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Chapter 1: The Short Story about Surviving Credit Card Debt

The Credit Card Debt Arbitration Scam scroll down

Resistance and Documentation of Credit Card Debt – How to Help Yourself

Resistance and documentation are the keys to beating these parasitic debt collectors. It is important to understand that junk debt collection involves the accounts of thousands of people.

Modern day information processing allows a collection agency to spit out thousands of mini-Mirandas at a time, bulked mailed at 34 cents postage. Most of these people in debt, when contacted, re-contract out of fear and become prey to the collection industry. As a result:
1) They may negotiate a payment plan only to have the proceeds eaten up by “interest and fees” charged by the junk debt buyer and collection agency. They pay for a few years, but the original balance remains the same.
2) They may make a lump sum “payment-in-full” for less than the full balance only to have the remaining balance sold to another junk debt buyer and collections start over again.
3) They may give their bank account information to have an immediate payment withdrawn, only to have future unauthorized payments withdrawn.
4) They may make a payment only to have the collection agency later claim there is no record of it.

Why should these collectors spend time with someone who is resisting them with a dispute and debt validation letter? They shouldn’t and they do not. The debt simply gets sold to another junk debt buyer.

Sometimes a junk debt buyer’s collection attorney or a legal firm that is also a junk debt buyer will file suit to collect the junk debt. To have standing before the court they need to document a contract between the defendant and them. They must show the original credit card contract and document the sale of the account to them. That is, that one account specifically, not the thousands of accounts that were acquired with it. And, they must document how they arrived at the balance they claim is owed. Instead of doing this, their typical approach is to get the alleged debtor to admit to the debt. There must be a contractual connection between you and them. You can tell how strong their case is with what accompanies the summons. If there are no documents of this sort, they are trying to scare you into submission or hoping you don’t know what you are doing and cannot afford an attorney. They want to hold a court case over your head to get you to settle for unfavorable, onerous terms.

The most likely scenario, when a debt collection attorney is involved, is they will send you a mini-Miranda as they are required to do. But, if you respond disputing and requesting validation, they will move onto weaker victims in the current debt pool they are working with.

The Credit Card Debt Arbitration Scam

If you credit card agreement has an arbitration clause, after charge-off your bank will refer it to a collection law firm who will threaten arbitration if you do not work with them to pay the debt down or off. If you do not comply, within six months of the initial attorney’s letter, you may receive notification of an arbitration proceeding begun against you.

Credit card debt arbitration is a rigged scam. However, while statistics show the credit card companies win over 96 percent of the time, most people who have tried to beat it in a regular court of law have succeeded. I did, twice.

Arbitration IS beatable. The key is insisting you did not agree to it and did not sign a pre-dispute arbitration agreement and to NOT participate in the arbitration process. THAT would be re-contracting with the creditor and an admission of your debt. When an arbitration award is issued against you, it must still be confirmed by a court of law before you bank account or wages can potentially be seized or garnished. The key is to file suit against the bank before arbitration begins or within 30-90 days after the award (depending on state law). You charge that you never agreed to arbitration. Then it is up to them to properly document your agreement.

The local outsourced attorney (Every large collection agency has a national network of local collection attorneys.) who handles arbitration matters in your court district for the national collection law firm is used to experiencing no legal opposition from debtors, then filing papers and getting awards with the arbitration forums and confirmations with the local courts. They make a percentage on what they get from you without doing any real work. If they have opposition, they will do a poor job of defending their client; that is if they simply do not default in the face of your lawsuit, as they did in my case.

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