Thursday, December 6, 2012

Break down the shakedown: Give the gift of telling debt it’s busted

Published in the Portland Phoenix

While you're out spending your hard-earned dollars on gifts for yourself and others at holiday and year-end sales, remember that money has to come from somewhere. Unless, of course, you're a Wall Street investment executive, or a banker. They get to invent money out of thin air. How come? Occupy Wall Street activists explain, in a new book about extracting yourself from America's drain-circling debt problem:
"We gave the banks the power to create money because they promised to use it to help us live healthier and more prosperous lives — not to turn us into frightened peons. They broke that promise. We are under no moral obligation to keep our promises to liars and thieves. In fact, we are morally obligated to find a way to stop this system rather than continuing to perpetuate it," writes the book's anonymous author collective.
As you might expect, the book, The Debt Resistors' Operations Manual, is free and openly downloadable as a PDF at Part manifesto, part history, and part step-by-step action plan, it's an easy read that stays away from overly technical language, preferring to stay high-level and comprehensible to most people who have dealt with the modern American financial system.
Observing that 76 percent of Americans are debtors (and one in seven is being pursued by debt collectors), a rhetorically strong introduction puts the lie to the idea that our debt crisis is the fault of irresponsible individuals who deserve moral chiding and no sympathy or help. If you weren't already upset by the chant that "Banks got bailed out; we got sold out," give page 2 a read.
So in this season of giving, the DROM is a reminder not to forget to save — yourself, from the vagaries of our economy. It's also a plea for collective action: "help beat the system that wants you to fail."
Make no mistake: Wall Street literally banks on the struggles of regular Americans. Can't afford education? No problem — you can borrow money, guaranteed by the government, with fees paying private companies to process the payments. Get sick or injured? No problem — medical-debt collectors will pack your bags and send you on a guilt trip as far away as they can, with no return until you pony up. What about living costs, or food? How about mortgage bundling, a credit card, a debit card, or — better yet (for them) — a prepaid charge card?
Worse than all that is how it snowballs into a credit score, which can affect not only your ability to get a loan, but even to find a rental apartment, or even a job. (How sick is that? Being short of money can prevent you from earning anything.)

In sections divided by type of debt (credit cards, medical, student, housing, payday loans, and so on), the authors provide deep (but brief) histories of how each market got the way it is (you'll see a business-government collusion theme develop), followed by details of the current practices that make these industries so repellent. (Example: credit-card companies are now robo-signing documents claiming to own debt with no actual legal proof, just like mortgage lenders did.)
The writing manages emotion well, never becoming truly overwhelming, and always offering hope for a better world. Just when you're mad enough to want to act come the specific steps for rectifying almost any situation.
For example, there are solid suggestions about how to avoid having to use the usurious payday lenders without subjecting yourself to the full power of Big Finance.
Many of these ideas subvert the existing systems — like detailing a multi-month, multi-step letter-writing campaign to dispute validity of reports to credit-monitoring agencies, and even forcing debt collectors to prove they are empowered to seek repayment from you. It might be a pain to write and mail various letters, but you'll help keep the US Postal Service operating, and the dollars you'll need to spend will likely be far less than you owe. (Don't miss the super-clever way out of doctor and hospital bills, involving an overlap between collection laws requiring itemization of debts and medical-privacy laws barring disclosure of medical treatments to third parties.)

But rather than deciding it's enough to simply take advantage of the byzantine "consumer protection" regulations, the DROM also explores the sort of options that few official sources will tell you about — like how to escape payday-loan hell (it involves borrowing lots and then leaving the country) and mortgage resistance. (Occupy's unsurprising, but surprisingly effective basic rule: Don't leave; see a variant in the sidebar.)
The DROM also highlights the potential power of collective action. (Student debt in the US totals more than $1 trillion, and 41 percent of the college class of 2008 is already in default on their loans. Think of the power of the people!)
A goodly amount of the book is devoted to exploring how to play defense if you're already in a bad situation. But there is quite a lot there about playing offense too. The basic idea is a call for systemic reforms to align the US with other industrialized countries, many of which have far less wealth than we do — such as supporting universal health care and instituting free higher education.
A revolutionary book whose time has truly come, the DROM is worth much more than the time you’ll spend downloading it. It might even save the US economy, since nobody else will.

ONE THAT GOT AWAY:Here's an idea the DROM folks could use
We're no lawyers, but for people who can't afford their mortgage payments, rather than walking away, rather than trying to negotiate with a nameless, faceless bank — what if they just stayed? Pay the utilities, keep the lawn mowed, and even do some light maintenance. Stop paying the mortgage and just wait for the bank to come foreclose. There's the trick: Banks actually don't want to foreclose — it means taking a valuable asset off the books (the mortgage) and turning it into a lower-valued asset (the property at its actual worth) plus a liability (taxes and upkeep).
If the bank ever came knocking, the response is easy — and is increasingly attractive, even to policymakers: make the bank produce in court the actual paper documents signed at the mortgage closing. Not a scan, not a photocopy, but the actual page. (Some states, including Maine, have considered requiring production of this document before a foreclosure can continue.) After all, who's to say that a person knocking on your door with a photocopy of your mortgage owns anything other than just that — a photocopy of your mortgage? That can't be enough to prove you actually owe them actual money. So stand there in court and tell the judge that as soon as the bank proves it actually owns your house, you'll pay. But not until then. And wait for the banks to sort out the paperwork.
You'll live rent-free for years — or even own your home free and clear. Don't forget to pay the property taxes, though — the town can take your home if you get too far behind on them.