Chapter 9 Featured Submissions

Here is a new submission:

The whole concept of debt purchase and the so-called legal ‘righteousness’ behind it, is one of the things that is inherent to the system which we have created. It’s is a system based on unsustainable growth and still driven by so called short term shareholder value.

If we like it or not… this is actually a fundamentally wrong perception which belongs to the pre-crisis world. Using pre-crisis methods in a post- or mid crisis world is like applying the wrong medicine for the wrong diagnoses.

When you owe someone money, then in fact someone – the bank or your supplier – must have enabled you to do so in the first place.

If my bank provides me commercial credit or a loan with the sole purpose to make a short term profit, while in fact they should have refused that credit or loan to me, because I am not creditworthy enough to lend money, then who is to blame when things go wrong? Obviously, where two parties do business, two parties are to blame, but in case of a bank they have a responsibility towards themselves and the customers that lend money from them. In fact, banks should protect customers against themselves or their poor judgment.

Now (we have) a situation, wherein people go from bad to worse and that leads to substantially more problems.

Debt Purchasers nothing more and nothing less, fill in the market gap that mostly banks and other financial institutions have created in the first place. Of course the banks / financial institutions are not the only ones to blame, because some debtors – former customers if you wish – have their own responsibility as well. But still, it does not make the situation much prettier.

Debt Purchase can be pretty lucrative, if you know what you are doing, but the underlying price we pay could be very high. I believe that this is a potentially dangerous situation, where there is a certain risk that the system may implode or explode, if the once-able-to-cope-with-daily-life victims of all this mess may reach a critical level.

Have you ever been in a paint factory? You may study the production process: you have to add many ingredients in a very specific sequence, at the right temperature and with strict safety measures in order to prevent that you create a mixture that will explode during the the process.

If we apply this production process to societies, once you go beyond a certain critical point – just like the credit crisis and Lehman Brothers – masses may start to move. And once masses start to move, then it may not be easily stoppable. The spreading effect may then affect still healthy parts of the system as well, with a not unlikely chance that the situation may deteriorate and finally implode being followed by an explosion.

I don’t want to think about that, but we have to prevent it from happening. Civilization is what we create together, just as (we do) destruction.

Is this an over-exaggerated reply?

Personally, I do not think so. We simply have to make sure that this does not happen, because an implosion/explosion will have dire consequences for all of us. It’s like winning the battle i.e. short term profit vs. losing the war i.e. long term huge loss. Governments, banks and ultimately debt purchasers should realize that, before it is too late to turn back the clock.

We have to redesign our systems towards sustainable societies. Consumers -live within your means – take responsibility for yourself, for those who are in need, for those you love and maybe even those you don’t love – and last but not least our future generations.

This is the time where we can show the world, that money is just a means to make a reasonable living, not to make short term profits at the expense of many who are already at the bottom of society, (however) they may (share the) blame. We are in this together, so we have to get out of this mess together.

-M.W., Netherlands

Here is a sample submission I received this week, along with a wonderful “back and forth” about banks and the real cause of our indebtedness:

The answer (to getting out of, or not getting into debt) is incredibly simple. It is not easy, it is not flashy.

Do not spend more than you earn. ALWAYS save money for a rainy day. ALWAYS. Start young, save as much as you can. Rainy days do come.

Invest your money very carefully. Plan to build for a long time.

Know where you must spend your money, then plan where you want to spend what is left over.
Cars, boats, stuff, are all “stuff” and not worth anything after you buy them. Save up and pay cash for “stuff”. “Stuff” is not an investment or wealth..

My parents – children of the depression – Counted every penny. Our family lived these rules.
They worked, they are working for millions of people.

I add – your house is NOT a bank, it is an investment, choose wisely. Read the fine print. If you don’t understand, get help.

The reason we talk about people that have gotten rich quick is that it is RARE. Usually people get poor quick. Often, through their own mistakes. If it sounds too good to be true, it probably is.

There are probably more of these rules that folks know.”

-D.V., Cincinnati

Here is my response:

Also having parents who went through the Great Depression, I understand the wisdom in everything you describe – but there is one, major problem.

The folks who suffered during the depression, and who are suffering now, arrived at this state for one reason far beyond their control – the greed of American Bankers, speculators, manipulators, ponzi artists, etc.

There are many people who largely subscribe to an practice your above prescription – but were swept away no differently than their profligate neighbors. They were not “volunteers” – they were victims.

In part, I blame these people, their parents, their teachers, perhaps even their religious leaders for not instilling ethics, honesty and responsibility into their head, heart and soul.

Do you have a solution for that?

And, finally, D.V’s response:

First you must be responsible for your self. Then you reach out to help others. This too is a great American tradition.

Organize, advocate, legislate, vote. Work for the greater good. Work for justice.

“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” – Margaret Mead

Human efforts are not perfect or permanent. Unions were made strong in response to abuses suffered in the depression. Lost strength through abuses. There is a cycle.

My mothers mantra – ‘This too shall pass.’ I Add – It will pass faster if you work harder.

Here is a letter from a reader with a lot of industry experience:

I think your analyses are where this country needs to head. I’ve been in practice for 20 years, used to lots of Chapter 11 bankruptcies.

In the last 5 years (after Congress fixed the bk law, which had been working quite well) I have had lots of clients with good incomes who were paying minimums on cards for years, getting nowhere, on the point of default, considering bankruptcy.

Taking the same precepts which business uses (pay critical vendors, everyone else is on hold) and using them for middle class workers, we take the calls and respond to lawsuits and work the claims out over 2 to 4 years (during which we urge them to develop a savings habit), credit gets restored, 1099 issues addressesd. Its not really rocket science.

If I could generate the volume in clients, I’d happily do it all day everyday. Fees are fair, flat charge for a few hours of my time each month.

I liked your article about a stake through the heart of out of stat debts. Your site too. The process screams for good workout professionals to get involved for the regular people among whom I grew up and still live.

I’ve written a book, a 150 page manual, about how to do this, premised on the survival of Northeast Pennsylvania, proudly the most insolvent (non inner city) place in America for 70 years. I have no clue about
how publishing works. I may give it away on my website if I don’t get the time to figure out how to sell it. If you have any thoughts on this and are willing to share, I’d be obliged.

Thanks for all this information. You have your eye on the correct approach.

-G.K., Old Forge, Pennsylvania, USA