Welcome, students, to the class that will open your eyes to the facts about debt and debt collectors. Today’s lesson may be the most important lesson you absorb during your life journey. For years, the education system has inculcated you with propaganda wrapped deep inside high school and collegiate textbooks. The propaganda softened you into believing that debt and debt collectors are an integral part of our economic framework. In fact, debt is nothing more than an elaborate Ponzi scheme orchestrated by an omnipotent banking cartel. Debt collectors are nothing more than legalized loan sharks.
Before we start today’s lesson, here are some statistical facts about debt in the United States:
-The typical American family spends 100% of its income on debt service
-Three out of five American households have a credit card balance of more than $16,000
-The American people owe over $10 trillion dollars in household debt
-The United States federal government is in debt for over $14 trillion
-Americans possess more than 1.5 billion credit cards
-The source of all debt is the Federal Reserve System.
The Fed issues notes to the United States federal government. In a move that can only be described as sleight of hand, the Fed immediately purchases the notes back from the federal government, thus transferring trillions of dollars into the government’s coffers. The federal government uses the cash infusion to pay its bills. The Fed holds worthless notes; the federal government holds worthless currency. The second sleight of hand move comes when the Fed lends money to banks within its expansive system. Once again, at the stroke of computer key, the Fed creates liquidity out of debt. The scam continues when banks take that money and lend it to individual and business account holders.
Debt inflates the money supply, causing manic boom and bust cycles that have plagued the American and world economy since the inception of the Fed. Boom phases of the economic cycle coincide with a rapid increase in debt. The Fed lowers interest rates to levels that entice consumers and businesses to borrow large amounts of “money.” America’s last boom cycle occurred when the Fed lowered its discount rate, the rate most banks peg their loans on, to record low levels. Eventually, the Fed did the unthinkable: it charged no interest on the debt issued to banks. Consumers and businesses went on an artificially created spending binge as a methamphetamine addict goes on a three day smoking binge.
The current bust phase of the economic cycle provides a lucid example on how debt contraction reduces liquidity. Without debt, businesses do not have the capital to expand operations, and thus hire more workers. Consumers are unable to obtain more credit, which in many instances they use to pay off rising interest payments. Banks withhold credit to homeowners mired by falling home prices. A prominent Fed official once said that paying off the national debt would permanently disable the American economy. His reasoning underscores the underlying premise of debt: money issued by the flicks of a few computer keystrokes.
What happens when people refuse to pay off their debts? Either the company that issued the debt comes after us, or the company hires an outside entity to collect the debt. In most cases, companies sell debt to collection agencies. In turn, collection agencies may sell and resell that debt. This process can create errors on the original debt report. It is imperative that debtors know that it is within their rights to demand accurate information and request proof that a debt actually exists.
American federal law prohibits debt collectors from threatening you or coercing you into paying off a debt. They cannot belligerently demand payment for a debt, nor do they have the authority to threaten you with incarceration. You can stop a debt collector from contacting you by sending a certified letter that demands the agency stop calling you at work or home. However, debt collectors have the right under law to initially contact you about a debt. During the initial contact, the collection agency can tell you how much you owe, including the amount of fees and penalties. Remember, collection agencies will continue contacting you until you take measures that force them to stop.
In-house debt collectors can continue to contact you even if you request that they refrain from contacting you. The reason for this is how the law defines debt collectors. The law defines in-house collectors as creditors, not debt collectors. In-house debt collectors, however, must still abide by the parameters set for decent behavior. You must ascertain early in the collection process whether the collecting entity is an in-house operation or a third party hired to collect your debt.
One of the more jarring elements of debt collection is when collectors contact family members and neighbors concerning your debt. The law permits this only if the collection agency contacts your family or neighbors one time, and only for obtaining your phone number, addresses, and place of employment. This act often scares debtors into trying to settle their debt. Debt collectors cannot contact a third party more than once according to federal law. Debt collectors can seek redress for your debt by suing you in a court of law. A judge determines the outcome; an outcome against you means that your wages may be garnished.
As personal debt soars, debt collectors have become more aggressive in their attempt to force debtors to pay. The tactics have made national news in print exposes and electronic investigative series. One of the salient facts about debt and debt collectors often goes unreported: you can avoid both by not taking on any form of debt.