogies, discovery questions, example answers, witness names, mail forwarding addresses, examples of collection practices and forms filed and undertaken by various law firms, raw data and research, statistics, legal theories, evidence, files, instructions, strategies and protocols that are used to implement the published version of WTCG. Q. Who would best qualify for this program? A. This program is for those who, through no fault of their own, have become victims of abusive and deceptive collection practices, loss of employment or identity theft. Q. Is this legal and why? A. Non-payment is the oldest method of resolving collection problems, literally by thousands of years. Over the last hundred years, the collection system has advanced very much. WTCG simply takes advantage of the same legal system to defend against the claims of the creditor. It is absolutely legal. Q. How does WTCG compare with consolidation and bankruptcy? A. It is private. It reduces your credit rating with the chance of restoration. You choose which accounts to settle and which to keep. When applied properly, the strategies have statistically resulted in substantial debt reduction compared with other methods, except those which qualify for a Chapter 7 bankruptcy discharge. Consolidation requires that all accounts be consolidated, reduces your credit rating with no chance of restoration. Most people pay a great deal of money in making payments to the consolidator, with the result that the accounts revert back to the original creditor and the balances returned or even more than when consolidation began. Bankruptcy is not private. It requires disclosure and
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liquidation of all assets and debts and ruins your credit history for a minimum of ten years. Q. When did the use of these strategies begin? A. Although the idea of simply not paying creditors is ancient, the deliberate refusal to pay and use of anti-collection strategies was first published by John Gliha in WTCG in 1998. He first began using these strategies in 1992 after discovering that the banking system today is nothing more than an elaborate counterfeiting scheme. Q. Which people are responsible for completing the research and what are their qualifications? A. Many people have contributed to the research that supports the legal foundation in defending against collections. The most comprehensive work on this subject was written by G. Edward Griffin and published in his The Creature From Jekyll Island. This text provides the best ten reasons to abolish the Federal Reserve System. Gliha’s work published in WTCG is the practical application of this type of research, although each was developed entirely independently. Q. How does the program work or what can I expect from it in the first year? A. After sending the initial correspondences which identify the nature of your dispute, the creditors will respond with normal collection notices claiming that your statements are frivolous. They are not of course, but this is what the creditors will say. You may receive contact from third party debt collectors. The creditors will object to arbitration, even though many of them want to force you into arbitration with a forum they have chosen. Some of the accounts may be assigned to law firms for collection. If you follow the program closely, your chances of settling your accounts for substantially less than most other methods are very likely. Q. What will happen to my credit history? A. It will appear the same as if you simply stopped paying, charge offs, etc. We can remove third party debt collector items provided you did not make payments, and in some cases, we can remove bad credit items. Do not expect that this is likely, but if you are sued or able to confirm your arbitration award, removing bad credit items is for certain. Q. Will I be sued? A. Expect to be sued at least once. Q. If I am sued, will the program prepare me for responding properly? A. Yes. The program will follow the best course in the process of having the lawsuit dismissed in your favor. Each subscriber can be represented by a local and competent attorney where available, who has been trained in the strategies published in WTCG.
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Q. What does the program include? A. WTCG consists of two volumes and a CD-ROM. They are WTCG (Getting Started) and WTCG (Advanced Analysis), about 180 pages and 250 pages respectively. The CD-ROM contains a list of forms and documents that are referenced in each text. They can each be easily modified for what you need. If you are using the attorney services program, the Due Process WorkGroup will assist your attorney in using these forms. Q. What can I expect after placing my order? A. Your order is entered in the Debt Nemesis website and a USPS tracking number is assigned within one business day. You will then receive an email welcome message with the tracking number and further instruction about accessing the online services. You will also receive a telephone call from our fulfillment center that provides the same information. If you have the attorney services program, your local attorney will have contacted you within this time. Within the first seven to ten days you will receive the books and CD-ROM. Q. Have others been successful using these strategies? A. Yes, these strategies have been used in over ten thousand collection cases over the last ten years. The claims made in this presentation accurately represent the results people have experienced in this time. Q. How long does the process take to complete? A. Twelve to eighteen months. Q. Do I need a lawyer to benefit from this course? A. No, but each subscriber is encouraged to use a local network attorney who is familiar with WTCG strategies. Q. What types of credit accounts is your course designed to settle? A. Unsecured credit card accounts, these include signature loans, credit card accounts, overdraft agreements and balances claimed to be owed after a repossession or foreclosure. It does not include charge accounts unless underwritten by a bank creditor, or lease agreements, or phone service agreements nor is it for hospital bills unless any is assigned to a third party debt collector. Q. Will I lose my option to file bankruptcy? A. Never, you can use the course strategies and at any time, change your mind and file bankruptcy. Q. Can the creditor or debt collector garnish my paycheck? A. Yes; however this possibility has been shown by statistics to be far less than one percent.
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Q. Are there other organizations selling similar strategies? A. There are no other organizations authorized to publish these strategies and those that make similar claims have plagiarized parts of WTCG. Its author maintains a legal fee budget to enforce his copyrights by court order. We have investigated everyone making the same claims and each time we discover that it is just another perversion of WTCG. Many of this individuals use John Gliha’s name and trade name, WTCG, in the Internet search engines so that people searching for this program find those that have plagiarized it instead. You should verify that anyone representing to sell this program is authorized under current contract with Due Process LTD to do so. Q. Can you help me with a mortgage, auto loan or student loan account? A. A. No. Yes. Q. Can your strategies be used to restore my credit rating? Q. Would your process cause a foreclosure or my car to be repossessed? A. No. Q. Are you affiliated with any attorneys or law firms? A. Yes, we provide client services for a national network of law firms that represent our subscribers in the attorney services program. Q. How much time will it take me to understand your process? A. Usually three months but for those who have the attorney services program, there is no need to study any aspect of the program. Q. What type of educational background do I need in order to best understand your course? A. You need a high school reading level unless you are using the attorney services program. Q. What resources do I need to implement the strategies? A. Unless you have the attorney services program, you need to speak and understand American, and be able to use a computer with a fairly recent version of Microsoft Word, email access and a printer and access to sending and receiving faxes. Q. Will I benefit from your strategies if I have a busy schedule if I am not using the attorney services program? A. Yes, we have toll free and email access to analysts that provide immediate assistance and guidance through program content. We also provide you with the form and instruction you need upon request, so that you do not need to first complete your studies in order to receive all of the benefits.
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Q. How do I contact your analysts or customer service? A. You can contact the Due Process WorkGroup by online email inquiry at www.debtnemesis.com, via fax and a toll free telephone number. The WorkGroup will provide you and your attorney with unlimited forms and research, including any revisions published following your order, for the first year. Q. Once I complete this process to resolve my collection problems, will I ever be able to qualify for another credit card? A. Yes, in the same manner you were able to qualify for credit when you first qualified. Q. What about hospital bills, lease agreements and phone bills, would those qualify for your program? A. Only if the accounts are with third party debt collectors. Q. How will implementing your strategies for one account affect my other credit accounts? A. In some cases, a creditor may increase your interest rate if your credit history shows unpaid accounts. This can be remedied with a phone call. Q. Will I continue to benefit from your service and consultation if for some unexpected reason you are not available? A. Yes, we have trained consultants that are very knowledgeable in the use of this course. Q. How frequently has your course been revised since 1993? A. It is officially revised about every three months to accommodate changes in the collection strategies. Q. Can your strategies assist me if the creditor attempts to force me into binding arbitration? A. Yes, the course includes specific provisions for this particular type of collection problem. Q. What kinds of other expenses might I expect if I am sued? A. There may be a minimal filing fee in your state for the answer or counterclaim, along with very small costs related to copies, postage, notaries and deposition transcripts. In all, the related costs are very negligible. Q. Do I need a computer and Internet access to use this publication? A. Yes. Q. Can your course show me how to respond to a law firm that continues to send me collection letters letters? A. Yes.
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Q. Does your course offer a script to follow when responding to unwanted phone calls? A. Yes. Q. If I do not have the attorney services program, do your consultants provide the service so that they do everything for me, or what level of participation is expected of me? A. Most of the time, you will only be expected to complete missing information in forms, these would include simple facts such as your name, address and account information. We do provide a service, for an additional cost, that prepare each form letter for you and delivers them to you for printing and mailing. Only your attorney will prepare legal documents for court. Q. Can your program help me if my employment will be terminated if I file bankruptcy or am sued for not paying my bills? A. Yes, we provide individual and confidential consultation in these types of cases. Q. In the years that you have been in this business, how many cases were resolved in a trial, in court but before trial and out of court? A. Only several have been resolved at trial, most are withdrawn during the proceeding.

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WHAT IS YOUR RISK TO COLLECTION?
Your collection risks increase with the possibility of being sued. The likelihood of being sued by a creditor such as a bank or a non-creditor such as a debt collector; is calculated by the policies of the creditor and the possibility of actually taking property (money) from you. Your risk of being sued increases with the dollar amount of the dispute and the possibility of attaching your income or assets. Most judgments from unsecured collections do not encumber title to real estate or other tangible property, but that is determined by state law and the contract. Of course, an unsecured account does not identify collateral in the contract (i.e. credit card agreement). If you have property such as a car or house in your name and if you have regular income from a job, you are a good candidate to be sued. This possibility can be reduced by changing a few things about how you manage your property. For most people today, and this number is getting smaller, they own their cars and the equitable (and legal sometimes) interest in their homes for most of their lives. Unfortunately, many people manage their property in this way until they near the age of retirement and with the wisdom that comes with age, seek out means to protect and preserve their assets in anticipation of death and/or incapacity. Those who can reach this point without losing their property are fortunate. It is never too early to learn how to protect assets over which you benefit by divesting your ownership and exclusive control over them. I don’t want to discuss asset protection methods in too much detail here because the subject is adequately covered in other publications, but your collection risk can be greatly reduced when you don’t own property and when you do not have exclusive rights to control the property from which you derive a benefit, such as your house, automobiles and investments. It’s important to realize the magnitude of liability if you are the sole owner of your car and house, and are found negligent in some way while driving and are sued for damages. Your house and all other property can be attached in a damage claim, even if you don’t mind paying high insurance premiums. The insurance protects property you own, but if you don’t own or control it exclusively, there is no need to maintain large amounts of insurance. If your car is owned by a contract, let’s say a partnership in which you have no ownership rights or exclusive rights to control what happens to the property, then any liability is limited to the contract (owner of the car) and all property owned by the contract, which would be nothing else. Only the rights and property you possess can be attached to the liability and the most effective use of these types of strategies is when they are used in secret.
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This strategy can be applied to all of your assets accept what the government refers to as “wage income.” That is, money you earn from working as an employee. Independent contractors have more latitude over this problem because the right to receive payment for their services can be legitimately contracted away. As an employee, you must maintain the rights to receive money for your work because you cannot legitimately contract them away. It is you alone, doing the work as an employee and you must be paid in your name. All other types of property can be protected by contracting away ownership and control rights. The object of protecting your assets is to divest yourself of ownership and exclusive rights to control property from which you and your family derive benefits, and maintain the beneficial interest through entities (contracts) that will survive your death and incapacity. Your collection risks are further reduced according to your level of education regarding the laws regulating debt collections. The collection process is governed by a very precise set of rules, and these rules are published for everyone to know. The only problem is that most people need to learn these rules within a short period of time. This is the exact problem this book is intended to solve. Think of it this way, the collection system is governed by a set of rules just as are the traffic systems, social customs, video games, board games such as Monopoly® and Chess, and even the rules of marriage. Collection rules are simply another set of rules that we have the opportunity to learn for the purpose of fulfilling obligations to protect our families and ourselves. In other words, learning the legal system as it relates to collections is something we need to do at some point in our lives, whether or not we hire an attorney. I have only a two-year college degree. I am not a lawyer, I have never attended law school and I developed this program alone, while working full time in an unrelated profession, from the time I was 24 years of age, with little or no professional assistance. It wasn’t until I was able to demonstrate the effectiveness of these strategies that I gained the support of the professional community such as other paralegals, lawyers and certified public accountants. I have written this book so that you don’t need to recreate what I developed from the consumer perspective. Winning The Collection Game® Strategies are your short cut to understanding the rules of the “collection game,” as I call it. In other words, if I can do it, you can certainly do it. The real challenge you will face in implementing the knowledge obtained from this course involves your ability to think critically. In other words, the templates and standard process explained in this course will help you complete your defense instead of leaving you with nothing upon which to build your defense, what you would have had to do by yourself without this course or through an attorney. The templates allow you to avoid the unnecessary distraction of writing captioned documents and articulating arguments without any guidelines to follow because they are nearly complete in themselves.
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However, the level of completion of the templates and examples in this course is no substitute for actually understanding what is discussed, comprehending your individual circumstances and having the forthrightness to argue your case in a convincing manner. To give you a better idea of what I am trying to explain, I’ll use a few analogies. The examples I’ve chosen typically become reality for any creditor lawsuits that are not resolved (withdrawn) before pre-trial. It is convenient to change a few facts in the templates for each correspondence and send them in the mail without a second thought. It is convenient to be able to click and drag the template for your answer, counterclaim, motion to strike and discovery requests, insert your name and additional facts that relate to your case and file these documents with the court. In nearly every case that comes before a judge, the judge will ask you questions for only one purpose, to find out if you can articulate your own defense as well as the documents that have been written for you. You must be able to answer the judge’s questions, even if you defer his attention to the motions before the court, the judge must know that you understand your position and are able to explain it so everyone else can understand, while staying on point. Some people have obtained information about the credit and banking system from a variety of sources and the arguments or defenses against the collections or issues contradict each other. After studying this course, some have been unable to relinquish old protester theories, such as “… the bank lent me credit and that is illegal.” Judges want to hear this from you so that they can enter a judgment for the bank against you. You must be careful to explain your defenses clearly and as they are presented in this course. The judge or attorney may ask you if you wrote a check to fund the account or if you provided cash. The answer to this question is that your approved credit application was the cash (or cash equivalent) that provided the funds for the account. And it will then be important to explain to the judge and the attorney that the bank or creditor cannot identify any accounts that were debited in order to credit or create your credit account. In other words, and this is where you will need to be able to articulate the situation. If the creditor cannot prove that it risked any money, assets or things of value in the transaction, then it cannot maintain a claim that you owe any more money than you have already paid. If you attend hearings or write documents with the attitude that you are not sure about yourself or that you only bought this course because it sounded good even though you don’t think it will really help you but you were curious, then you probably won’t be able to present your defenses with enough confidence to be convincing. You cannot print out templates, insert them in the mail and cross your fingers or pray that they will save you. You must work at developing each argument and trying to understand the people you are presenting them to so that you can talk on their level. You will see that some attorneys and judges are just
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arrogant and unwilling to cooperate with you or consider your arguments and they will do everything they can to lie, mislead or trick you into sabotaging your own case. Still there are judges and attorneys who have enough confidence in their own professional experience and ability to try and comprehend your defenses. Some attorneys will even withdraw their clients case, maybe because they feel there is too much liability for themselves or they realize that they would need to knowingly misrepresent material facts to the court in order to have a chance at winning. If you can understand what kind of person you are defending against, that is, what kind of attorney or creditor, you will increase your chances of effectively communicating with him and reaching a timely resolution. You must approach each case with the attitude that it is the principal for which you are defending yourself, regardless of the consequences. Some subscribers are terrified of the attorney who threatens that his fees will be assessed against the defendant for making what he calls frivolous arguments. This should not deter you, and I use this analogy: Would you commit a crime to avoid personal injury if coerced by someone? Not necessarily. My parents taught me to tell the truth, and if telling the truth and defending myself involves some risk, namely, fines or similar penalties, than I am not going to lie or not defend myself in fear of these types of consequences. If I did, what would that say to others or what kind of environment would I leave for others who are willing to accept the consequences of defending themselves and telling the truth?

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QUICKLY END HARRASING COLLECTION CALLS
Many people fear debt collection calls and there two very simple strategies or methods of stopping them, almost for certain. These procedures apply to any unwanted calls, creditors, debt collectors or even annoying family or neighbors. In all seriousness though, even though collectors may claim not to be liable under the Fair Debt Collection Practices Act, they are liable under the Telephone Solicitations Act and under the criminal statutes regarding harassing and threatening telephone communications. The first lesson in responding to unwanted calls from creditors or debt collectors is that you must never discuss the account that they are calling about. Your first concern is to obtain the caller’s full name, mailing address and phone number. Write this down in a log next to your phone along with the time and date. Next, never, never, never give out any information about yourself to the caller, not your address, phone number, banking information, social security number, driver license number, nothing. Do not acknowledge the accuracy or inaccuracy of any information they provide. If they do not have it, they don’t need it and it’s their problem. You may need to confirm that they have the right person in order to complete the next steps, but give them nothing else. Remember that what you say will be summarized or quoted in their call management software database and it will be used against you on the next call. The more information they collect about you, the more times they will be motivated to call you. Follow these steps and you can use this to your advantage. Next, inform the caller that the conversation is being recorded, that he has the right to remain silent and that anything he says may be used against him in a court of law. Expect him 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 his organization after this time, that you will hold him personally responsible and file a written complaint for telephone harassment against him 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.
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Next, send the collector the request for validation as explained in this text; along with notice to stop telephone communications as shown on the following page. This procedure is absolutely effective at stopping about 99% of all unwanted phone calls, without regard to the matter about which they are calling. You can even use it with in-laws and annoying neighbors. In very few circumstances, you will have a collector who thinks that the law does not apply to him and who will ignore all of these responses. You can pursue the complaint to the attorney general’s office, but there is one more strategy you can apply that is more effective. Debt collectors and creditors calling to collect from you are trying to make a sale, just like 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 exchange for them not continuing to harass you, not making any more claims on your credit history and/or not suing you. That is the implication anyway, some will even say it. 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 should no longer receive any calls. This is a little time-consuming, but it works very well. Your objective, if you must follow this strategy, is to keep the caller on the phone for as long as possible. The trick is to never discuss the collection account, but make it appear as if you are sincere. Talk about politics, collection laws, the evil banking system or 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, just avoid discussing the collection account, do not give any payment information, do not make any commitments to pay, and 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.

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[Subscriber] [Address] [City state ZIP] [Collector] [Address] [City State ZIP] [Phone number] [Date] Re Harassing and Threatening Phone Calls From Your Company Greetings: Please limit your communication with me to writing only. If I receive any telephone calls from your company, I will consider them to constitute harassment. Please be advised that unwanted telephone calls are a class 1 misdemeanor in this state and I will file a complaint against the caller with the attorney generals office. I maintain a telephone log of each phone call and in some cases, make an audio recording when necessary. Send me a copy of your “written policy” for maintaining a “do not call” list. The Telephone Solicitation Act requires that such policy be made available upon demand. This Federal statute imposes a $500 fine against unwanted telephone solicitation. I do not want you to call me. If you do call me, you agree to pay, on a for-hire basis, my telephone equipment and time in answering your call at a rate of no less than $500 per call. Be advised that you have the right to remain silent. If you ignore this notice and contact me by telephone, you and your employees agree to allow me to make an audio recording of our conversation and you and your employees agree to allow the recording and any other information to be used against you and your employees in a court of law. I will accept only your written communication. Be advised that I am not requesting a "verification" that you have my mailing address, I am requesting a "validation;" that is, competent evidence that I have some contractual obligation to pay you. You should also be aware that sending unsubstantiated demands for payment through the United States Mail System might constitute mail fraud under federal and state law. You may wish to consult with a competent legal advisor before your next communication with me. Your failure to satisfy this request within the requirements of the Fair Debt Collection Practices Act will be construed as your absolute waiver of any and all claims against me, and your tacit agreement to compensate me for costs and attorney fees. Best regards,
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In the event that you continue to receive unwanted telephone calls, and this includes from anyone, a debt collector, creditor, attorney, rude neighbor, you can make a written complaint to your state attorney general’s office using this example (You should also be able to make this same complaint via the Internet. Just do a keyword search under your state’s name, and “attorney general”): [Subscriber] [Address] [City state zip] [Attorney General Office] [Address] [City state zip] [Phone] [Fax] Re unwanted, threatening and harassing phone calls Greetings: Please help me to resolve this problem. I have tried to address it myself but my requests go unanswered. [Individual calling] from [creditor/collector] continually calls me demanding payment of money I have already paid. They refuse to correct the problem and have been calling me, almost every day, making threats about garnishing my wages or closing my bank accounts. Sometimes they call me numerous times in the same day, even at work. It's like they think they can do anything they want. Is this illegal? [Individual calling] said he (or she) could garnish my wages any day unless I sent payments immediately. He (or she) asked me to fax and then mail five pre-dated checks or the company would begin garnishing my wages. Can they do this? Please help me if you can, as soon as possible. Best regards, [Sender] Copy to: [Creditor/Collector] [Address] [City state zip]

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CREDIT FILE CORRECTION STRATEGIES
Correcting or restoring your credit history is not a magical process. The Fair Credit Reporting Act defines specific limitations that all credit reporting services and their subscribing members must follow. The process of correcting your credit history involves simple letter writing methods and persistence. I recommend always trying to improve your credit rating with a specific purpose or plan. Avoid thinking that you just want a better credit score for the sake of having a better score. You want to improve the rating of specific items for the specific purpose of buying a car for example. You must first either obtain a copy of your credit file or submit a credit application and have it rejected for a certain reason. New car dealerships are a great place for this since the sales person will tell you which items are precluding your application from being approved. If you begin by applying for an auto loan, you can then work with the sale manager to add disputes and improve certain items until you qualify for a car loan. The most important secret in restoring your credit history is to begin your dispute by not requesting a verification or correction of any item, but to simply request that a statement (100 words or less) be appended to the item that explains the dispute. The reason is not as important as the fact that you have appended the dispute to the item. This will immediately improve your chances of obtaining credit by allowing potential creditors to overlook these disputed items. The next step involves disputing specific items. Let’s begin with an example of a request for your credit history: [Sender] [Address] [City State ZIP] [Credit Bureau] [Address] [City State ZIP] [Phone] [Date] Re credit history request Greetings: Please send me a copy of my credit report. I’ve enclosed a payment for the necessary fee (or included copies of any letters of denial to obtain a free report). My credit file is identified by the following information:
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full name: date of birth: social security number: present address: previous address: My telephone number is:

, , , . , .

I have attached copies of my photo identification and other records in order to establish my identity. Please send my credit history as soon as possible. Best regards,

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After obtaining a copy of your credit file, you can dispute any items and request a “verification” of the accuracy of such item. The request must be in writing. The following items are prohibited: A bankruptcy order that is more than ten years old; lawsuits, judgments and arrest records that either exceed the statute of limitations or seven years, whichever occurs first; paid tax liens which, from date of payment, are more than seven years old; collector or charged off accounts more than seven years old; and any other adverse item of information, other than records of convictions of crimes which are more than seven years old. The following conditions are exempted from these requirements: a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more; the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more. This is an example of a well-written dispute letter that has been used thousands of times with a great deal of success: [Sender] [Address] [City state zip] (credit file number, usually an SSN) (sender's date of birth) [Credit Bureau] [Address] [City State ZIP] [Phone] [Date] Re credit history correction request Greetings: Please correct the following items appearing on my credit report: (disputed item) is not my account. (disputed item) has been paid in full but the creditor has failed to provide you with this new information. (disputed item) is not valid because it's not my account. I requested a validation from this alleged creditor, but never receive it. This is a violation of the Fair Debt Collection Practices Act and reporting this false information is a violation of the Fair Credit Reporting Act. (disputed item) antedates the report by more than seven years. (disputed item) is incorrect. The corrected item should be "
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(disputed item) was not an authorized inquiry. This inquiry was made by fraudulent means. Please correct your records and send me a copy of the amended report. If you fail or refuse to make these corrections within a reasonable time, I will promptly file a complaint against your organization with the Federal Trade Commission. Best regards, [Sender] To use this effectively, you will need to dispute only one or two items at a time. Remove the dispute reasons which do not apply and edit those that do to include all relevant facts. Include a copy of your credit file and any pertinent information regarding your dispute. Expect to send the same letter at least twice, most employees of the credit bureaus are not competent and are not really concerned with assisting you. Keep in mind that most requests for verification are completed by computer database matching only, this is the reason primary why you may need to send your request twice. Credit bureau employees only concerned with avoiding penalties imposed by the Federal Trade Commission. If you have a problem with a reporting agency acting unfairly, be sure to file a complaint with the Federal Trade Commission. One of the more effective strategies in disputing items that you do not want on your credit history, is to first request a validation (using the two examples in this text) from the creditor. If the creditor fails to provide evidence that it is your account, or fails to respond, or fails to validate the accuracy of the amount they claim is owed, then their failure to validate can be used to remove or correct unwanted items on your credit history. If you are using poor credit to obtain financing, many lenders will work with you so that you can obtain financing. The exception to this is when applying for a mortgage, mobile telephone service or unsecured credit accounts. There are many instances where you can use poor credit to obtain accounts with credit risks, such as utility services, automobiles and insurance. In the case of an auto loan, the dispute notation you appended to a derogatory item may be enough to allow the dealer to find you a lender. You will not be able to expect the best terms, but they will be acceptable. Remember that a poor credit rating is not a life sentence, it lasts at most seven years.

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SUCCESSFUL DEFENSES TO COLLECTION LAWSUITS
THE MILLION DOLLAR LETTER I have been calling this correspondence “The Million Dollar Letter” for over four years and it is probably the most widely used response to third party collection notices in the country. There are two simple reasons for this; the language of the request originates from the same federal law that it invokes and the results it has produced during this time almost always result in the third party debt collector discontinuing its collection efforts. To use this effectively, be sure you identify the collection notice as coming from a third party debt collector and not the creditor. Attorneys are not debt collectors, they represent either, but they are not debt collectors themselves. A third party debt collector is a corporation that never provided you with credit and is not in the banking or credit business. Most of us are familiar with the corporate names commonly known as creditors, such as Citibank, Discover, but companies like “Asset Acceptance Corporation and NCO and First Select” are not creditors. In response to a third party debt collector, do not send the same objection and dispute letters as for creditors, and do not use the arbitration process. If you do, you may waive your argument that there is no valid assignment, no consideration and be left with defending their collection in court as if they were the original creditor. You do not want this to happen. Always request a validation (much the same as verification) from the debt collector. You can also use the following example to request the same from a creditor, just correct the RE line to indicate the account number. The request for validation is very effective at showing you what information the collector, creditor or law firm for either has about your account. It also establishes the foundation for a counter lawsuit for violations of the Fair Debt Collection Practices Act. I do not recommend relying on this strategy exclusively in defending against any lawsuit. It is important to understand that there are many more procedures and strategies to implement in the event you are sued. This request for validation will eliminate most collection notices and phone calls after it is sent the first time. It is designed to cause the collector to follow a standard procedure. In most cases, it will cause a debt collector to refer the collection back to the original creditor. The creditor may respond by sending you a series of your most recent billing statements. Their answer will reveal what information they do not have for your account, such as the original signed credit application. This will greatly assist you in defending against any lawsuits.
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[Subscriber] [Address] [City state ZIP] [Collector] [Address] [City State ZIP] [Phone number] [Date] Re inquiry dated : account no. (none, there is no account) Greetings: Thank you for your recent inquiry. This is not a refusal to pay, but a notice that your claim is disputed. This is a request for validation made pursuant to the Fair Debt Collection Practices Act. I dispute your debt collection-related allegations, deny the same, and demand strict proof and verification thereof. This dispute, denial, and demand are made in accordance with federal law. Please complete and return the attached disclosure request form. Please limit your communication with me to writing only. If I receive any telephone calls from your company, I will consider them to constitute harassment. Please be advised that unwanted telephone calls are a class 1 misdemeanor in this state and I will file a complaint against the caller with the attorney general’s office. I maintain a telephone log of each phone call and in some cases, make an audio recording when necessary. Be advised that you have the right to remain silent. If you ignore this notice and contact me by telephone, you and your employees agree to allow me to make an audio recording of our conversation and you and your employees agree to allow the recording and any other information obtained to be used against you and your employees in a court of law. I will accept only your written communication. Be advised that I am not requesting a "verification" that you have my mailing address, I am requesting a "validation;" that is, competent evidence that I have some contractual obligation to pay you. You should also be aware that sending unsubstantiated demands for payment through the United States Mail System might constitute mail fraud under federal and state law. You may wish to consult with a competent legal advisor before your next communication with me. Your failure to satisfy this request within the requirements of the Fair Debt Collection Practices Act will be construed as your absolute waiver of any and all claims against me, and your tacit agreement to compensate me for costs and attorney fees. Best regards,
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CREDITOR DISCLOSURE STATEMENT Name and Address of Collector (assignee): Name and Address of Debtor: Account Number(s): What are the terms of assignment for this account? You may attach a facsimile of any records relating to such terms.

Have any insurance claims been made by any creditor or assignee regarding this account? Yes / no Has the purported balanced of this account been used in any tax deduction claim? Yes / no Please list the particular products or services sold by the collector to the debtor and the dollar amount of each:

Upon failure or refusal of collector to validate this collection action, collector agrees to waive all claims against the debtor named herein and pay debtor for all costs and attorney fees involved in defending this collection action. X Authorized signature for Collector Date
Please return this completed form and attach all assignment or other transfer agreements that would establish your right to collect this debt. Your claim cannot be considered if any portion of this form is not completed and returned with the required documents. This is a request for validation made pursuant to the Fair Debt Collection Practices Act. If you do not respond as required by this law, your claim will not be considered and you may be liable for damages for continued collection efforts.

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This is an example of what to expect in response to your request for validation, and how to respond if necessary. You will find the follow up example to the request for validation and a final notice you can send to the collector that fails to answer your request. The form can be modified if you want to send this second notice thirty days following your first request for validation because they did not respond. You only need to change the first line to “I did not receive any response to my request for validation dated , a copy of which is attached.” If the collector fails to produce the records or information listed in this second request, then send the request. To save you some time, they never produce these records. The collector or creditor will claim that those records are not required in order to comply with the Fair Debt Collection Practices Act, or that because they are the creditor, the Act does not apply to them, or because it’s a business account, the Act does not apply. Although correct, these records and information are required in court to prove their case, so by sending this letter now, you are establishing a foundation for your defense, and for requiring them to produce the information in court, in the event you are sued.

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[Subscriber] [Address] [City state ZIP] [Collector] [Address] [City State ZIP] [Phone number] [Date] Re inquiry dated : account no. (none, there is no account) Greetings: Thank you for your recent response to my request for validation. This is not a refusal to pay, but a notice that your claim is disputed. Your response did not include sufficient information to establish your claim or meet the requirements of the Fair Debt Collection Practices Act. Again, I dispute your debt collectionrelated allegations, deny the same, and demand strict proof and verification thereof. This dispute, denial, and demand are made in accordance with federal law. I need documents or information that show how I might be obligated to pay you. Do we have an agreement, maybe a contract in writing? I have never heard of your company before. What is the nature of your business? Are you a depository or lending institution? Did you provide me any services or products? If you did, please list them and be specific. What did I buy from you? Did either of us rely upon the other to perform? When did you solicit my business or do you have any records showing that I solicited your business? If I owe you money as you claim, then what is your obligation to me? If you claim to be the assignee debt collector for a particular creditor, do you maintain a valid license and bond to engage in this particular collection activity in this state? What are the terms of the assignment? What are your rights and liabilities and what are the assignor’s rights and liabilities under the purported assignment agreement? When did I consent to the assignment and do you have evidence of that consent? What provisions of the purported assignment agreement describe my rights and liabilities under its terms? In what manner did I benefit from the purported assignment? Is the purported assignment within a class of contracts, the performance of which might exceed one year? Please include a facsimile of this agreement and any other supporting records in your reply. Please answer these as soon as you can and be specific. If you don’t provide me the information requested within thirty (30) days I will consider the purported debt to be invalid, that you made a mistake, and that you agree to sanctions imposed against you and your organization for knowingly continuing a frivolous claim against me.
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Please limit your communication with me to writing only. If I receive any telephone calls from your company, I will consider them to constitute harassment. Please be advised that unwanted telephone calls are a class 1 misdemeanor in this state and I will file a complaint against the caller with the attorney general’s office. I maintain a telephone log of each phone call and in some cases, make an audio recording when necessary. Be advised that you have the right to remain silent. If you ignore this notice and contact me by telephone, you and your employees agree to allow me to make an audio recording of our conversation and you and your employees agree to allow the recording and any other information to be used against you and your employees in a court of law. I will accept only your written communication. Be advised that I am not requesting a "verification" that you have my mailing address, I am requesting a "validation;" that is, competent evidence that I have some contractual obligation to pay you. You should also be aware that sending unsubstantiated demands for payment through the United States Mail System might constitute mail fraud under federal and state law. You may wish to consult with a competent legal advisor before your next communication with me. Your failure to satisfy this request within the requirements of the Fair Debt Collection Practices Act will be construed as your absolute waiver of any and all claims against me, and your tacit agreement to compensate me for costs and attorney fees. Best regards, [Subscriber]

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This is another example I believe to be valuable in giving you the language you need to respond to those rude collection notices you might receive from an attorney in response to your request for validation. It can also be used to respond to offers to settle the collection account with a reduced payment. Please be careful to read the following section that explains the problems you might expect from making any settlement payment. [Subscriber] [Address] [City state ZIP] [Attorney] [Name of Creditor] [Address] [City state ZIP] [Phone] [Date] RE [Name of Creditor]; Account No. 0000-0000-0000-0000 Greetings [Name of Attorney] Thank you for your recent response to my letter of inquiry dated ; however, you have failed to give sufficient information regarding the alleged debt that you are attempting to collect. Before I consider any offer or settlement terms, I will need the additional information that you have not provided. Please identify or describe any losses or injuries incurred by your client. Explain whether or not your client lent me any money or the manner in which the disputed credit account was originated. Best regards, [Subscriber]

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If you want to finish the series of communication in the event that the collector fails to satisfy your request, you may use the following example as your final notice. [Subscriber] [Address] [City state ZIP] [Collector] [Address] [City State ZIP] [Phone number] [Date] Re inquiries dated and (see attached copies) Greetings: I have made two separate requests for validation (see attached) and your response or lack of response fails to comply with the disclosure requirements of the Fair Debt Collection Practices Act. Enough time has passed to allow you to comply but you have failed to meet the legal requirements of the law. It is apparent that you have no claim and that you have no records or evidence to support any claims against me. You have not provided me with any evidence to establish that I owe you any money. Your failure to respond in a timely manner is therefore deemed as an admission that you are not able to support your claim of debt against me. Please be advised that should you initiate a lawsuit against me without having proof that I owe you anything at all, I now have evidence that you are advancing a frivolous lawsuit. Starting a frivolous lawsuit may subject you to sanctions by the court, including costs, fees, and penalties. I urge you to carefully consider your course of action from here on out. Best regards, [Subscriber]

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No more communication is necessary. These two letters are enough to accomplish your objective of determining what information the collector or creditor has about you. This will better prepare you for any possibility of a lawsuit and restoring your credit history. The following instruction supplements this procedure to give you a better understanding of why it is effective. These strategies can be relied upon when a creditor assigns, sells or transfers a debt to a third party collector without the consent of the debtor. The object in corresponding with collectors is to enforce the protections under the Fair Debt Collection Practices Act by first requesting a validation of the purported debt. Lawyers and law firms are not organized as debt collection companies, but may sometimes represent third party debt collectors. Sometimes it is confusing because of the notice they include at the bottom of their collection letter “This is an attempt to collect a debt, and any information…” This does not mean that the lawyer or law firm is the actual debt collector, only that they want to avoid the liability under the Fair Debt Collection Practices Act which made attorneys liable in 1996. If you are not certain who they are or who they are representing then ask over the phone or send them a request for validation. I have found that even though a debtor might have owed the original creditor (it doesn’t matter whether he did or not), the third party debt collector is unable to validate the account simply because of the way they operate. In other words, the debt collector is never part of the original credit agreement; they get involved only after the debt is “charged off” to collections. The term “charged off” means that the creditor reported the unpaid account as a loss and claimed a tax deduction and if it was insured, filed a claim to recover it. The charge and subsequent assignment, when done in this manner renders the debt collector’s claim invalid, not only because you cannot be compelled to pay a third party assignee without your prior consent, but because they simply cannot prove you owe even the creditor or that there was a valid assignment agreement. Most of these companies do not maintain the records needed to validate such claims because many people do not question them this way. I believe this might change as more people learn how the system works and use it against the collectors. Remember that the debt collector is not required to actually provide you with evidence or proof that you owe what they say you owe, new case law regarding the Fair Debt Collection Practice Act standards requires only that the debt collector confirm the correct spelling of your name and the dollar amount they say you owe. My form letter includes requests for more information, knowing that it is not required at this stage, but it does establish a foundation for them to be required to provide this evidence if they sue you. Most debt collectors do not sue anyone; their primary skill is in obtaining a payment commitment over the phone. Examples of proof of the debt would include some evidence that you derived a benefit from the alleged debt. It might also include a payment history
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and remember that a contract does not require a signature to be binding. The claimant (e.g. the debt collector) merely needs to establish that the debtor derived some benefit from the collector. They do need evidence of your signature connected with the terms of any contract they want to enforce, specific to a certain provision. But they can sue you for what is called “account stated” which avoids the problem of proving the existence of a written contract. The facts of any collection today would never satisfy these requirements, unless the “debtor” paid money to the debt collector or was given the ability to use a line of credit with the debt collector and failed to refuse it. Some debt collectors will actually send you a credit card or a check stating that if you failed to refuse the offer, you will benefit from the new contract. There is a clear distinction between a creditor and a debt collector. A debt collector is not, in any way, a creditor and every aspect of the debt collector’s business is regulated under the Fair Debt Collection Practices Act. After several years of discussing this book with subscribers, I decided to include this section to help others prepare for what to expect when they follow this process. You must first learn to recognize the differences between a debt collector and a creditor (or the assignee creditor). In cases where a creditor has assigned your account to another creditor who is in the business of providing credit services and may be a member of Visa™ or MasterCard™, you should consider the collection as if it were undertaken by the original creditor. In the case where a creditor assigns your account to a third party debt collector, a business that does not provide credit services and is not a member of Visa™ or MasterCard™ or any of the other credit card technology associations, you would respond with a request for validation and your defenses would be those explained in this chapter. Typically, you may receive a notice from the creditor that your account has been charged off to collections, and a subsequent notice from a company that you have never heard of, requesting payment. The collector is usually not represented by an attorney, but if it is, the response is the same, send a request for validation. Just like actual debt collectors, attorneys are required to include the debt collector notice, “This is an attempt to collect a debt and any information obtained will be used for that purpose.” But that does not mean that the attorney or law firm is the debt collector itself. The lawyer would be representing the debt collector in nearly every situation. Lawyers know that it is not a good business practice (too much liability) to work as debt collectors themselves, or engage their entire law firm in that type of business. This is because of the liability of being sued under the Fair Debt Collection Practices Act and because of the different licensing requirements in each state. First, they must be authorized to practice law in each different state, by each state bar, then as a debt collector, they must maintain a separate licensing for each state in which they want to do business (engage in collections).
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There is far less liability for the lawyer to either enter into a partnership arrangement with an established debt collector, or to create his own debt collection corporation. You can expect a variation of many circumstances once an account goes into collections (is charged off). It is important to distinguish between the original creditor and the assignee (debt collector). Always request a validation from the assignee debt collector as soon as you receive the first collection notice in the mail or in writing. If the collector calls before sending the first notice, obtain the information about the caller's identity and collector for whom he or she is calling. Explain that you will not discuss the collection over the phone but they may correspond with you in writing. It is important to maintain an open line of written communication in the beginning of a collection with the assignee debt collector. End the call after you have explained this and collected the information, and do not discuss any aspects of the collection. 1. The collector may send you all the information it has from the account you had with the creditor. This does not establish any contractual obligation with the collector but only supports the fact that you do not owe the collector. This type of response is known as a "non-response" or a "failure or refusal to validate" and does not satisfy the legal requirements of the Fair Debt Collection Practices Act. 2. The collector may reassign the account back to the creditor. In this case, the creditor can no longer enforce the collection because it has previously "repudiated" the account. It has no more standing than any other third party collector at this point. 3. The collection may be assigned to another debt collector. Follow the same process as if it were a new collection (because it is). 4. If or when you begin receiving phone calls, make a record of the caller's name, company, phone number, address, date and time of call. Send a written communication to the caller requesting that future communication be limited to writing only. If they refuse to honor that request, then send a written complaint to the attorney general's office for your state, alleging that the caller is making unwanted, harassing and/or threatening phone calls to you. Include a copy of your telephone log. Send a copy of the complaint to the caller or his company. That should end the problem very quickly. Follow the procedures already explained in this text for stopping unwanted telephone calls. 5. The collector may tell you that if you do not pay by a certain date, they will report the unpaid balance to the Internal Revenue Service on a Form 1099 as imputed income. This type of income is the result of benefiting from not paying a debt and is taxable; provided that money was actually lent to you and that you had made payment arrangements and failed to maintain them as agreed. Imputed income does not result when you simply never pay the debt collector, and the way creditors operate today, no money is ever lent to the customer. And
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as for debt collectors, they do not even claim to be in the business of lending money, and without any evidence of a contractual obligation between you and the debt collector, their claim would be false. This text gives you an example of the type of response you should send. The important aspects of defending yourself against debt collectors include the Fair Debt Collection Practices Act, simple contract law and the basis that a debt collector (assignee) cannot establish any contractual nexus to enforce a claim. This doesn’t mean that the creditor does not have the right to assign the account to collections, the assignment clause permits this; however, the terms of the assignment fail to include the account holder (you), and this renders the actual collection unenforceable. Most importantly, if there is no written assignment agreement between the creditor and third party debt collector, in which the creditor (assignor) waives all claims against you, then there is no valid assignment. Further, absence of valuable consideration, an exchange between you and the debt collector of a benefit of detriment, then there is no valid assignment due to failure of consideration. A contract is an agreement between two or more people or entities in which obligations are created by what is known as "consideration." In law, the term consideration means the exchange of a benefit or detriment. The essential factors in determining whether or not a valid contract exists are first, there must be an offer, there must then be an acceptance and there must then be an agreement to perform under the terms and conditions of the contract. And while these are the basic elements of a contract, it is of no value unless it can be enforced in a court of law. To establish the validity of a contract, consideration must first be given. Remember that no process actually prohibits a collector or creditor from suing you. Even the United States president can be sued while in office. Anyone can file a lawsuit; however, if you follow the principles in this book, the collector or creditor will not be able to enforce its claim or get a judgment against you provided the circumstances are similar to what is described here. My entire letter writing process is based upon little known but basic principles of contract law. If people had a basic understanding of them the credit and collection industry would probably not exist today. Elements of a contract or agreement If I agree to purchase a service from someone, that agreement is not valid until I pay something for it or enter into a written "promise to pay.” It is "consideration" that creates an obligation and it can be in the form of just giving something in exchange for the performance or benefits of the contract. If I handed you a book that you wanted and you agreed to do something for me because of that book, then we have a valid contract. This type of verbal contract is sometimes difficult to enforce because when tested in court, the parties may
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not be able to resolve genuine disputes as to the true agreement. The court might then make a judgment based on what would appear to be equitable. Consideration for a valid agreement involves an exchange of a benefit or detriment between two or more people or entities. A valid contract exists when there has been an offer, acceptance, agreement, and when consideration has been made. And these contracts are easier to enforce when they are written; however, there are at least two more important factors involved in making a valid contract. Each party to the contract must be competent, or have the standing to contract, and the terms of the contract must be equitable for everyone entering into it. A contract is a matter of equity. In other words, a contract with someone who is insane or not of sound mind (non-compos mentis) is not valid or enforceable in any court because it cannot be equitable. A contract with a child is not valid except to the extent that it may be enforced upon the party who is not the child. A contract with a corporation is not valid unless it is directly with its board of directors or an authorized agent or officer as defined in the corporation's articles and by-laws. A contract with any government is not valid unless it is authorized by one holding an office as prescribed by law and the office holder must have the proper delegation of authority as required by statute. When a contract is not equitable it can be said to be unconscionable, and therefore, unenforceable. If I agree to pay for a service and enter into a contract to that effect, then it may be enforceable. However, if the written terms of the contract create only obligations for me, but not for the service provider, it can be said to be unconscionable. It could not then be enforceable in any court for two reasons, the first because it was not fair or equitable, and the second because such an action to enforce it would be barred by the statute of frauds (no contract in writing). On its face, such a contract could be found to be unconscionable when the service provider attempts to sue for breach of contract. Or, if I brought suit for the service provider's failure to perform, there's a good chance that because the contract was more or less one sided, I wouldn't be able to show the court that the service provider had any particular obligation as agreed to under the written contract. Contracts cannot be extended beyond the language of the written agreement. And agreements made in a written contract must be performed within a certain period of time. Even statutes and company charters have expiration dates. The request for validation process can benefit you in restoring your credit history.

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CHANGE OF ADDRESS This first step involves a little time and preparation. It can be avoided for now, but the earlier you complete this, the better your chances will be of avoiding a lawsuit. The standard method of determining which law firm or attorney will be chosen to file suit against you is based upon your mailing address. It is assumed by the collections department and the law firm that your mailing address is your place of residence. Since the bank must file suit in the county in which you reside, it must then locate a law firm that is local to this mailing address. If the collection department sees that you reside in Phoenix, Arizona, it will assign the collection to a law firm located in Phoenix, Arizona. This is information that you provide, and when you move to a different address, you can easily complete a change of address form and include that with your monthly payment. What if you submitted a change of address form with an address located in the middle of the Atlantic Ocean? Provided that you would ultimately receive all mail, or that you pay your bills online so that this would not be a factor, no one would probably notice. In fact, if your account did go to collections, upon deciding to file suit, that department would attempt to locate a local law firm to the middle of the Atlantic Ocean. What do you think your chances of being sued would be at that point? There is a chance that the bank would have archived a history of previous mailing addresses, and be able to try the next most recent. But what if they did not? What if you sent the bank a change of address notice with an address in an area of the United States that had a population less than 4,000 people in one county? Your chances of being sued by a local law firm would be dramatically reduced. I hope you don’t get the wrong impression, that John Gliha is saying “duck and hide” and that’s your solution to debt problems. No, I believe this is a practical strategy and one that is consistent with my text and other strategies. Along with the correct statement used in asset protection and privacy methods, “They can’t take it if they can’t see it”; it may be equally true that they can’t take it if they can’t take you to court and obtain a judgment first. The only way to do that is to properly serve you with a summons and complaint, and with a local attorney, at least within a few hours of where you apparently live. I have compiled a list from the World Almanac 2003 of every county in the country where the population was under 2,000 people in 2001 and between 2,000 and 4,000 people in 2001. This edition does not include any mail box services, but you can easily locate any post office boxes in these areas. You will have difficulty finding a mailbox service for the same reason that the bank will have great difficulty finding a law firm in these counties. However, an Internet keyword search and searching at websites for services such as Mail Boxes Etc.,
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The UPS Store, and Pak Mail will be to your advantage. You may need to obtain their consent to open a box via mail, and if they accept, they will want to see two photo identifications, and have you complete and Form 1583 required by the post office. Once you are able to open your new mail box, you can complete the change of address notification for each credit card account to which you wish to apply these strategies. The mail they send you can then be automatically forwarded to your local address for response. I know that some of you will ask me “What happens if I do this and they sue me anyway?” Well, that’s why I wrote the course, but in this case, your first response is to file a motion to dismiss for improper venue (without making any other motions) and explain how your residential address is where it is. This will only cause delay, but at least the lawsuit can be handled locally.

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Pop. 2001 Alaska Bristol Bay Borough Denali borough 1196 1914 Lake and Peninsula Borough 1675 Yakutat Borough 791 Haines 2333 Skagway-Hoonah-Angoon 3449 State County California Sierra Costilla Custer Ovray Sedgwick Colorado Dolores Hinsdale Jackson Kiowa Mineral San Juan Georgia Quitman Schley Webster Idaho Camas Clark Adams Butte Lewis Kansas Comanche Greeley Wallace 1961 1503 1706 Coldwater) (Tribune) (Sharon Springs) Page 41 1002 971 3428 2856 3625 (Fairfield) (Dubois) (Council) (Arco) (Nez Perce) 2610 3921 2301 (Georgetown) (Ellenville) (Preston) 1837 800 1589 1537 809 586 (Dove Creek) (Lake City) (Walden) (Eads) (Creede) (Silverton) 3485 3647 3693 3882 2668 (Downieville) (San Luis) (Nestcliffe) (Ovray) (Julesburg) Pop. 2001 Seat of Government

BANK ATTORNEY REVEALS DEBT FREEDOM SECRETS Copyright © 2004 by John Gliha

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(Sierra Blanca) (Fort Davis) (Brackettville) (Lipscomb) (Mason) (Menard) (Vega) (Big Lake) (Leakeu) (Eldorado) (Albany) (Stratford) (Rankin) (Manila) (Junction) (Randolph)

Once you have completed the first change of address, you should do one more after three months. This will greatly improve the possibility that the creditors will not maintain more than two addresses for you at the same time. One word of caution, they can easily look into your credit file to review more addresses, so it is very important that when you begin the change of address procedure, you pull your credit file from all three bureaus and dispute the listing of your personal residence by stating that it is not correct, and then provide them with the “correct” one, the one you would not mind showing to creditors. FACTS YOU SHOULD KNOW ABOUT SETTLEMENT OFFERS You must be very cautious, and even avoid all partial settlement offers, either directly with the creditor, collector or through debt consolidation. You will have to pay federal income tax on the difference between what they said you owed and the amount you paid to settle the account. After you settle the account under the new terms, or even if you do not settle the account because you failed to make all payments, the creditor or debt collector will send you a copy of a Form 1099 that it will file with the IRS. When you file your next tax return, you will need to include the amount on the 1099 as imputed income; if you do not, it might cause an audit or deficiency notice. If you do not file, you will receive a deficiency not or summons for an audit. The following example is a response to a notice that the amount you did not or will not pay will be reported as imputed income. This is their attempt to coerce you into maintaining your payments. The response explains the problem

and the reason why they cannot legally file this report, unless you make a payment arrangement and unless they actually lent you something.

[Subscriber] [Address] [City state zip] [Bank] [Address] [City state zip] [Phone] [Date] Re 1099 for uncollectible account; No. Greetings: I recently received a communication from you indicating that if I did not pay you money to satisfy what you claim to be my debt to you for the above stated account, that you would send me a Form 1099 and report this nonpayment to the IRS as my income. Please be advised that imputed income can only be reported when there has been a settlement arrangement and a failure of payment according to its terms, and only when money was actually lent. If you carry out this scheme, my CPA will provide expert testimony that I was the depositor in this account and that you owe me the return of my deposit (credit limit). You will not have lost any money because you lent me nothing. When the account was opened, you entered a dollar amount of credit in my name but that money did not come from you or other depositors. That money came from my promise to pay. You created currency that never existed before the account was opened. This account is my receivable, not yours. If you wish to make false statements to the Internal Revenue Service, I will file a complaint with the Criminal Division of the Inspector General's Office at the IRS and hold you liable for all damages I might incur from such false statements. I am willing to forgive the return of my deposit provided that you discontinue your attempts to collect what you claim to be owed, and this includes reporting to the IRS. Best regards, [Subscriber]

The basic concept to remember in responding to any settlement offer, or collection notice, is to always explain that you are not refusing to pay, but that you are disputing the amount they claim you owe. The form letters in this course are very useful to that end, and many attorneys have contributed to making them focused and legally enforceable over the years. Another fact that is not widely known is that the IRS recently issued a letter ruling that precludes settled accounts that would normally qualify as imputed income from being classified or reported as such if the debtor is insolvent. That is, if the consumer is bankrupt or cannot pay his creditors, regardless of whether or not a bankruptcy petition has been filed, his is insolvent and there is no taxable event for imputed income on the settled account. UNFAIR AND ILLEGAL BINDING ARBITRATION After the credit reporting scheme created by the banks to coerce people into payment, and after the debt consolidation gimmick that tricks consumers into making payments longer than they would normally, commercial binding arbitration was next. Commercial binding arbitration is an excellent means of resolving disputes between businesses and labor unions and government agencies without taking the matter into the court system. However, requiring the unsophisticated consumer to utilize the same forum has been shown to be unfair and even illegal and unethical. In the mid-90s, banks began adding arbitration clauses to their credit card agreements and simply using the notice clause of the contract to add it in by sending copies with monthly statements. What most consumers do not realize until it’s too late is that these commercial binding arbitration clauses require the consumer to waive his rights to a jury trial, in fact, waive all rights to use the benefits of the court system, such as discovery. Discovery allows the parties to investigate each other claims in great detail. It also precludes card holders from joining class action lawsuits against those same creditors who routinely violate federal and state laws against large groups of their customers. The research behind this text shows that these so-called arbitration clauses are not binding because there is never a “meeting of the minds” or “mutual assent”. In other words, the unknowing customers are never given a fair opportunity to understand the change. The banks claim that the notice is adequate and that the consumer can close his account in response, this is not reasonable. Many courts agree that the banks cannot do this, especially when you have a network attorney represent you in your defense. In order to create your defense, you must object to the creditors “notice of arbitration”. The first opportunity is when you receive notice in the mail, follow the process they explain to state your “rejection” of the new terms. If at some point in the future, the bank claims you to be in default, they might file a notice and demand for arbitration with one of their arbitration firms, NAF, JAMS or AAA.

Most of the arbitrators that work for these organizations receive most of their income from these arbitration petitions filed by the banks. You can be sure that you have very little chance of a fair hearing. If you receive a notice or demand to arbitrate such as this, and usually they are filed by MBNA via the NAF via Wolpoff & Abramson or Mann Bracken, then you must file an objection immediately, but never, never and never participate in any way in the proceeding. After you file your objection, do not attend hearing, produce documents or anything. If you participate by filing anything other than an objection or attending a hearing, you will have waived your objection as to no valid agreement, and limited it only to the forum being corrupted or unduly influenced. This will preserve your defense if you are sued. You should also take the initiative, if they obtain an award against you, to file a motion in your local court to set aside or vacate the award for the same reasons stated in your objection. This will give you the best chance of prevailing. In some cases, an arbitrator will suspend the petition to arbitrate in view of your objection. If not, they should be expected to obtain the award and then apply to your local court to confirm it. The basis of your objection should be that there was no valid agreement to arbitrate and that the proceeding is or was subject to undue influence and corruption. Your objection should be signed and dated and include a certificate of service stating that you certify it was mailed to the forum and the attorney on a certain date (post mark date). Initial and date the certificate of service and include that with the objection and copies of their petition for reference. Keep a copy for your records. CORRESPONDING WITH THE CREDITOR’S ATTORNEY You can expect collection notices from attorneys, it is just part of the process. In fact, this is how you reach a final resolution of the collection problem. As of June of 2004, we began building an attorney network in every state. If there is a member attorney in your county, he will already be knowledgeable of these strategies and able to assist you through our office if you have purchased that service. In the alternative, if you only have recently purchased only this text, you can use these forms in your own behalf. The following response is what should be sent to the collection attorney representing the creditor (not the third party debt collector). [Subscriber] [Address] [City state zip]

[Bank] [Address] [City state zip] [Phone] [Date] Re Collection Notice Greetings: I received your collection notice, a copy of which is attached for your reference. I understand that you will send me copies of monthly statements if I request a validation of this disputed account. I object to your claim and request validation, but more importantly, if you intend to sue me, I ask that you send me a copy of the contract on which your claim would lie. I need to see at least a copy of the instrument that bears my signature and date of execution. Do not ignore this part of my request. I need to know what specific terms of default to which you allege I agreed. Also, I need to know what steps your client undertook to mitigate any damages it claims to have incurred and any records that might evidence such damages. If you fail to provide it now, you will be compelled to produce these records by the court. My dispute is not relative to the provisions of the Fair Credit Billing Act. All undisputed charges on my account have been properly authorized. My dispute is that you incurred no losses, lent nothing and in fact, have been unjustly enriched by opening the disputed account, or will be unjustly enriched if you are permitted to obtain a judgment against me. I will expect your complete response including all requested records within thirty (30) days. Best regards, [Subscriber] LEGALLYH IMPEDING THE GARNISHMENT OR LEVY There are many creative ways to defeat levies (garnishments) and if you have prepared properly, the only money subject to this risk is your paycheck. It is very easy to protect bank accounts and other assets from levy. This is a subject best left to a qualified estate planner, usually an attorney or financial planner that is local to you. However, I have distilled a few strategies into this text that have been used over the years to legally defeat judgment garnishments. After receiving a judgment against you, the first step should be to request a wage garnishment exemption form from the clerk of the court, unless you already have one. Many people believe that filing an appeal is a solution, but the system is not fair in this regard. The reason why most people are sued is because they cannot pay, yet the courts require a bond in order to file your appeal that is equal to or

twice the amount of the judgment. This is usually not a viable option for many people reading and relying on this text. Before I continue explaining about the exemption form, I wanted to mention one other procedure you might be able to use. If you were sued, that is a complaint was filed and you were not properly served with a summons and complaint, in person as is usually required in all states and counties, and a default judgment is entered against you, you have a chance to have that judgment set aside if you file a “motion to set aside or vacate the judgment” for “improper service of process”. In some cases, if you are only a few days late in filing your answer, a motion for leave to answer out of time that argues your defense is meritorious, or that you answered late due to excusable neglect, and that you have exercised due diligence in answering as quickly as possible and that your untimely filing will not cause a substantial prejudice to either party, the court is inclined to grant your motion and accept the answer, or give you more time to file your answer. The name of the game in defeating collections after a judgment has been obtained when there is no chance to appeal or have it reversed is delay, delay, and delay. If you cannot file the motion to set aside for improper service, and you did file a timely answer and raise appropriate defenses, yet the plaintiff obtained a judgment anyway, you might be able to use one rule about allowing the court to set aside such judgments if they were obtained by fraud or misrepresentation. There are many people selling this as a solution to debt problems by itself and it is in no way what these individuals claim it to be. The courts are very skeptical about granting such motions, so they must be well founded in the facts and supported by an adequate memorandum of legal citations. These motions and even an appeal would not necessarily stop the collection process, but they might cause the judgment creditor to wait until the matters are resolved before proceeding. The worst part of a judgment is what is known as “post judgment discovery.” This is very much like a tax audit, you must answer all questions, usually without objection, and they are questions that will allow them to take any property you have not protected. Like I said, this problem can be avoided by planning. As an example, if a judgment creditor was able to sell my house and take the money, he would not be able to do that if I did not own my house, or if it was owned by my corporation. So while I would tell him the truth about its ownership, there would be little, actually nothing he could do about it. If I transferred the property to my corporation because of the lawsuit, then it would be reversed on the basis that I did it to defraud that creditor, but again, with planning, you won’t face this problem. Don’t be confused, an unsecured credit account does not attached to real estate like a mortgage would, but it might cloud your ability to sell the house

without first paying the lien if it is recorded properly. In order to attach real property to an unsecured judgment, the judgment holder must ask permission from the court, and this is usually never given unless prescribed by state law. The reason is that it would allow plaintiff’s to effectively re-write their contracts with customers and unfairly increase the customer’s risk while unfairly decreasing their risk to your prejudice and without due process or mutual assent. In any case, these types of motions may assist you in recovering from a judgment. In one example, we were able to reverse a levy that had been active for about a year by simply filing a motion to set aside for improper service of process. Because the opposing attorney did not want to pursue the collection, he agreed to settle the account by returning all the money levied and discontinuing all collection efforts, rather than take it back before the judge and explain why he misrepresented having served the summons and complaint properly. While you may choose to file any of these motions, it will never preclude you from filing a petition in the local bankruptcy court. This does not mean you need to follow through and obtain a discharge and chances are it may never appear on your credit file or the local newspaper. It simply means that you will take advantage of the court’s one hundred day automatic stay against the type of levy you are defending against. The day you file your petition and notify creditors, only those who are taking collection actions against you, they are prohibited by penalty of law from continuing to collect.

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UNDERSTANDING THE FAIR DEBT COLLECTION PRACTICES ACT
Request for Validation This statute is federal and many states have codified versions of it that are substantially the same. You cannot expect to defeat a collection process with this statute alone, not even if you rely on your state’s statute while you are defending against a lawsuit in your state. This statute was probably written to quell consumer outrage at abusive collection practices undertaken during the 1970s. It has very little penalty provision or authority. Most creditors will ignore it and most debt collectors have never heard of it, even though it applies to them. Your best defense against a third party debt collector is the chance that they did not include any assignment agreement from the creditor, did not include evidence of consideration for that agreement, or for your consent to enter into any so-called obligations with the collector (unless you made payment), and many times, the fact that they are not registered with your state’s Secretary of State to do business in your state. It is always good practice to obtain a certificate of non-existence from your Secretary of State for any third party debt collector so that it can be used in court. Failure to register means that the collector is not authorized to file any lawsuits in that state. None the less, I have included the following analysis. The Fair Debt Collection Practices Act (FDCPA) provides some type of defense against nearly every unsecured collection instituted by a third party (assignee) debt collector. The important sections of the Act are discussed below and you might want to search for a complete copy of the text on the Internet. Analyzing Section 804, any collection notice or other form of communication such as a telephone call must comply with each of these requirements. When a debt collector calls you, his only objective is to get you to commit to make payments or to pay the entire debt as quickly as possible. The collector may ask for your social security number and bank account or even credit card information to secure payment. Sometimes they will ask you to fax or mail them post dated checks. Some debt collectors will even go as far as to tell you that if you don’t pay by a certain date, they will come out and tow away your car or take your house. This is patently false, only in cases where the property in question is secured as collateral by an actual written agreement (usually a promissory note), can the collector take the property, and only after they have followed the lengthy and expensive process of a lawsuit and obtaining an actual judgment. Based on what I have noticed from conversations conveyed to me by subscribers, it
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appears that debt collectors and their agents are trained to actually lie and tell you whatever they think will induce a payment. A judgment would only be obtained in about a year if they are diligent about it. In nearly every debt collection case, the collector is not prepared to sue you, that’s the purpose of calling you, to try and harass and intimidate you with verbal statements and scare you into paying to make them stop calling. Sometimes the collector will tell you that adverse and negative claims will be made on your credit history, but even this doesn’t happen many times and if it does, the items can be removed simply because the information published in the debt collector’s claim does not represent your account. One or two letters will cure this problem, if it ever is a problem. Without making any such commitment or disclosing any more information than the collector already has about you (do not engage in argument with the caller), it is recommended that you obtain the following information before disconnecting: the caller’s identity, such as his full name, and 2. The name of the caller’s employer (name of debt collector). Keep a written record of this information close to the phone (a phone log) and write down the time and date of each call. Try and obtain the caller’s phone number, fax number and mailing address as well. This information can be used at a later time if it becomes necessary to file a complaint with the Federal Trade Commission or even a lawsuit for damages (so far, I have never seen a need for this). Let’s discuss Sections 805 and 806 in detail and see how they apply to our strategy. Unless you give them permission, a collector cannot call you at work or after normal “convenient” hours at home, that is not before 8:00 AM or after 9:00 PM local time. If after being notified that you are represented by an attorney, the debt collector cannot contact you directly. Our program is not designed for use with attorneys who represent you, but in case you already have one, this is the rule. In some cases, collectors know that they cannot intimidate your attorney, so they will try and go around your attorney to try and get a commitment to pay from you over the phone, as discussed earlier. Instead of requesting that the collector cease further communication, we notify the collector that no further telephone contact will be permitted and that the only line of communication available will be via fax or mail. This helps you avoid unnecessary argument with the caller or disclosing information or making commitments over the phone. Believe it or not, many people are intimidated by what a collector will say over the phone, the requirement to correspond in writing usually eliminates this potential problem. If any of these prohibitions apply to your particular situation, one or more of the templates published in this series can be modified to address and solve the problem. Let’s examine Sections 807 & 808 as well and see how they apply to what we want to accomplish. As you can see, there is a great deal of potential liability for
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the collector. I really cannot imagine how this type of business can even come close to being profitable, especially with other publications such as Winning The Collection Game® and educated consumers. Section 807 describes what would constitute a false or misleading representation of the disputed account or collection attempt. It’s not such a problem anymore, but in a few collection cases, we will see a collector who uses a letterhead to appear as if it were an attorney or law firm, or even a government agency. Sometimes a debt collector will use a “dba” (doing business as) or an actual corporate name, that sounds like a government agency with words such as “United” or “American” or “Department.” Some of the examples include language such as “…from the offices of Peterson and Peterson” yet this name may be the debt collector’s dba and not an actual law firm. Some debt collectors will obtain the consent of a local law firm to use their letterhead in written correspondence or to simply be able to mention that they are calling from an actual lawyer’s office if they contact you by telephone, when in fact, the lawyer may be in another state or city and have no intention of representing the collector in an actual lawsuit against you. This does not happen very much, but it is good to be able to recognize these attempts to mislead you into thinking that the debt collector is something other than what it is legally. Obviously, the reason why a collector would take such measures would be to try and intimidate the consumer. Many consumers greatly fear being contacted by a debt collector and especially fear a debt collector’s attorney or government agency. Some debt collectors will misrepresent the status of the collection account by claiming (by phone or letter) that if you do not pay, they will take your car or garnish your paycheck, when in fact, they have not obtained any judgment. All debt collectors (except the government) must obtain a judgment by suing you and giving you the opportunity to answer and defendant yourself. If you lose, the collector would obtain the judgment from the court, then file it on the public record in your county and begin “executing” its right to enforce the collection under the authority of the court and local sheriff’s office. In order to take your property when no property is secured by the agreement creating the debt, the collector would need to post a bond with either the clerk of court of the sheriff’s office and then apply to the court for a writ of execution and have it served by the sheriff before any property could be taken. The typical collection is a paycheck and not cars or even real estate. It can happen, but I cannot remember any single case in the thousands I have assisted with in the last eight years where this has happened. In order for a collector to take your house, it would have to overcome any homestead exemptions and the amount of the collection would have to be high enough to justify the foreclosure. Again, I have never seen this happen, but I could imagine a time when it might be possible. Remember that the most valuable tool a debt collector has is using the fear of the consumer (fear of the unknown) to coerce a payment. One of the purposes of this course is to dispel
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that fear in your mind so that you can deal with any collection situation in a rational manner. Once you know what they can and cannot do, a debt collector will not be able to intimidate you. Once a debt collector cannot intimidate you, its collection efforts will be costly and worthless. The more money a debt collector spends to try and collect from anyone, the greater the likelihood that, not only with the collection not take place, but the debt collection industry will calculate that this particular business enterprise is not very profitable. In fact, in the relatively short period of time that we have been publishing this information and educating consumers, I have seen various trends in the debt collection industry that would indicate this type of awareness is spreading throughout the debt collection industry. There are higher number of “contingency” collections, where the collector is simply hired to make one or two attempts to get a payment and must return the account to the creditor when it is not successful. I think once you understand this course, you will realize that we would prefer to face the debt collector rather than the creditor, but we can surmise that if the creditor uses a debt collector at all, it probably does not have a budget to sue or to defend itself against a counter suit. This is the reason why we can be so successful at stopping debt collections. While the debt collector may be able to use a dba, it cannot use a fictitious name unless it is registered with the state in which it is doing business and attempting a collection. In other words, the debt collector must be available to be sued or investigated and this cannot happen if collectors were permitted to make up business names with regulation. In some cases, a debt collector may correspond using a form or other document that appears to be an official or legal document issued by a court. This is one of the recognized and illegal collection practices described under the last part of this section. Section 808 of the statute describes what would be considered unfair practices employed in the course of attempting to collect a purported debt. It begins by saying that the limitations described in the following section do not limit the object of the statute, that means that even though the debt collector might not have violated the literal language of a particular provision, if it can be shown that the particular collection practice was unfair or unconscionable, then it will be considered a violation of the Act. It further states that the debt collector cannot collect any amount of money that is not permitted by law or by the agreement. Because there is no agreement between the collector and the alleged debtor, no collection can be sustained. Paragraph 2 states that they cannot keep any post dated check longer than two weeks (approximately). We do not recommend paying the debt collector so this is not an issue. If the collector solicits you for a post dated check, he cannot do so while indicating that if you don’t provide it, you may be indicted for a crime. You should not be having this type of conversation with a debt collector if you are
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following the program. They cannot charge you fees for communicating in any way, and they cannot threaten to take your property as if they had a right to repossess personal property without a court order. Obviously, post card communication would violate the privacy restrictions in the Act as well simply because anyone can read the contents of their correspondence which would probably include your personal information. And the return address or envelope cannot display information indicating in any way that the correspondence is from a debt collector. There are many other defenses to collection instituted by a third party. The debt collector cannot provide the same services as the creditor did, so the contractual arrangement changes. It would be analogous to assigning a credit card debt to a loan shark and instead of getting sued, the loan shark hunts you down and shoots off your kneecaps. It’s not an equitable agreement and there was no “meeting of the minds,” a necessary element of any valid contract. This is known as “breach of contract” or the affirmative defense of "statute of frauds" (no contract in writing). The “statute of frauds” has its origin from the English common law as early as 1677. It required certain classes of contracts to be in writing so as to avoid perjuries or false testimony when maintaining an action to enforce the terms of an agreement. Generally, the statute of frauds is concerned with agreements exceeding five hundred dollars in value, contracts which guaranty the debt of another, the sale of land, or those agreements that cannot, by their terms, be performed within a year. It has been adopted by many state legislatures in America and has nothing to do with “fraud” per se. It was formerly known as the statute of frauds and perjuries because, by securing an agreement in writing, the courts can better decide on the facts of the dispute and avoids perjured testimony by the parties. Suppose you made an agreement with another person to purchase his property for a value of one thousand dollars. If you both agreed that a down payment of one-fourth of that was acceptable, then you might also agree to pay the balance over the next several months. That’s a fair deal, but if you decided not to fulfill your end of the bargain by making those payments, and the seller never entered into a written agreement with you defining those particular terms, it would be very difficult to enforce through our court system. You might argue that the seller agreed to accept payment on the balance over the next eighteen months, while the seller would argue that you agreed to pay him the balance within a week. An agreement in writing should prevent this type of dispute. The statute of frauds prevents costly disputes, as in this example. The parties would have simply referred to the written agreement, each knowing completely what the obligations were.

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The statute of frauds can be used very effectively as an affirmative defense if a debt collector sues you. Here is an example of the language you could use in an affirmative defense. “The purported contract or agreement falls within a class of contracts or agreements required to be in writing. The purported contract or agreement alleged in the complaint was not in writing and signed by defendant or by some other person authorized by defendant and who was to answer for the debt, default, or miscarriage of another person.” In order to make this argument effectively, “statute of frauds” must be properly plead as an affirmative defense in your answer. You must review your state jurisprudence (case law) about this to determine the elements of facts which are required to be plead. Another reason is that the debtor of a creditor cannot be responsible to third party collectors because our legal system does not provide a remedy for a individual (e.g. collector) who knowingly and voluntarily incurs a liability (takes the assignment of a debt) and then seeks to recover the purported balance from the debtor (former debtor). It would be analogous to arriving on the scene of a house fire, buying the house from the owner and then suing him for damages resulting from the fire. There are certain principles of law that protect debtors from the collection efforts of third party debt collectors. One of those involves the concept that one cannot put oneself in harm’s way and maintain a suit for damages resulting therefrom. It’s such an old principle of law that it’s found in Latin as “Scienti et volenti non fit injuria” in which the literal translation is “An injury is not done to one who knows and wills it.” This is what debt collectors must do when they assume the liability for collecting a debt from you on behalf of an assignor. Furthermore, because there was no exchange of any benefit or detriment between the collector and former debtor, there is no enforceable agreement. A benefit or detriment would include a payment history to the collector, receiving products or services from the collector or some reliance by either party on the other to perform. Because these elements are not present, there is a “failure of consideration” and no valid contract or agreement. In some cases, the creditor (assignor) makes an insurance claim for an assignment or claims it as a tax deduction. This is known as “accord and satisfaction” because the creditor accepted payment from a third party for the purported debt, or a portion of the purported debt. This renders the debt satisfied and legally uncollectible by the creditor or any subsequent assignees. If the collector waits too long to file the suit or fails to serve it within the time limits, then the “doctrine of laches” or “statute of limitations” precludes any claims.
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“Each cause of action, claim, and item of damages did not accrue within the time prescribed by law for them before this action was brought.” This is another example of an affirmative defense. Better known as the doctrine of laches or the statute of limitations for civil actions, it’s a defense to bar claims in which the claimant waits too long to assert his rights. Today, it’s governed by statute and imposes a time limit on most civil actions. It could be anywhere from two years to seven years in duration depending upon the subject matter of the dispute. The legal affirmative defense of “failure of consideration” is another way of saying that there has never been any exchange of any money or item of value between plaintiff and defendant. Defendant has never entered into any contractual or debtor/creditor arrangements with plaintiff. “Consideration” is a necessary element to prove the existence of a valid, binding and enforceable agreement (or contract). Consideration may be shown in any form, and it must be valuable. It must give rise to a benefit and/or a detriment between two or more individual people or companies. In other words, if it can be shown that either party had even the option to benefit from the other, it might be enough to argue that there was valuable consideration for an alleged agreement. The terms of the agreement would need to be disclosed, and that is another defense to the claim that there was valuable consideration. If there was consideration for an agreement, then there must also be terms that can be scrutinized in writing or by an analysis of an accounting ledger. For example, a ledger showing regular payments could be interpreted as the payee’s right to receive those regular payments now and in the future. The assignment may also not be valid. Although the assignment is permitted by normal business practices, the assignee (debt collector) is not named in the agreement so the debt is not owed to the collector. Because the creditor assigns the account to a third party, he waives his rights to collect, afterwards. There was no “meeting of the minds,” a necessary element of a valid contract. This is known as “repudiation.” If there were terms of an assignment from the creditor to the collector, the customer was not a party to those terms, nor was he ever notified of the terms (if any), and most importantly, the customer of the original creditor had already calculated and assumed a certain number of risks (just like in any contract or agreement). When the assignment took place, that number and those types of risks changed and the customer was never given a fair opportunity to agree to the new risks. It was prejudicial to say the least. I have never seen an assignment agreement with any terms and it follows that I have never seen any customer included as a party to any assignment agreement. The assignment clause in the credit agreement is not sufficient to establish a new obligation with a un-named third party. The assignment clause is merely enough to allow the assignment, and thereby eliminate or abrogate any rights the creditor may have
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had before the purported assignment. While the assignment may be valid, because there are no terms and because there was no disclosure to the customer and because the customer never consented knowingly, and voluntarily to unknown or undisclosed terms, the collection of the debt cannot be enforced or maintained. The simple explanation, the assignment clause is enough to defeat the collection possibilities for both the creditor and debt collector. The argument may look like this in court: “The plaintiff is not an assignee for the purported agreement and no evidence appears on the record to support any related assumptions. Plaintiff's complaint fails to allege a valid assignment and there are no averments as to the nature of the purported assignment or evidence of valuable consideration. Plaintiff's complaint fails to allege whether or not the purported assignment was partial or complete and there is no evidence that the purported assignment was bona fide. Plaintiff's complaint fails to allege that the assignor even has knowledge of this action or that the assignor has conveyed all rights and control to the plaintiff. The record does not disclose this information and it cannot be assumed without creating an unfair prejudice against the defendant.” We say that the “complaint fails to state a cause of action or a claim upon which relief can be granted” for several reasons. 1. The complaint fails to allege or prove that plaintiff is licensed and has procured a bond as required by law. 2. The complaint is not supported by any certified facsimile of a collection agency license. 3. The plaintiff is not a collection agency licensed or authorized to conduct a collection agency business in this state. 4. The plaintiff is not authorized or licensed to collect claims for others in this state, solicit the right to collect or receive payment of a claim of another. 5. Plaintiff is not authorized or licensed to advertise or solicit, either in print, by letter, in person or otherwise, the right to collect or receive payment of a claim for another, nor to seek to make collection or obtain payment of a claim on behalf of another. The complaint fails to allege any exception or exemption to these requirements. The plaintiff is not any of the following: an attorney at law; a person regularly employed on a regular wage or salary in the capacity of credit men or a similar capacity, except as an independent contractor; a bank, including a trust department of a bank, a fiduciary or a financing and lending institution; a common carrier; a title insurer or abstract company while doing an escrow business; a licensed real estate broker; an employee of a licensee; nor a substation payment office employed by or serving as an independent contractor for public utilities. 6. The complaint fails to allege necessary facts such as the terms of the purported agreement, the date that purported account was opened, the form of consideration given and the complaint is unsupported by any evidence, details or other information. Believe it or not, these conditions are usually always true. The Fair Debt Collection Practices Act requires all debt collectors to validate the collection upon request of the purported debtor. Debt collectors
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cannot possibly validate the claim unless payment to the debt collector has been made by the customer of the assignor (original creditor). Although the legal requirements of validating a collection account can be met by producing the name and account information upon request, as in the Chaudhry v. Gallerizzo case, but the collector will have a very difficult time meeting the burden of proof and obtaining a judgment against you. If you have not yet mailed your request for validation, you can send it in the mail, in a separate envelope, at the same time you file your answer to their complaint (for those that end up in court). Attach a copy of the request (or requests) with a copy of their collection notice or notices to your answer. In any case, a request for validation, or several of them, should be sent by first class mail to the debt collector and a copy of each request should be maintained for your records. Be sure to include a copy of the collection notice with your request for validation. We collect and sometimes purchase transcripts from subscribers and attorneys using these strategies so that we can show how they work in practice for real collection lawsuits. The effectiveness of these strategies is continually confirmed by these transcripts and we also use them as tutorials for those using them for the first time or without an attorney.

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BIBLIOGRAPHY
The following references provided the source for the strategies published in Winning The Collection Game®. This publication is the original work of John Gliha. You may find unauthorized, erroneous and perverted variations of his work that have been plagiarized by certain individuals and organizations, but this publication is the original work of John Gliha and only Due Process LTD and its authorized distributors have the exclusive rights of duplication and publication. 1. Winning The Collection Game, John Gliha 2. United States Congressional, Report “Money Facts” 3. Federal Reserve Bank of Chicago, “Two Faces of Debt” 4. Federal Reserve Bank of Chicago, “Modern Money Mechanics” 5. Fair Debt Collection Practices Act, 15 USC § 1601 et seq. 6. Fair Credit Reporting Act, 15 USC § 1601 et seq. 7. Fair Credit Billing Act, 15 USC § 1601 et seq. 8. Telephone Solicitations Act 9. American Jurisprudence 10. Corpus Juris Secundum 11. Ballentine’s Law Dictionary 12. Black’s Law Dictionary 13. State Rules of Civil Procedure (all fifty states) 14. Federal Rules of Civil Procedure 15. Other sources include legal opinions from a list of attorneys in private practice, attorneys and law firms defending against course strategies, court rulings and comments made by judges, attorneys, witnesses and feedback from consultants assisting subscribers. 16. The Creature From Jekyl Island, G. Edward Griffin. 17. Money & Banking, 5 Ed. and Money & Banking Instructor’s Manual, 5 Ed.
th th

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APPENDIX
Abolish the Fed by Rep. Ron Paul, MD In the House of Representatives, September 10, 2002 Mr. Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. I also ask unanimous consent to insert the attached article by Lew Rockwell, president of the Ludwig Von Mises Institute, which explains the benefits of abolishing the Fed and restoring the gold standard, into the record. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people. From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts. With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America's exports or the low rate of savings should be enthusiastic supporters of this legislation. Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government. Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over
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monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy. In fact, Congress' constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy. In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve. WHY GOLD? By Llewellyn H. Rockwell, Jr. As with all matters of investment, everything is clear in hindsight. Had you bought gold mutual funds earlier this year, they might have appreciated more than 100 percent. Gold has risen $60 since March 2001 to the latest spot price of $326. Why wasn't it obvious? The Fed has been inflating the dollar as never before, driving interest rates down to absurdly low levels, even as the federal government has been pushing a mercantile trade policy, and New York City, the hub of the world economy, continues to be threatened by terrorism. The government is failing to prevent more successful attacks by not backing down from foreign policy disasters and by not allowing planes to arm themselves. These are all conditions that make gold particularly attractive. Or perhaps it is not so obvious why this is true. It's been three decades since the dollar's tie to gold was completely severed, to the hosannas of mainstream economists. There is no stash of gold held by the Fed or the Treasury that backs our currency system. The government owns gold but not as a monetary asset. It owns it the same way it owns national parks and fighter planes. It's just another asset the government keeps to itself. The dollar, and all our money, is nothing more and nothing less than what it looks like: a cut piece of linen paper with fancy printing on it. You can exchange it for other currency at a fixed rate and for any good or service at a flexible rate. But there is no established exchange rate between the dollar and gold, either at home or internationally. The supply of money is not limited by the amount of gold. Gold is just another good for which the dollar can be exchanged, and in that sense is legally no different from a gallon of milk, a tank of gas, or an hour of babysitting services.
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Why, then, do people turn to gold in times like these? What is gold used for? Yes, there are industrial uses and there are consumer uses in jewelry and the like. But recessions and inflations don't cause people to want to wear more jewelry or stock up on industrial metal. The investor demand ultimately reflects consumer demand for gold. But that still leaves us with the question of why the consumer demand exists in the first place. Why gold and not sugar or wheat or something else? There is no getting away from it: investor markets have memories of the days when gold was money. In fact, in the whole history of civilization, gold has served as the basic money of all people wherever it's been available. Other precious metals have been valued and coined, but gold always emerged on top in the great competition for what constitutes the most valuable commodity of all. There is nothing intrinsic about gold that makes it money. It has certain properties that lend itself to monetary use, like portability, divisibility, scarcity, durability, and uniformity. But these are just descriptors of certain qualities of the metal, not explanations as to why it became money. Gold became money for only one reason: because that's what the markets chose. Why isn't gold money now? Because governments destroyed the gold standard. Why? Because they regarded it as too inflexible. To be sure, monetary inflexibility is the friend of free markets. Without the ability to create money out of nothing, governments tend to run tight financial ships. Banks are more careful about the lending when they can't rely on a lender of last resort with access to a money-creation machine like the Fed. A fixed money stock means that overall prices are generally more stable. The problems of inflation and business cycles disappear entirely. Under the gold standard, in fact, increased market productivity causes prices to generally decline over time as the purchasing power of money increases. In 1967, Alan Greenspan once wrote an article called Gold and Economic Freedom. He wrote that:"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. . . . This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights." He was right. Gold and freedom go together. Gold money is both the result of freedom and its leading protector. When money is as good as gold, the government cannot manipulate the supply for its own purposes. Just as the rule of law puts limits on the despotic use of police power, a gold standard puts extreme limits on the government's ability to spend, borrow, and otherwise create
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crazy unworkable programs. It is forced to raise its revenue through taxation, not inflation, and generally keep its house in order. Without the gold standard, government is free to work with the Fed to inflate the currency without limit. Even in our own times, we've seen governments do that and thereby spread mass misery. Now, all governments are stupid but not all are so stupid as to pull stunts like this. Most of the time, governments are pleased to inflate their currencies so long as they don't have to pay the price in the form of mass bankruptcies, falling exchange rates, and inflation. In the real world, of course, there is a lag time between cause and effect. The Fed has been inflating the currency at very high levels for longer than a year. The consequences of this disastrous policy are showing up only recently in the form of a falling dollar and higher gold prices. And so what does the Fed do? It is pulling back now. For the first time in nearly ten years, some measures of money (M2 and MZM) are showing a falling money stock, which is likely to prompt a second dip in the continuing recession. Greenspan now finds himself on the horns of a very serious dilemma. If he continues to pull back on money, the economy could tip into a serious recession. This is especially a danger given rising protectionism, which mirrors the events of the early 1930s. On the other hand, a continuation of the loose policy he has pursued for a year endangers the value of the dollar overseas. How much easier matters were when we didn't have to rely on the wisdom of exalted monetary central planners like Greenspan. Under the gold standard, the supply of money regulated itself. The government kept within limits. Banks were more cautious. Savings were high because credit was tight and saving was rewarded. This approach to economics is the foundation of a sustainable prosperity. We don't have that system now for the country or the world, but individuals are showing their preferences once again. By driving up the price of gold, prompting gold producers to become profitable again, the people are expressing their lack of confidence in their leaders. They have decided to protect themselves and not trust the state. That is the hidden message behind the new luster of gold. Is a gold standard feasible again? Of course. The dollar could be redefined in terms of gold. Interest rates would reflect the real supply and demand for credit. We could shut down the Fed and we would never need to worry again what the chairman of the Fed wanted. There was a time when Greenspan was nostalgic for such a system. Investors of the world have come to embrace this view even as Greenspan has completely abandoned it. What keeps the gold standard from becoming a reality again is the love of big government and war. If we ever fall in love with freedom again, the gold standard
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will once more become a hot issue in public debate. Republican member of Congress from Texas. Bring Back Honest Money by Rep. Ron Paul, MDby Rep. Ron Paul, MD Ron Paul in the US House of Representatives, July 25, 2003

Dr. Ron Paul is a

Mr. Speaker, I rise to introduce the Honest Money Act. The Honest Money Act repeals legal tender laws, a.k.a. forced tender laws, that compel American citizens to accept fiat (arbitrary) irredeemable paper-ticket or electronic money as their unit of account. Absent legal tender laws, individuals acting through the markets, rather than government dictates, determine what is to be used as money. Historically, the free-market choice for money has been some combination of gold and silver, whenever they were available. As Dr. Edwin Vieira, the nation’s top expert on constitutional money, states: “A free market functions most efficiently and most fairly when the market determines the quality and the quantity of money that’s being used.” While fiat money is widely accepted thanks to legal tender laws, it does not maintain its purchasing power. This works to the disadvantage of ordinary people who lose the purchasing power of their savings, pensions, annuities, and other promises of future payment. Most importantly, because of the subsidies our present monetary system provides to banks, which, as Federal Reserve Chairman Alan Greenspan has stated, “induces” the financial sector to increase leverage, the Federal Reserve can create additional money, in Mr. Greenspan’s words, “without limit.” For this reason, absent legal tender laws, many citizens would refuse to accept fiat irredeemable paper-ticket or electronic money. Legal tender laws disadvantage ordinary citizens by forcing them to use money that is vulnerable to vast depreciation. As Stephen T. Byington wrote in the September 1895 issue of the American Federationist: “No legal tender law is ever needed to make men take good money; its only use is to make them take bad money. Kick it out!” Similarly, the American Federation of Labor asked: “If money is good and would be preferred by the people, then why are legal tender laws necessary? And, if money is not good and would not be preferred by the people, then why in a democracy should they be forced to use it?” The American Federation of Labor understood how the erosion of the value of money cheated working people. Further, honest money, i.e., specie, was one of the three issues that encouraged ordinary people to organize into unions when the union movement began in the U.S. circa 1830. While harming ordinary citizens, legal tender laws help expand the scope of government beyond that authorized under the Constitution. However, the primary beneficiaries of legal tender laws are financial institutions, especially banks,
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which have been improperly granted the special privilege of creating fiat irredeemable electronic money out of thin air through a process commonly called fractional reserve lending. According to the Federal Reserve, since 1950 these private companies (banks) have created almost $8 trillion out of nothing. This has been enormously advantageous to them. The advantages given banks and other financial institutions by our fiat monetary system, which is built on a foundation of legal tender laws, allow them to realize revenues that would not be available to these institutions in a free market. This represents legalized plunder of ordinary people. Legal tender laws thus enable the redistribution of wealth from those who produce it, mostly ordinary working people, to those who create and move around our irredeemable paper-ticket electronic money which is, in essence, just scrip. The drafters of the Constitution were well aware of how a government armed with legal tender powers could ravage the people’s liberty and prosperity. That is why the Constitution does not grant legal tender power to the federal government, and the states are empowered to make legal tender only out of gold and silver (see Article 1, Section 10). Instead, Congress was given the power to regulate money against a standard, i.e., the dollar. When Alexander Hamilton wrote the Coinage Act of 1792, he simply made into law the market-definition of a dollar as equaling the silver content of the Spanish milled dollar (371.25 grains of silver), which is the dollar referred to in the Constitution. This historical definition of the dollar has never been changed, and cannot be changed any more than the term “inch,” as a measure of length, can be changed. It is a gross misrepresentation to equate our irredeemable paper-ticket or electronic money to “dollars.” However, during the 20th century, the legal tender power enabled politicians to fool the public into believing the dollar no longer meant a weight of gold or silver. Instead, the government told the people that the dollar now meant a piece of government-issued paper backed up by nothing except the promises of the government to maintain a stable value of currency. Of course, history shows that the word of the government (to protect the value of the dollar) is literally not worth the paper it is printed on. Tragically, the Supreme Court has failed to protect the American people from unconstitutional legal tender laws. Salmon Chase, who served as Secretary of the Treasury in President Lincoln’s administration, when he was Chief Justice of the Supreme Court, dissenting in Knox vs. Lee, summed up the argument against legal tender laws in twelve words: “The legal tender quality [of money] is only valuable for the purposes of dishonesty.” [emphasis added.] Another prescient Justice was Stephen Field, the only Justice to dissent in every legal tender case to come before the Court. Justice Field accurately described the dangers to our constitutional republic posed by legal tender laws: “The arguments in favor of the constitutionality of legal tender paper currency tend
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directly to break down the barriers which separate a government of limited powers from a government resting in the unrestrained will of Congress. Those limitations must be preserved, or our government will inevitably drift from the system established by our Fathers into a vast, centralized, and consolidated government.” A government with unrestrained powers is properly characterized as tyrannical. Repeal of legal tender laws will help restore constitutional government and protect the people’s right to a medium of exchange chosen by the market, thereby protecting their current purchasing power as well as their pensions, savings, and other promises of future payment. Because honest money serves the needs of ordinary people, instead of fiat irredeemable paper-ticket electronic money that improperly transfers the wealth of society to a small specially privileged financial elite along with other special interests, I urge my colleagues to cosponsor the Honest Money Act. Dr. Ron Paul is a Republican member of Congress from Texas. Honest Money, Not Fiat Money by Congressman Ron Paul, MD Statement on the Financial Services committee's "Views and Estimates for Fiscal Year 2003" Supporters of limited, constitutional government and free markets will find little, if anything, to view favorably in the Financial Services committee's "Views and Estimates for Fiscal Year 2003." Almost every policy endorsed in this document is unconstitutional and a threat to the liberty and prosperity of the American people. For example, this document gives an unqualified endorsement to increased taxpayer support for the Financial Crimes Enforcement Network (FINCEN). According to the committee, these increased funds are justified by FINCEN's new authority under the PATRIOT Act. However, FINCEN's powers to snoop into the private financial affairs of American citizens raise serious constitutional issues. Whether the expansion of FINCEN's power threatens civil liberties is ignored in this document; instead, the report claims the only problem with the PATRIOT Act is that the federal financial police state does not have enough power and taxpayer money to invade the privacy of United States citizens! The committee also expresses unqualified support for programs such as the Export-Import Bank (EX-IM) which use taxpayer dollars to subsidize large, multinational corporations. Ex-Im exists to subsidize large corporations that are quite capable of paying the costs of their own export programs! Ex-Im also provides taxpayer funding for export programs that would never obtain funding in the private market. As Austrian economists Ludwig von Mises and F.A. Hayek demonstrated, one of the purposes of the market is to determine the highest value of resources. Thus, the failure of a project to receive funding through the
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free market means the resources that could have gone to that project have a higher-valued use. Government programs that take funds from the private sector and use them to fund projects that cannot get market funding reduce economic efficiency and lower living standards. Yet Ex-Im actually brags about its support for projects rejected by the market! Finally, the committee's views support expanding the domestic welfare state, particularly in the area of housing. This despite the fact that federal housing subsidies distort the housing market by taking capital that could be better used elsewhere, and applying it to housing at the direction of politicians and bureaucrats. Housing subsidies also violate the constitutional prohibitions against redistributionism. The federal government has no constitutional authority to abuse its taxing power to fund programs that reshape the housing market to the liking of politicians and bureaucrats. Rather than embracing an agenda of expanded statism, I hope my colleagues will work to reduce government interference in the market that only benefits the politically powerful. For example, the committee could take a major step toward ending corporate welfare by holding hearings and a mark-up on my legislation to withdrawal the United States from the Bretton Woods Agreement and end taxpayer support for the International Monetary Fund (IMF). The Financial Services committee can also take a step toward restoring Congress' constitutional role in monetary policy by acting on my Monetary Freedom and Accountability Act (HR 3732), which requires Congressional approval before the federal government buys or sells gold. This committee should also examine seriously the need for reform of the system of fiat currency which is responsible for the cycle of booms and busts which have plagued the American economy. Many members of the committee have expressed outrage over the behavior of the corporate executives of Enron. However, Enron was created by federal policies of easy credit and corporate welfare. Until this committee addresses those issues, I am afraid the American economy may suffer many more Enron-like disasters in the future. In conclusion, the "Views and Estimates" presented by the Financial Services committee endorses increasing the power of the federal police state, as well as increasing both international and corporate welfare, while ignoring the economic problems created by federal intervention into the economy. I therefore urge my colleagues to reject this document and instead embrace an agenda of ending federal corporate welfare, protecting financial privacy, and reforming the fiat money system which is the root cause of America's economic instability. March 4, 2002 Dr. Ron Paul is a Republican member of Congress from Texas.

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