Re: Debt Elimination Programs - Decide for Yourself

Posted by K.M. Henry (68.18.24.46) on June 07, 2004 at 11:19:05:

In Reply to: Re: Debt Elimination Programs - Decide for Yourself posted by Prune Man on February 04, 2004 at 15:02:59:

Hi I was just reading through the posts about credit card elimination and thought I would throw my 2 cents in. I am a paralegal and have been for about ten years. I also hold a bachelors degree in criminal law, and I have also been involved in some debt elimination cases. Debt elimination is legal and it is possible. In my opinion however, based upon my experience as a paralegal it must be done correctly. I have cancelled a couple of my wife's cards,one they reported on her credit report as disputed, the other they did not report at all.

In reading some of the posts I see that some people do not really understand what happens in a credit card transaction. This is not to put anyone down but it is designed that you not understand what occurs in a credit agreement. It has nothing at all to do with the bank lending their money, depositors money, or money from anyone. It is crucial to understand that the credit card agreement is written in such a way to give the impression that the bank is making a loan to the person that is using the credit card. Now if this were the case, even if they were using other's people's money one would still be obligated to repay it. So the issue is not where the money they lent came from but whether or not they lent any money at all. The Federal Reserve has stated in their rules, regulations, and circulars, which banks must follow, that banks do not really pay out loans from other depositors money, but rather they "exchange" credits in the borrower's transaction(checking) account for the promissory note/agreement. So an "exchange" occurred not a loan per the FED regulations

The publications then explain that the promissory note is deposited by the bank and thus "new" money is brought into "existence".

Banks must also follow the Generally Accepted Accounting Principles(GAAP). According to GAAP; commercial paper(includes promissory notes) is equivalent to cash. This is why the regulations state that "new" money is brought into existence with the deposit of the customer's prommissory note/agreement. It was money that the bank did not have before the customer signed the promissory note/agreement and the bank deposited it. The regulations also state that the bank actually owes you the value of that deposit! {See Modern Money Mechanics,and The Two Faces of Debt which you can get by going to the FED's website and putting in a Freedom Of Information Request-you will have them in about 3 business days or less}

As any attorney knows, for a contract to be enforcable in law both parties must give value. This is an element of basic contract law. Futhermore, as any attorney knows there must be full disclosure(a meeting of the minds). In other words both parties fully disclosed all material facts surrounding the contract so that no one would be duped.

The credit card agreement fails on both points. I have never read one that explains in the agreement that they were going to take the promissory note/agreement after the customer signed it(which gives it value) and return the value of the note/promise to the customer as a loan.(Remember according to GAAP commercial paper is a cash equivalent). So you gave the bank a signed promise/agreement which according to the law is the equivalent of cash,and according to their own regulations they owe you the value of... amazing.

This is not illegal. The law allows them to operate this way. What makes the contract unenforceable however is that they fail to disclose to you what they are doing,and they fail to provide value and therefore it cannot be a valid contract.

Finally there is a legal maxim or self evident truth which says "A thing similiar is not exactly the same". The credit card transaction on its face may appear to be a loan, but a thing similiar is not exactly the same.

Some people will still say who cares you got the merchandise so pay the bank. I would say on what grounds should I pay them if they did not lend me money. They have admitted via their publicatons that they do not lend money. So why should you "repay" money that was not lent.

Who pays? You do. The "new" money brought into existence by you when you signed the promise/agreement is added to the national debt when the bank takes the promise/agreement and circulates it through the Federal Reserve Clearing House. They get the amount of your "approved credit limit" in federal reserve notes. Thus even if you never use the card they are that much richer and all of us that pay taxes are that much poorer as the national debt increases.

I have written an ebook entitled How to Legally Terminate Credit Card Debt Yourself and Save Thousands. It can be found at howtolegallyterminatecreditcarddebtyourself.org.

Follow Ups:

Post a Followup