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So by now most people have come around to the idea that bankers and their buddies in the financial industry are a ravenous and pernicious cancer preying on the public by purchasing political solutions to catastrophes of their own making.  So it’s kinda nice when you see a populist backlash that inflicts pain on the bad guys begin to take shape.

This story is a mixed bag..  The protagonist, Cunningham, sounds kind of marginal and it’s pretty clear that in championing Cunningham, we’re choosing the lesser of two evils.  But his tenacious leveraging of all the law offers him against unscrupulous debt collectors is pretty inspiring to those of us that are tired of reading about the corporate dominance of everyman’s day to day life.

Anyway, the story is long and should be read in its entirety.  To whet your appetite, lemme offer a few excerpts.

First, meet Cunningham:

In 2005, two foreclosures pushed Cunningham near financial ruin. Like many Americans, he fell enchanted by the siren's song of easy credit and borrowed more than $100,000 to bet on risky, high-yielding investments, such as stock in the now vilified sub-prime mortgage industry. Then, while stationed with the Army in El Paso, he attempted to become an absentee landlord and got zero-percent-down sub-prime mortgages to buy low-income four-plexes in Houston and Dallas. With the interest earned on his high-yielding stocks he was paying back his low-interest credit card debt; now, he was using the mortgages to borrow even more.

Then, the bottom fell out. Investors like Cunningham fell the fastest. He sold his Houston homes, but his Dallas properties were foreclosed on. The collection calls started. He was running scared.

There’s a LOT more context to the story, but eventually, this is what happened:

He immediately started devouring as much information as he could about the three chief federal laws that protect consumers from collectors: the Fair Debt Collection Practices Act, the Fair Credit Reporting Act (FCRA) and the Telephone Consumer Protection Act (TCPA). In the next four years, Cunningham accused debt collectors of misrepresenting the amount he owed (an FDCPA violation that entitles a consumer to collect up to $1,000). He sued over prerecorded and auto-dialed calls to his cellular phone (a TCPA violation worth up to $1,500 per call). He also filed complaints that agencies failed to investigate his claims that his credit file contains inaccurate information, a breach of the Fair Credit Reporting Act worth up to $1,000 per violation. All told, he filed 15 other lawsuits in federal court without the help of a lawyer, earning himself settlements totaling more than $20,000.

"Most people hear about the abuses that debt collectors do, but you just didn't hear about the second part of it, where people sue the collectors," he says.

Where did Cunningham get the expertise to fight back?  Ha.  Where else?  The internet, of course!

Debtors, either because they feel morally obligated or because they don't know their options, get backed into a corner by their creditors and believe they have to repay their debts, he says. Not so with Cunningham. "I don't have to do anything but stay black and die," he says, a small, smug smile on his lips.

Cunningham wasn't always such a stickler.

The knowledge on these boards originated from consumers testing the boundaries of the credit system through their own experiences. The nature of this information, from the beginning, was a mixture of anarchistic tendencies, vengeance and greed. Now the wisdom of the boards has been distilled into an e-book published in January. Debtsmanship was written by Steven Katz, a former New York debt collector turned consumer advocate, who now lives in Phoenix. In 2005, Katz founded a message board called "Debtorboards," with the slogan "Sue your creditor and win!"

Katz doesn't believe that people are morally obligated to pay back their debts. That notion was invented by debt collectors as a way to beat people into submission, he says. "Bill collectors would love for you to send them a check and then explain to your kids because you have the moral obligation to pay your debt they're not eating this week," he says. "But they don't see the moral obligation to feed your children or yourself.

"People are brainwashed to think that paying a credit card is more important than paying for the necessities of life," Katz says. "If you're in a position where you have to make a choice, my argument is food, clothing and shelter come first... Nobody ever went to hell for not paying a debt."

Many of you know that I just graduated law school.  A dirty little secret many lawyers want kept is that in many civil contexts, pursuing your own lawsuit simply isn’t that difficult.  Debtorboards, while not purporting to give legal advice, does help the pro se litigant understand what the process entails.  And I can say with confidence that in this context, as a plaintiff, the vast majority of people frequenting this site can navigate the shoals of our civil legal system without first securing a law degree for themselves.

Anyway, after reading stories of debt collectors preying on survivors by telling them that they are responsible for their deceased loved ones debts...  after reading about debt collectors that use every imaginable device to strike fear into the hearts of their victims...  just to get that last dollar...  well...

I’m happy to see people turning the tables on the parasites that prey on the struggling – especially in an economic environment in which nearly 20% of the working-age population is un- or under-employed...  with underwater mortgages, usurious student-loan interest rates, and credit card rates that bear little relation to a person’s credit-worthiness...  

Originally posted to Mike Stark on Tue Feb 09, 2010 at 09:10 AM PST.

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