What simpletonistic, self-indulgent, boring bullshit. Thank All nobody actually read it.

First down and sanity to go

A little over a month has passed since my last posting, but not that much has changed. Chase calls me one to three times per day until I decide to answer the call. Some chair moistener from Sector 7G is on the other end of the line.

"Hello, is this Mr. Dodger?"
"Yes."
"Mr. Dodger, I'm calling you from Chase Bank regarding an overdue balance on your account ending with the numbers 1234 in the amount of $345.00. I'm calling to see what we can set up to get this balance paid."
"Thanks, but I'm not interested." (This line seems to annoy them.)
"Mr. Dodger, I am talking about a credit card that you owe."
"Yeah, I know. And I already told you, I'm not interested in paying you. Did I stutter?"
"Well, no. But can we set up a check-by-phone to get this overdue balance paid?"
"Not gonna happen. Do you even know the history on this account."
"Uh, no."
"I'm gonna tell you the same thing I told every other office monkey who called has called me about this account: I am not going to pay you. Period."
"Okay, I'll put down here that you refuse to pay."
"You can put down whatever you want. It's not like the next not-ready-for-prime-time player y'all send my way will have reviewed YOUR notes, either. Honestly, I'd prefer you just send this account to your attorney already and I'll be happy to deal with them. Plus they'll get a cut which means less money for you, and that makes me happy."

Usually that's about the whole conversation. Yesterday I decided to append to the end of it: "Maybe I can work out some kind of lump sum settlement with them."

"Could you DO a lump sum settlement of this account?"
"I don't know. Maybe. Make me an offer." (...Honestly thinking they'll require me to make the first offer as is customary in these kinds of things.)
"Well, you owe about $3,500 on this account. We could accept a one-time payment in the amount of $2,400 in settlement."

Whoa. Wait. What? No hardship forms, no payment plans, no financial statements or other information, no nothing other than "F**K YOU I'LL PAY YOU NOTHING AND YOU'LL LIKE IT" for a mere -- five weeks, perhaps? -- and Chase is already offering to knock off about 30% of my balance if I pay it all at once.

All this for what is right now just one, solitary ding on my credit report.

Of course I'd be a damned fool to accept their offer. I figure I've got four to five more months of phone jockeys to churn through and wear down. Right now I'm feeling pretty good about getting them down to one-third of the balance. That would be not much more than I would have had to pay them on the same account over six months, after which I still would have owed them ALL of the rest!

Compliance is for the weak-hearted. Default puts the debtor in control. For a while, at least...

That felt GREAT!

I wish I had recorded it.

I saw that a 301 area code number had called a couple times today. I called them back about 20 minutes ago.

"We're calling because your three accounts with us are past due. What's going on?"
"I've decided I'm not going to pay you any more."
"What do you mean? You can't pay us?"
"No, I can. But I've decided not to."
"Why?"
"Because I don't like your lending practices. First of all, I never opened an account with Chase. Each of these three accounts was opened with a different institution, and you now own them due to merger or acquisition. Second, all I have ever done with regard to all three of these accounts is pay on time. On my last statement, you lowered my available credit to roughly the balance owed on each account. If you want to change the terms regarding how much credit I have available, then I'm going to change the terms regarding how much I'm going to pay. Specifically: Nothing."
"So you're just going to let these accounts run up late fees and interest for 7 months and then charge off?"
"Yep."
"You realize that it's going to be a substantial hit on your credit."
"Don't care. In fact, I know which law firm will represent you when this goes into default, so I'll just wait until I deal with them. Probably reach some kind of settlement, and they'll also get a cut. And they'll pretty much have to settle, because I don't own anything from which you can collect, and I'm self-employed, so it's not as though you can garnish my wages."
"But you used these cards."
"That's in the past."
"So you're just not going to pay this $14,000 balance you owe?"
"Nope."
"You realize we're going to call you every five to seven days for the next six months or so?"
"You're wasting your time."
"I'm in collections, so I can't see why they changed your credit line. Do you want me to transfer you to them so you can ask and see if you can work something out."
"No. I'm not going to waste my time and yours jumping through your hoops. It's not going to affect whether I pay you anyway. I don't care. Whatever decision was made, Chase is now going to have to deal with the consequences."
"Okay, we'll call you in five to seven days."
"You're wasting your time, but go right ahead."

Maybe it's not the American Dream, but it's my dream: Telling someone to go f##k themselves when I know I have the upper hand. Bring it, Chase. You're f##ked.

Welcome to the Machine

Representing consumers as litigation defendants and bankruptcy debtors has given me both a unique knowledge base and perspective about it. I often counsel my clients and potential clients that determining whether to litigate a collection lawsuit or file a bankruptcy is partially a function of what your creditors can do to you if you elect to do neither. But whether they try to do anything at all is typically itself a function of how you got to looking for and talking to me in the first place.

Let's say you have a credit card balance that you do not pay. Although my clients often seem to think otherwise, it does not matter why you default. When the expected payment is late or insufficient (that is, less than the "minimum" the creditor requires) they will likely call you to inquire as to why they have not been paid, find out when you are going to pay, make arrangements for you to pay, and otherwise encourage you to pay. Most people, of course, have not paid because they are unable to do so. This explanation is likely to spur the creditor's agents to inquire further along the lines of: "Well, you have been paying us on this account without major incident for some number of months or years. What has changed? Tell me about what is going on in your life." The unfortunate debtor is fooled into believing that the person on the other end of the phone actually cares how they respond; they are wrong. The agent is only asking to determine the soonest possible time that the debtor is likely to be cajoled into paying, making arrangements to pay, etc. Creditors know the effect that always having the same person contact the debtor regarding the account is likely to spur a sort of Stockholm syndrome, in which the debtor will begin to identify with and feel a bond to that person. Guilt is a powerful motivator, especially for the religious.

But let's say that you still do not pay it; again, the reason for not doing so is immaterial. In the United States, something called Regulation Z requires, among other things, that a banking institution cannot carry on its books for more than six months a debt in default. In essence, it requires the creditor to value seriously delinquent accounts at zero (dollars). At that point, the account is worth nothing to the institution, meaning that if they can get anything in exchange for it, then they are "ahead" in some sense.

Many such accounts are packaged and consigned or sold to entities whose sole purpose is to collect those accounts. While a consignment would call for the entity to receive a certain percentage of all amounts collected in the package, a sale would transfer the contractual right to collect the accounts in the package to the purchaser. Debt sales such as these typically call for the purchaser to pay the original creditor one to twenty cents of the face value of the packaged accounts at the time of purchase. These transactions sometimes require the exchange of tens or even hundreds of millions of dollars to consummate. The purchasing entity ("collection agency") then has the right to collect the account in whatever manner it sees fit.

The reality that most people do not wish to accept: Other than bankruptcy, there is no law that requires any creditor to accept even one penny less than what is lawfully (that is, contractually) due upon the account. Creditors and collection agencies have no duty whatsoever to "work with" you.

Yes, there are laws such as the Fair Debt Collection Practices Act ("FDCPA") that prohibit collection agencies from taking certain actions in connection with the collection of these debts. But the truth is that the penalty for violating these statutes is slight. The statutory damage award provided under the FDCPA of $1,000.00 per successful lawsuit (NOT per violation) has not been amended nor otherwise updated to keep up with inflation or any other economic indicator since it became law more than thirty years ago. In comparison to the types and amounts of balances that are being collected, this penalty is a drop in the bucket, and the risk of being sued for $1,000.00 is one that a collection agency working a $10,000.00 debt is all too happy to take.

And if you still do not pay? That is when the collection agency may well hire an attorney to pursue its right to receive involuntary payment by way of a judgment. How they might acquire a judgment varies from state to state, but it always begins by commencing a lawsuit against the debtor.

Eyes Wide Shut

What does it mean to do your life's work?

As a bankruptcy attorney, I frequently sit next to my clients when they appear for what is likely to be their only personal experience with the bankruptcy process: testifying to an attorney responsible for administering their case at a "First Meeting of Creditors". Not uncharacteristically for most of our limited experiences with the government, this "official" description is a misnomer in more than one way. Foremost, the use of the word "First" suggests that there may be a second, and a third, and so on. Rare. "Meeting of Creditors?" Hardly. Typically there are only two classes of people who appear for the hearing: ex-spouses and former business partners. In the years that I have been a practicing bankruptcy attorney, I have seen more than one such creditor appear for the hearing exactly one time.

Today, for one of only a handful of times ever, I appeared for a Creditors' Meeting on behalf of a creditor. My client had hired me to question a pro se Debtor who appears to have borrowed a small sum of money from my client and then promptly gambled it away. After my client successfully sued to recover and commenced a garnishment of Debtor's wages, the gambler rolled again by filing a bankruptcy. The Debtor employed a petition preparer, but not an attorney; snake eyes.

Doubtlessly, Debtor wished she had an attorney today. If Katie Couric interviewing Sarah Palin was a battle of wits in which Palin was unarmed, then with me at the podium today, this Debtor faced a firing squad. Too daft to be embarrassed? Perhaps. But by my last few questions, even the other debtors in the room awaiting their own Meetings were snickering at the responses. A massacre.

I doubt myself often. But there is one thing about which I never harbor doubt: As between myself and nearly any other person, I will possess a stronger ability to decompose, deconstruct, denigrate, and ultimately discredit anyone else's reasoning used to explain anything not capable of scientifically objective justification. It is unquestionably my finest talent, and why I always believed becoming an attorney was my destiny.

Recently I began to wonder: What if my greatest talent was being wasted on others? How often have I applied it to my own lines of reasoning? What would I discover if I did?

Through the Looking Glass

Tick, tock, tick, tock. "T" minus one week until the first of many payments goes late.

I am so very much looking forward to receiving their calls because I don't think they're quite going to know what to do with me. I have considered, for example, telling them that I have committed suicide and that they are talking to my next of kin, the executor of my estate, my attorney, or some other such nonsense. I have considered pulling credit reports on someone I know is dead, just to see what it says. Will there be a public records entry for "Certificate of Death"? I don't know and I imagine few know the answer to that question, because who has occasion to pull a dead man's credit report? Yes, yes, I realize that pulling credit on anyone without authorization is against the law. But what harm? A dead man doesn't need credit, even though they're the only one who could lawfully use it.

Sure, I will engage them at first, but I aim to spend little time beating around the bush: You are not getting paid because I do not care for your lending practices, and I no longer have any regard for the sanctity of written agreements with those who do not wish to act under them in good faith. In fact, now that I think about it, there is an implied duty of good faith and fair dealing in every contract. I think I'll send them a "preservation of evidence" letter instructing them to retain every document in their possession having to do with any of my accounts over their entire life span and ask them to point out exactly when and where that implied term was excluded with regard to each of my three accounts with them. That might be particularly difficult for them given that not one of those three accounts originated with Chase -- they were all picked up by Chase when they absorbed another bank.

What else is there for me to tell them? "God appeared to me in a dream and told me not to pay you any more"? What does any of that banter matter? I don't care about what they do to my credit report, and I'm not scared of being sued, because then they'll be on my turf. Without fear, what leverage will they have? I'll be all to happy to tell them that I'm going to set the phone on my desk and they can talk until they're blue but they shouldn't expect to receive any further reply from me except in the form of an answer to a lawsuit. And then what more will there be for them to say?

Mad World

Graduate from law school shortly after September 11th, just in time for my backup employment option to institute a one-year hiring freeze. D'oh.

In debt...Loads of it; somewhere north of $100k in law school loans alone. A few thousand in credit cards, maybe. Take the bar exam, then spend a few months traveling -- probably the best thing I ever did for myself. Rack up a little more credit card debt, but not that much. At that point, in for maybe $7k. Manageable.

Begin looking for a job, with no success whatsoever. Take another bar exam. And then a third. A top-20% law school GPA and carrying three different law licenses does not seem to be helping my job-hunting fortunes. In the mean time, do contract work for other attorneys for $20 / hour, knowing that they were charging their clients at least five times that rate for my work. Realize that all of the attorneys for whom I was doing work were their own boss, but not one of them was smarter than me. Bite the bullet, hang my shingle, start my own practice.

No capital available to me other than credit cards. Become an expert at reading the fine print attached to balance transfer checks, and manage to borrow more than $30k at permanent interest rates of 3 to 7%. Become an expert at robbing Peter to pay Paul; across 10+ credit cards over 5+ years, no more than 5 total late payments -- most the result of a failure to press the right button on a web page somewhere -- none more than 30 days. Other than my carried debt as a percentage of my available credit, my credit report always has been -- and remains to this day -- spotless.

In 2006, settle my first big case and having grown well tired of moving every 12 months or so, purchase the condo I was renting from the owner. Pay more than I prefer, but didn't care so long as I didn't have to move again. And besides, I'd already lived there for 6 months, liked my neighbors, and liked my neighborhood. How often does one get to test drive real estate?

Being self-employed and having an insufficient income history meant that in order to be able to acquire financing to purchase the condo, I needed to utilize a sub-prime lender, Aurora Loan Services ("ALS", whose trademark once proudly boasted that it was a division of Lehmen Brothers Financial, recently bankrupt and now defunct). My loan calls for me to make payments of interest only for the first 5 years in the amount of about $1,100. After that, payment of interest and principal varies with the prevailing interest rate published in the Onion on the last Thursday before each full moon...Or something like that. Of course, like everyone else, I paid no attention to any of that, as my mortgage broker assured me that by the time it started adjusting, my solid income history would mean no problem re-financing. Unfortunately, that advice was wildly incorrect.

Four years later, no lender will re-finance a property to more than 80% of its appraised value, and my condo is worth $30k less than the price at which I purchased it. In other words, in order to re-finance of my property, I would need to bring at least $30k to the closing table. Uhhhh...Yeah...Right.

Contact ALS regarding my loan, inquire as to whether a modification might be available to convert my variable-rate mortgage to a fixed-rate mortgage, which would lower my payments and secure their investment. They decline on the basis that I "make too much money". Not missing the message, I cut my own salary.

This, of course, means that someone will not get paid this month. I have already decided it will be Chase. That is step 1. I intend to use my failure to pay Chase to get ALS's attention that they might be next. They, at least, will be given a choice by the end of the year: Modify my mortgage or you're the next parasite that I'll starve. Chase deserves no such dignity.