Why Charge Offs Shouldn't Be Paid

Many times when I review clients' credit reports I see paid charge offs.  My stomach gets a sick feeling every time. Paying off a charge off might help the score a bit because it changes the balance to zero, improves the debt ratio, and potential creditors like seeing that the alleged debt was paid, but it's still a derogatory account and will always be a derogatory account.

The truth is, that creditor has already been paid for that charge off, even before it was charged off, but they never told you.  These creditors always fail to fully disclose every important aspect of credit accounts. That voids the contract. It voids the account. The account and contract were never valid because of fraud and lack of disclosure by the creditor.

One thing these creditors fail to disclose is that the account is insured to protect them from loss of asset due to default or other credit loss.  Did you know that? Did they disclose that to you?  They're supposed to. In over 30 years of doing credit repair, I have only seen the disclosure 1 time.  ONE TIME, and that was years ago.  Haven't seen any disclosures in probably over 15 years or so.

I'll explain the insurance in a bit but here are some other things they don't disclose.  They don't disclose that they are prohibited from lending you money from their assets or their depositors' assets.  They are prohibited from lending you their credit. They are lending you your own money that you first lent them, which means that you funded the account that you are using to shop or spend. They are converting paper (your application, service agreement, loan papers) into negotiable instruments and depositing them into the newly created account to fund the account and essentially lend them money.

The National Bank Act of 1864 and National Banking Act of 1933 are where you can find the regulation that states these financial institutions cannot lend money from their assets or their depositors' assets.  Supreme court case law repeatedly has ruled that these financial institutions cannot lend their credit.  Here are a few cases but there are many, many cases that uphold this. 

"A national bank has no power to lend its credit to any person or corporation…" Bowen v. Needles Nat. Bank, 94 F 925 36 CCA 553, certiorari denied in 20 S.Ct 1024, 176 US 682, 44 LED 637.

First National Bank v. National Exchange Bank 29 U.S. 122, 128

California Bank v. Kennedy 167 U.S. 362, 367

Concord Bank v. Hawkins 174 U.S. 364

You will find the requirements related to the insurance banks have for each account in 15 USC Section 1605.  Let's talk about this insurance and how it supports my opinion that charge off's should not be paid after the fact by the consumer.

FDIC rules require creditors to charge off written contracts at 120 days of default and revolving credit accounts at 180 days of default.  However, creditors can file a claim against the insurance for a credit account at 90 days of default.  That's 30 to 90 days prior to when that creditor is allowed to charge off the account.

Once the insurance claim is launched the creditor shortly thereafter receives the money to pay off the balance of the account which they claimed is a loss of asset.  Please tell me, whose loss of asset was really affected?  Not the creditor because they didn't have any skin in the game.  How can I say that?

Remember I stated that these financial institutions are converting paper (agreements, applications, etc.) into negotiable instruments.  Well, they don't own these negotiable instruments.  They belong to the consumer whose name is signed on the bottom. Under Title 12, negotiable instruments are to be treated as CASH!  Whose cash?  The consumer's cash.  That is what is deposited into the newly created account. That is what funds the account.  The CONSUMER funds the account, not the creditor, so the consumer should be the recipient of the insurance payment, not the creditor who has not lost a dime!

But let's go over the insurance and charge off actions. Since they get a payoff for the insurance claim they place for the "default" , the balance is paid off.  Why then do they charge off the account 90 days later, when the default timeline hits 180 days (or 120 for written contracts)? The balance was paid off by the insurance so there is no amount left to charge off.  Did you ever think about that if you knew about the insurance?  

Since the consumer funded the account and continued to deposit more money in the form of "payments" and the creditor never lent any money or credit since that's forbidden by law, and then the creditor swipes the insurance payment by fraudulently claiming they are experiencing asset loss, why do they need to charge the account off?  The insurance paid it off. In reality, the account was paid as agreed from the get go by the consumer and credit reports should reflect that.

But since these liars will never report the truth and will not correct the record, the consumer needs to not give them more money by paying a charge off but instead, demand that they prove their claim. Demand that they prove they lent something, that there was equal risk and full disclosure, and a truly valid contract.  Since they cannot provide that, put the squeeze on them and remove that bad account from your credit, get them to close their file, and work on rebuilding your credit without paying that derogatory, false account that is void and was void from the origination of the account due to an invalid contract, fraudulently created by them, the fake creditor.

Hopefully this sinks in and you will stop and think about how they are trying to dupe you, before you pay off a charge off that you do not owe.  

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Free Credit Repair Assistance

Thank you to all my blog readers and newcomers for all the compliments on my blog.  I enjoy helping you learn how to fight back and fix your credit.  I have done this for many years and love hearing about the many successes people all across the country, and sometimes people from other countries, have had because of the information I have freely shared.

I respond to many, many emails, many, many phone calls and tons of comments here on the blog.  I don't hold back and help give the best information I can.  I have done credit repair for  over  30 years and have been very successful for my clients.  I've shared tactics and strategies and legal information that almost no-one else shares, and certainly no one, as in credit repair professionals, ever shared the amount of information, knowledge, and secret strategies with others back when I began on my mission to educate others, and still to this day. 

I've had plenty of professionals contact me and tell me I should stop sharing so much information because then too many people will try to do for themselves what we do for our clients and it affects our income.  (I admit that I've shared so much information that it has cut into my income too).

Anyhow, it feels good to be able to have helped so many people, including other credit repair professionals that have needed guidance on how to proceed with their clients.  I have a favor to ask of all of you now.  I am feeling a bit awkward asking this but I feel I need to.

If you have learned anything valuable from my blog; if you have experienced success with your credit repair because of information I have shared; if you have made comments and I have responded with information that was useful to you and to others; if I have helped you through emails or phone calls, I'm asking that you please show your appreciation by making a donation.

I would also like you to make a comment on here to let me know what areas of fixing your credit you need me to write about.  Your comments and your donations will help me keep this blog active with relevant and needed information.  I appreciate you and I thank you in advance for your generosity. 

You Don't Owe Your Debt - Its All A Fraud!

You've been duped and you don't even realize it.  When you think you borrowed money, you are incorrect. When you think you have to pay back money for what you borrowed, you haven't learned the truth.

Most people grow up believing what they are told by parents, teachers, lenders, politicians (well maybe not so much them), our government. Few grow up challenging what they are being told. Few people stop and ask why or how. Few people stop and say, "Prove it!"  

I'm one of the few who has always questioned what I was told. I was always labeled as argumentative when I really was just looking for answers. Somewhere in my gut it seemed that things I was taught and things I was told was not the whole truth.  You may have had that same feeling at times in your life. But we are conditioned to just accept what we were told as the truth.  Its not our parents' fault. They didn't know any better because they were  raised the same way.  You just don't question authority and you should just respect your elders.  

Well, in my book, you should question what triggers a twinge of doubt in your gut and why respect your elders (lying government officials, lying banksters) when they are not telling you the truth and they have an agenda to keep you from knowing the truth.  Truth is power and they want to keep you from gaining any truth or power because they want it all for themselves.  Then they can control you and enslave you.

I've decided to post a video today. Please take the time to watch it. Its about money. Where it comes from, where debt comes from, and how its all a fraud that has been kept secret so you won't find out the truth.

There are 5 videos in this series. I encourage you to watch all of them when you have a chance.  They will help open your eyes to the scam that has been played on all of us.  I hope that it helps you understand that getting into debt is not your fault because that's how this system was set up - even if you maxed out credit cards, were allegedly irresponsible in your spending, and just got to a point where you had to walk away or give up trying to pay these bills for credit and loans. 

When the truth about this sinks in, you may get a bit angry, and rightly so.  I care about you and I want you to know the truth.  Please, if this video opened your eyes a bit, then share it. I would love it if you shared my blog with others. They too can watch the video right here but also, there's a lot of information that I give that may be what they need to help handle their own credit issues.

Thanks for reading, watching and sharing.  Enjoy!

If you have found this blog helpful to you, please consider donating as a sign of your appreciation for information I have freely given to you.  The "Donate" button is on the right side bar.  Thank you for your generosity.

How To Write Follow Up Letters When Collectors Claim To Validate

Today I'm going to explain how you are to follow up and send a second letter to a collector (could be an original creditor) who responded and sent what they claim to be validation. In all reality, if you ask the questions and request the production of documents I ask for, you will know that they didn't validate. I'm going to give you examples of the junk they send claiming validation. Well, usually, they claim to have "verified", but, that's not what you asked for now, was it?  You demanded validation.

Validation is "PROOF" from creditors and collectors, and Verification is used with credit bureaus. Not the same thing.  According to Black's Law Dictionary, Sixth Ed., 1990, Verification is:

"Confirmation of correctness, truth, or authenticity, by affidavit, oath, or deposition. Affidavit of truth of matter stated and object of verification is to assure good faith in averments or statements of party."

What this is saying is that whoever claims to verify is willing to testify in a court of law that information they furnished is 100% accurate, truthful, and they have 1st hand knowledge of all that has transpired for that alleged debt or alleged account.  How can they be sure what they think they are right about is right unless they personally know it?  Who on earth actually knows the truth about your accounts or your debts other than you?  You are the ONLY one who has 1st hand knowledge.

Here is a typical response from both original creditors and collectors that send a letter and nothing else:  "We've investigated this account and found that we are reporting accurately."   Does that look like validation to you?  That's hearsay!  Where is the proof?  That's what your response letter will say to them.  

Dear Dummy Collector,

Thanks for taking the time to waste paper and postage on your response to my demand for validation.  How about if I send you a bill and just say, "yep, I got it right, you owe me." Do you think that would stand up in a court of law?  I highly doubt it. I asked you for proof, not hearsay, not more of your lies.  Send the proof I requested or go pound sand.

Okay, so I don't always say it just like that but seriously, claiming something is accurate is lazy and weak. Its not validation.

Here's another response you might see.  They send you a letter back claiming verification or validation and send you an old bill, probably the last month of an account that was getting ready to be charged off.  The bill might even say on it "Noncollectable Account." That is NOT validation.  Its an old bill that has  your name on it, possibly your address on it, but hmm, does it have a signature on it?  Is it a contract?  Its just a piece of paper that makes a claim but has no teeth in it.  I love getting these because they do several things usually.  They prove that whoever is trying to collect is a 3rd party collector. They prove that they don't have much in their file to come close to validation. And my favorite, as long as you are not in a state with an idiotic statute of limitations like 10 years or so, many times you will see that it is an old bill that is Time Barred!  Got to love it!

Dear Dummy Collector,

Thanks for digging into your archives to come up with a useless paper claiming to have provided proof that I owe you something.  You're not even close.  I can create one of these too with your company name as the alleged debtor on it pretty easily as well.  However, sending me some paper with what appears to be my name is not validation, nor is it proof.  Do you know how many people out there have a name similar to mine? There's no signature, its not a contract, one of the things I told you to provide, and lookie there...that paper you sent is outside my state's statute of limitations.  Now, if this is all you have, then buh-bye! By the way, since you haven't validated and you only have stuff that appears to be time barred, you had better get that crap off my credit report before I sue you in Federal court for FDCPA and FCRA violations.   

Now, a response that really looks like they validated.  They sent a Contract with Your Signature on it!  Is that validation? Nope!  Not full validation.  One of the things I request in my demands for validation is a full accounting.  I want to see every charge, every payment, interest accrued, late charges, legitimate fees, and it must include the dates every charge, change, or event occurred.  Case law for that is (Spears v. Brennan). That's not where I stop though. You'll see in my sample response below how to go after them.

Dear Dummy Original Creditor,

Thanks for sending me what looks to be a contract. It appears that you are trying to validate but you have yet to fully and lawfully do so.  Remember I also told you that I needed a full accounting - Spears v. Brennan style?  Where is that? You must have forgot to include that.  Oh, this contract you sent, I suppose it says I'll pay back what I spend, but are you saying I spent credit? Is that what you allegedly lent me?  I see you are a bank.  You do know that its against the law for banks to lend credit don't you?  If you say that you (or the original creditor) lent credit, then there is no valid contract, in fact, it means that any alleged contract we supposedly had is actually a VOID contract, completely unenforceable since it was created illegally.  

Now, if you say that you actually lent me money, well that's a different story now isn't it?  If you lent me money, then please provide the source of funds you allegedly lent me.  Because you know, being a bank and all, it is unlawful for banks to lend money from their own assets, and its unlawful for them to lend their depositors' money or assets.  So which was it?  Should I answer for you?  

I found out what you did, and you know what?  What I found out proves that you violated Regulation Z - you know, the Truth in Lending Act! Shame on you for not being truthful.  You created money out of thin air.  Well, maybe not thin air, but sort of.  Its a con game. You used my signature on a promissory note (the alleged contract) and illegally converted it into a security instrument and sold it. That alleged note did not belong to you and I did not give you the right to sell it.  You also insured it.  You have illegally received monies for something you sold that belonged to me and did not give me the money for it. 

You need to prove what I'm saying is wrong or you need to delete this from my credit reports immediately and destroy all evidence of this fraudulent alleged debt/account.  You don't have a valid contract with me - you can't even prove the 4 basic elements that create a valid contract -not with a violation of Reg Z and not when you allegedly lent money or credit unlawfully.  I don't owe any alleged debt when you committed fraud. You rendered everything void from its alleged creation. 

There is another type of alleged debt that is very common that you will want to get off your credit reports.  It is the medical collection. This post is very long already so I'm going to do another post for that one.  They have additional laws to abide by and I will show you how to use those laws to stop their collection efforts and delete their information from your credit reports.

I hope I've helped you look at their responses better.  Don't let them intimidate you and don't let them fool you into thinking that because they say they've validated or verified or that their records are correct, that it is so.  They are trained to get money from you.  Its all about the money.  Its not about being responsible. Its not about some moral need to fulfill an obligation. Its about MONEY! Your money, and they want every little bit they can squeeze from you regardless of fraud, regardless of the fact that they don't have valid contracts with you or in the case of 3rd party collections, no contract at all.

Keep fighting, keep learning, keep beating them!  If you need help fighting back, I'd love to help you.  Just use the contact information up at the top on the right side.  My email address and my phone number are there.  Use either one, use both.  I answer the phone and I respond to emails.  I'm here for you and I look forward to helping you successfully improve your credit! 

If you have found this blog helpful to you, please consider donating as a sign of your appreciation for information I have freely given to you.  The "Donate" button is on the right side bar.  Thank you for your generosity.