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Almost two decades of credit repair -- lessons learned


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Looking back, I now realize I started to first get into trouble with credit back in 2001.  To be more precise, I had a lot of credit issues in the 1980s and 1990s, but I inherited some money in 1986 and some more in 1999, which made those problems go away.  


My credit in those days went up and down.  

I am starting with 2001, because that is when I went from solvent and money in the bank to under water by over $100k.  And then back again,  

At this point I have some credit card debts from when I was out of work last year, but they are at a manageable level.  One card will be paid off in May, the other card will be paid off by the end of the year.





I lost my job in 1999, but I inherited some money.  I moved from living in absolutely NOWHERE to where my wife and I met -- The Big Apple.  I had inherited some money, and we were staying rent free with my in-laws.  My pregnant wife, kids, and myself.  I even changed careers during that time to a somewhat higher paying career.  


Just as we were about to run out of money, I got a job, and got a new apartment.  We got a great deal on the rent because it was FILTHY!!!  We spent 2 weeks cleaning it up, and then moved.  Finally, late at night, we went to bed.  Our first night in our brand new bed in our new apartment, now clean and lower than market rent.  

Less than half an hour later, my wife's water broke.  Baby was born the next day.  Baby is in college now.  

I took a few days off from my contract position, and oh, by the way, your job no longer exists.  That was life in the dot-coms back then.  I kept losing jobs and getting new ones at higher pay, until there were no new jobs.  


Finally, in 2001, we had racked up credit card debt and I ran out of unemployment, I got a job across the country.  I moved my family out in 2002.  With my mother's help, we bought a house we still live in.  

We also got a home equity line of credit for furniture, etc.  Trouble is, I wasn't making that much, my wife wasn't working, and we got into debt FAST.


Less than 2 years later, we refinanced the house.  At this point, with the HELOC and credit card debt merged in, our mortgage was now about $65,000 more than what it was when we started.  

My wife doesn't make much money, but she started working part time, then full time, and we kept getting further and further into debt.


At one point, not long before the Big Crash, we bought a couple of rental properties.  We separately bought both halves of a duplex.  At first, the money coming in plus the tax advantages gave us a positive (barely) cash flow, so we were able to keep our heads above water.


Until we got problem tenants.  


More later.  

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I want to mention -- the point of this is so others can see what I did right, and what I did WRONG, and learn something from it. 

Obviously, going through the HELOC so fast was a very bad idea.  That meant I wasn't earning enough to make ends meet, esp. with my wife not working, so we got into the credit card cycle.  


Then, my wife had issues with student loans.  My mother helped us with that, but it was still money we had to spend when we were already getting further and further into debt.

As I said, at one point, in between my job and my wife's job and the rental properties, it looked like we actually had a future.  Keep the properties going, eventually pay off the credit card and mortgage bills, and in the end we would have equity in our home AND our rentals for our old age.  


Nice in theory.

When the tenants are bad, and the place is often empty, and repairs have to be made, the three houses (ours and the rentals) can rack up the bills quickly.  I went further into debt.  I cashed in stock options.  At one point I was over $50 k in debt to credit cards, so I took out an unsecured loan with BOA for between $50-$60 k.  I think you can see where this is going.  

Instead of using the unsecured LOC to pay off the credit card bills, I was using it to keep the rental places afloat, and to make the minimum payments.

At this point I am not over $100k in debt, plus I have two underwater rentals, barely making ends meet with the new tenants.

Then the new tenants on both sides decided to leave.

Blah.  Well at least by this point I had already found CIC.  More on that later.  


Good lesson:  the best thing I did was to find CIC BEFORE I defaulted on all my debts.  The knowledge I got saved my bacon big time.  

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I wound up defaulting BEFORE my tenants left.  My original plan was to find a way to keep my home and my rental properties.  Soon that turned into just keeping my home.

At one point I thought I would be able to negotiate down my debts.  That was before I realized just how bad my cash flow situation was.  In that, even if my debts disappeared, I would barely be getting by every month.  

At one point I considered BK, then I realized it would be bad for us.  EVERY situation is different.  For us. BK was a bad idea.  For others, it is a godsend.  

Finally. I did a triage of my debts:

Category 1:  Essential debts.  Mortgage, car payments,. food, Uncle Sam, and the like.  I paid off a used car a little early, to give myself some breathing room.  

Category 2:  Debts I would continue to pay.  This included my USAA card (which I did NOT want to lose.  It was low interest and I could never get a card like that again! Plus I didn't want to lose my USAA membership for myself and my descendants).  This also included a few low balance credit cards.  

Category 3:  Debts to negotiate.  This was basically FNB of Omaha.  No arbitration agreement, they always sue, they always win, but they give GREAT settlements if you ask.  I paid off a $5000 balance for 25%.  Great!

Category 4:  Debts to default on.  This wound up including the two rentals, plus over $100k in unsecured debt.



1.  You should devise a strategy to pay off the debts.  If you see the strategy doesn't work, try a different one.  I wound up with about my 4th or 5th strategy.  There is no one strategy that works for everyone.  

2.  Borrowing to get out of debt is a fool's game.  It winds up multiplying the debt.  I now had a home refinanced for a lot more money, PLUS a ton of CC debt, PLUS $50-$60k in an unsecured loan.  Even in 2019, after another refi in 2017, I owe more than my original loan in 2002!  (although I finally at least owe less than the original loan plus the original HELOC, and I at least owe less than the original purchase price).  

3. Triage is key.  Know what to do with each of the debts.  Things can move from pile to pile.  Originally, my rentals were in the "keep this debt" pile, but when my tenants left on both sides, the rentals went into the "default on this debt" pile.  

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15 minutes ago, Brotherskeeper said:

@BackFromTheDebt Thank you for sharing your "membership rites" to enter the CIC clubhouse. The tension between remaining hopeful for the future (to be able to get out of bed each morning) and the failure to imagine how bad things could get is so tricky to manage well. You've given some great advice. 



I was wondering if anyone were reading these. :-)

I will continue with the thread.  It is also a good history lesson.  Some of the things I did might be really out of date, such as buying a call blocker and a call recorder for my land line.  These days many people don't have a land line.  My wife yells at me for continuing to have a land line.  Since all the calls I get these days are spam, I think she is right.  Why do wives ALWAYS have to be right?

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18 minutes ago, Brotherskeeper said:

@BackFromTheDebt Thank you for sharing your "membership rites" to enter the CIC clubhouse. The tension between remaining hopeful for the future (to be able to get out of bed each morning) and the failure to imagine how bad things could get is so tricky to manage well. You've given some great advice. 

Sorry to quote you twice.  OK, not sorry.

I can truthfully say that the information I got on this forum and the now-defunct "other" forum, and from PMs and phone calls and faxes with CIC posters, allowed me to sleep at night.  

Stress can kill.  There was a time last fall I was under a lot of stress and had to be taken to the hospital in an ambulance.  I don't even remember the ambulance ride.  It was scary, but all the tests were negative for heart attack, stroke, etc.  So I got a very clear warning to keep my level of stress under control.

The peace of mind I got from the useful information not only saved my finances, but it may have saved my sanity, certainly strengthened my marriage, and may have prevented me from a stroke or heart attack.  

Trust me, when people post stuff and say they are stressed out, I can understand.  Been there, done that, got the t-shirt.

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43 minutes ago, BackFromTheDebt said:

Why do wives ALWAYS have to be right?

The eternal question. 


48 minutes ago, BackFromTheDebt said:

I will continue with the thread.  It is also a good history lesson.

Good. Your username says it all. New members need the reassurance that the hell they're in is survivable. 

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Next step:

The phone calls from the OC.  Calls from collection agencies are a different matter.  

When you default on a credit card or line of credit, expect calls from the OC.  Lots of them.

Different OCs handle this differently.  One place, which runs a collect call scam, called hundreds of times from different numbers.  One person calling me from a major credit card told me something interesting.  That particular card had a policy that they would call the customer constantly until they reached the customer, and once they actually talked to the customer in person, the calls would stop for another month,

I used a land line back then, and I bought two things. Realize there are now apps to do the same thing with cell phones.

1.  I bought a call blocker.  Back in the old days, there were actually threads on CIC as to what was the best call blocker to buy.  The one I got could block up to 100 numbers.  The creditors call from different numbers, and there are multiple creditors, so 100 was not even enough.

2.  I call a call recorder.  In those days, very few people had call recorders.  These days there are apps.  I never needed this for an OC, but I did for some CAs. some of which were truly scummy.  

The call blockers were a real lifesaver.  In times of stress, having the phone ring off the hook was really bad.  The call blocker could block at least SOME of them.  Once a number had been used, then I could block the rest of the calls from that number.

Interesting observations:  the calls from Americans ran the entire gamut of very polite to quite rude.  Some of the calls from Asian call centers were ladies who did not want to be rude.  So I could very politely get them off the phone quickly.  

Then there was the water tower fire.  That cost a certain well known credit card company quite a bit of money.  True story, and one of those things that will probably never happen again.


LESSON:  blocking calls can make life a lot less stressful. You generally don't want to talk to these people anyway.

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The Water Tower Fire.

How do you burn down a water tower?

They were renovating a water tower.  When buildings or structures are being renovated, the chances of fire go up enormously.  As our friends in Paris can tell us after the tragic fire at Notre Dame.

They took all the water out of the tower to renovate the tower.  There were paint fumes in the tower, and it caught on fire.  This is the only time I ever knew of a water tower catching on fire.


Why did this matter?  Because our land line service went through a cell on the water tower.  We lost our phone service.  No calls at all for a few days.  After that. some creditors called 411 to get our new number.  Why a new number?  We could get a new number with a different phone service in a day or two, or we could wait a week and get our old number with the new service.  Nobody really called us except creditors and a few friends, and we could give our phone number to our friends and relatives.  The creditors were on their own.  MOST of them figured out our new number quite quickly.

One company, which is famous for pursuing debts to the ends of the earth, decided to do things differently.  They had one of their skip tracers track my wife down.  Don't leave your water tower without it.  Some threads call this company "the Australians".  I cannot tell you which company this was.  

Anyway, one time my wife did a huge balance transfer to get the special rate, and then NEVER charged a penny on the card.

One day she got a letter saying the card was suspended due to an unusually high level of activity on the card.  This raises more red flags than a May Day rally in Beijing.  Was this identity theft?  Was this fraud on the account?  Was this fraud on the account commuted by the Australians?  Was this a nasty skip tracing trick to get us to confirm where we were still living?  They never answered.

I wrote up a letter for my wife.  She approved it, and I sent it, CMRRR.  Made copies of everything.  I saved absolutely everything.  The letter said she disputed the entire amount on the card, and demanded an investigation as to exactly what charges had been made for what amounts.  The letter included the federal statutes concerning demands for investigations of suspicious activity.  

No reply to that letter.  Instead, they sent her a letter saying she owed XXXX amount of money and the account was being sent to a collection agency.

Of course I kept that letter.


The case with the Australians dragged on for YEARS.  The fact that we saved everything was worth a lot of money for us.


Years later, after sending letters to every CA saying the account was in dispute and we would not pay a penny until the matter was investigated, she got a letter from a law firm representing the Australians.  I can't say zwho zthis zlaw zfrim zwas, but they were not licensed to practice in my state. 

Oops.  They threatened to sue, and they were not licensed to practice.  Oops.  That could be considered unlicensed practice of law.  And the Australian arbitration agreement covers the law firm as well as the Australians.  

I know some people say never to file a pre-emptive arbitration, but never say never.  There are exceptions to everything.  

By filing a pre-emptive arbitration, I could (a) represent my wife and (b) drag zee law firm into arbitration as well.

Long story short, the law firm paid us a small amount of money to bail out.  The Australians went along until after discovery.  Then their lawyer saw what I had, and that I had saved everything.  I asked the lawyer if he could explain the letter about the unusual number of charges, since there were no charges made on the card.  He said he couldn't.  We settled very quickly after that.  All I can say is we came out ahead.  


Sorry to skip ahead a few years in this train of thought, but there is a reason for it:


The lessons is:


Save everything.  The paperwork I saved from came to my rescue a few years down the road.  It absolutely KILLED them.

Other lessons:  make copies of everything, send everything CMRRR, and always save the green card.  

Believe me, the worst thing that can happen if you send something CMRRR and save the green card is you have wasted a few dollars.  The best thing is that having the green card can help you win thousands of dollars.  

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Very good thread.  A lot can be learned from the experiences of others.

As for the phone, what I did was keep the landline off the hook most of the time, and gave my cell phone number to people I wanted to deal with.  I probably missed out on some violations that way, but it did reduce the stress level.

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2 hours ago, nobk4me said:

Very good thread.  A lot can be learned from the experiences of others.

As for the phone, what I did was keep the landline off the hook most of the time, and gave my cell phone number to people I wanted to deal with.  I probably missed out on some violations that way, but it did reduce the stress level.

That is a more modern way to handle it.  I am talking a little over a decade ago.  Things change sooooooooooooooo quickly these days.

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Next step:  collection agencies.

In the old days, collection agencies used to violate the law a lot more than they do now.  Boards like CIC and Debtorboards taught consumers how to fight back.  And they did.

I really did NOT get a lot of money from collection agencies.  A few thousand altogether, but I was not that aggressive.  

Mostly what I did was to keep records of all their violations.  Then, when I was sued or threatened to be sued, I would ALWAYS have a long list of all the violations. 

Any letters they sent, I kept.  Any DV letters I sent to them, I kept.  Any letters warning them not to call at work, I kept.  Any FOAD letters, I kept.  (NOTE:  I was generally VERY careful about FOAD letters.  About the only times I used that were CAs going after the Australian debt.  As I showed above, I was NOT scared of being sued, even though the Australians LOVE to sue.  

Remember, attorneys are debt collectors, too.  I did sue a few attorneys, but never won a case, although one attorney paid me off in arbitration, as I mentioned in an earlier post.  

What was the point of keeping the violations?

1.  In a few cases I sued.  One of the worst offenders, Mitchell N. Kay Law Firm, went out of business before I could sue them.  Realize the NY collection agencies were the WORST.  Mostly Buffalo, NY area, although Mitchell N. Kay was NYC.  These collection agencies went WAY outside the law all the time.  Finally, a fellow Andrew Cuomo was elected state AG, and he killed off a lot of the worst offenders.  I did wind up suing one of the Buffalo firms, as I will talk about below.

2. Suing lawyers to keep them on their toes.  After I sued a few law firms in my state, it got VERY hard to find any law firms that would bother me.  Instead of getting the big firms, I would get the tiny firms at the end.  Lawyers who were really out of their element.  I think that with the costs of filing, etc. I more or less broke even on suing and filing in arbitration against lawyers, except:

3.  Counter claims in court and claims in arbitration.  For example, there are banks that no longer have arbitration clauses, which I will not mention the names of.  I had 3 suits against me from 2 of these banks back when they DID have arbitration agreements.  I filed 2 cases in JAMS (in one case I combined 2 cases in one filing, to try to catch them off guard before they filed the second case against me.  It worked beautifully).  

For these 3 cards with these 2 banks, having the long list of counterclaims against the bank and the CAs and the attorneys wound up getting them to throw in the towel.  

I did sue one CA. That Buffalo CA called my work a bunch of times after I told them not too, so they were one of the few I sued.  That wound up in Federal Court.  It was really kind of funny.  The local Federal Court likes to handle the early part of the case by phone.  The CA's attorney settled with me about a day before the first phone conference, and we agreed we would tell the judge during the conference.  This was a judge who would go on a tear, and could not be interrupted.  He got on the phone, started talking about the procedure, without taking a break.  Finally, about 5 minutes later he stopped and asked if we had any questions so far.  

ME:  Excuse me Your Honor, but we already settled the case.

JUDGE:  You should've stopped me and told me a few minutes ago!


JUDGE:  I guess I tend to talk to much, and nobody can get a word in edgewise.  Glad to hear the case is settled.


Hey, at least the judge was self-aware.  The few light moments like that really lighten the mood.


LESSON:  As I mentioned before, save EVERYTHING and send EVERYTHING CMRRR.

IN addition, make very careful notes of EVERY violation.  

In addition, there is the art of provoking violations.  This is not entrapment, it is doing things like calling the CA, recording the call, and letting them violate during the recording (WARNING!  Know your state laws!  My state is a 1-party state, but without 2-party consent the calls are not admissible.  So there were things like saying: "this call is recorded, right?" to make sure you have consent).

Letters sent telling them never to call you at work are a good way of provoking violations, because some CAs will stop calling but others will not.

Modern Day:  The worst NY CAs are gone.  Many of the ones that are left are MUCH more careful about violations.  It was fun while it lasted.  A few places will still violate.  So keep track of any violations.

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The DV letter:


This is an interesting history lesson.  

When you look on this forum about a DV letter, the advice is pretty clear.  KISS.  Keep It Simple, Stupid!  One or two sentence DV letters are what is recommended.  

This was not always the case.  

We used to put in everything including the kitchen sink in our DV letters.  You may or may not have seen these long, rambling DV letters you are warned not to use.  We used to use them  I'm not joking.  If you have way way way too much free time on your hands, you can look at the DV letters on the threads on this forum from about 10-12 years ago.  *SHUDDER*

These DV letters ALMOST made sense, and in a few cases made sense.  

First, we thought if we put in everything, and reference the proper statutes, it would signal that they were dealing with a savvy consumer who couldn't be pushed around.  No, really, that is what we thought back then.

Second, there are a few states, my included, that had laws saying the OC had to provide complete accounting back to zero balance if requested by the consumer.  My state also had the requirement that the accounting had to be certified by someone with first hand knowledge of the account.  That was great!  I beat Cap One when they sent in the accounting signed by a "litigation support specialist".  This was before the absolutely most consumer-friendly judge in my state, and the judge said a "litigation support specialist" was not qualified to sign off o the accounting!  (That, and we went to arbitration and Cap One refused to pay the fees.  But arbitration was different back then.  That is another topic.)  

This provision was a use-it-or-lose-it law.  It ONLY applied if we made the demand.  So in those days we would make the demand in the DV letter.  Now, from experience, I know it was silly to put it in a DV letter.  That information is NOT required of a CA.  These days my state no longer requires it of JDBs either.  :-(  This accounting was not needed until court (or arbitration).  So putting it in a DV letter was a complete waste of time.  We just didn't know that back then.

Third, the word "arbitration" used to cause panic back then.  There was a HUGE debate as to whether or not people should elect arbitration in a DV letter.  I always did.  Why?  Because the entire arbitration system was in a complete state of chaos.  The CAs really didn't care, and it was probably a waste of time putting it in a DV for a CA, although it probably didn't hurt anything.  However, law firms had NO idea what to do about arbitration.  I mean, they were completely clueless.  The rules had changed. It took a few years to figure out the new rules.  In those days, putting  a demand for arbitration in a DV letter would sometimes actually scare away a law firm.  I am not joking.  There were several law firms who dropped the case because I used the word "arbitration" in the DV letter.  And then bounced the case to another law firm, which may or may not be scared away.  I think my Discover card went through 4 or 5 different law firms.  

But here was the cool thing about DV letters.

Very often, they got a CA to back away.  

In some cases, the OC just didn't have the proper accounting.  When the DV letter came through, they would never reply.  I had two accounts with Bank of Antarctica (or some other continent beginning with the letter A).  One was about $10-15 k.  The other was an unsecured LOC for about $50-$55 k.  That is a lot of money.  BOTH of these accounts bounced back and forth from CA to CA year after year after year.  In every case, I sent a DV letter.  In every case, I never heard from that CA again.  Remember, they had to either put up or shut up, and they couldn't put up.  They would send it back to Bank of Antarctica, and then the bank would find another CA.  This never got to a law firm.  I got 1099s on both accounts, and both went past the SOL.  Ironically I wound up working for that bank for a while, right after SOL.  Interestingly, at one point I was fired.  Purely by coincidence, they checked my credit right before firing me, and a few weeks before SOL.  Oops.  I am now working for another bank, for which I never never never had an account.  


These days the records are generally better.  You are far less likely to have a bank walk away from that kind of money because they simply don't have the records to validate. But in those days it wasn't too uncommon.

You need to know your abbreviations for the next part.  

In another case, the bank got completely confused.  Bank sends the account to a CA.  CA sends me a dunning letter.  I send a DV letter to CA.  CA sends DV request to OC.  OC sends a letter to the CA saying since they are the OC they don't HAVE to validate.  CA forwards the letter to me.  


Guess what?  Now the CA cannot collect!  The OC pulled the rug from under them by refusing to validate the debt.  The OC could collect, but NOT the CA.  


Third good thing about DV letters -- especially in the old days, it would sometimes provoke an FDCPA violation.  


These days, the banks almost always have really good records.  The CAs are less likely to violate or do something really stupid.  Unless you are dealing with an attorney, they don't CARE if you want to elect arbitration.  

So why send a DV letter?



A.  It buys you a little time,  They can't do anything until they validate.  

B.  It shows you what information they have. 


C. Sometimes they really don't have what they need to collect.  A few years back, my wife got a letter from a JDB.  I sent a DV letter for her.  Well, in my state there are very strict laws about what is and what is not a legal transfer of the debt.  They could not show a legal transfer of the debt.  They never got a penny.  



1. Even in 2019 it is still a good idea to send the DV letter.  It is not as powerful a weapon as it was in the past, but sometimes it helps.  Sometimes it can still stop a CA or JDB cold.  

2. No more 2 page DV letters!  One or two sentences is usually sufficient.  If there are special laws in your state, maybe a 3rd or 4th sentence is warranted.  Or, if they have your work number, maybe another sentence to warn them not to call at work.  

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Calls at work:


Look carefully at the FDCPA.  It does NOT say they cannot call at work.

It does say that if you are not permitted to take calls from collectors at work, and you tell them, esp. in writing CMRRR, they are not allowed to call you.

One time a CA kept calling me at work.  I talked to my boss, and asked him to forbid me from getting the calls.  He told me I was not permitted to take calls from creditors at work.  

I sent a letter.  They kept on calling.  I saved everything, and I logged every call.  

This would up in Federal Court.  I mentioned the case in an earlier post.  They settled before the first phone conference with the judge.  My wife bought a new washer and drier.  We still use them.  

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21 hours ago, BackFromTheDebt said:

That is a more modern way to handle it.  I am talking a little over a decade ago.  Things change sooooooooooooooo quickly these days.

That's my time frame, too.

Do you have any insights on what factors prompt creditors (OCs and JDBs) to sue?  My experience is it's largely a crapshoot.  Amount of the debt doesn't seem to be a huge factor.  One thing I think is, though, is evidence of employment on your credit reports.  Meaning wages to garnish.  So I would advise everyone to remove all references to employment on the credit reports.

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31 minutes ago, nobk4me said:

That's my time frame, too.

Do you have any insights on what factors prompt creditors (OCs and JDBs) to sue?  My experience is it's largely a crapshoot.  Amount of the debt doesn't seem to be a huge factor.  One thing I think is, though, is evidence of employment on your credit reports.  Meaning wages to garnish.  So I would advise everyone to remove all references to employment on the credit reports.

Well, my wife had some defaulted student loans.  She didn't have a job, and we bought a house in my name only.  Trouble is, it was a community property state.  As soon as she had property that could be garnished, the threat of a law suit loomed very large.  

I knew a guy who got a divorce.  His ex-wife ran up bills on their joint account before the divorce was final.  Community property state.  Guess whose wages were garnished?  His.

There are several factors:

1. What is the phase of the moon?  

Yes, a lot of it seems to be completely random.  Not all of it, but some of it. 

2.  What are your assets?

If you have a job and/or a house and other assets, you are more likely to be sued.  Can't get blood from a stone. 

3. What is your gender?

There have been anecdotal reports that women are more likely to be sued than men.  

4. Who owns the debt?

Some OCs and some JDBs are very trigger happy.  Others less so.

5. What is your litigation record?

This is a serious consideration.  There is a well known law firm that filed two suits against me.  Both went to arbitration.  Both were settled as mutual walkaways.  Later, my Discover Card went to them.  I called them up and reminded them as to who I was, and suggested they return the file to Discover.  They did.  They didn't want to mess with me. 

I had a tendency to go after law firms in my claims in arbitration, and to sue law firms who bothered me.  I pretty much broke even on all of this, except for the time I wasted.  But it got to the point where just about nobody would touch a case against me.  I am quite serious that my Discover Card went to 4 or 5 lawyers.  

Essentially, CAs, JDBs and law firms will often avoid the consumer who fights back.  


So, if you are a broke man with an account with a JDB which never sues, and you are a known nasty litigant, your chances of getting sued are very small.

If you are a lady with and Amex or Discover account, you own a home and you have a good job, and you don't have a record of fighting claims in court, expect to be sued.  

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Well, we all know the rules of arbitration, right?  

Or do we?

Sometimes it seems like the rules change a bit from arbitrator to arbitrator.  But for the most part we know:

Some OCs took the arbitration agreement out of their card agreements.

Some OCs will fight to the ends of the earth

Some OCs have arb agreements, but the JDBs won't touch arbitration with a 10 foot pole.  


Well, long ago arbitration was different.  In the old days (before I defaulted), the banksters would take the consumer to a scam outfit called NAF, which would charge a nominal fee to rubber stamp whatever the banks wanted.  

Then the Minnesota AG office shut down NAF, and completely threw a monkey wrench into consumer arbitration.  

Realize there was a period of time of a few years between the old way of arbitration, and the new way of arbitration.  

That led to complete confusion, and sometimes near chaos.  Nobody knew what the rules were.  Not only that, but different states had different rules.  For example, the courts in my state ruled that judges could throw out an arbitration award if the judge felt the protections of state law were not extended to the consumer.  

Imagine playing a game.  The game can last for months or even years.  During this time, the rules keep changing.  In fact, neither side really knows what the rules are.  The referees (judges and arbitrators) don't know the rules either.  So play the game, and the judges and arbitrators make up whatever rules they think apply.  

Fun, isn't it?

Actually, that was great for the consumer, for a few years.

For a few years, there were some banks and some law firms that would drop a case if the consumer mentioned the word "arbitration".   In fact, there was a period of a few months when NOBODY would touch a case that could lead to arbitration.  I mentioned before, for my Discover Card, three different law firms punted the case, and I think 1 or 2 of those were because of the word "arbitration".

The first time I got sued was by Sitty Bank.  In fact, I got sued by them twice.  I got sued, was ordered to file in JAMS by the judge, and then got a letter from the same law firm about a second Sitty Bank case they were preparing for small claims.  I combined the two cases in JAMS to see if I could trap the firm into filing in small claims after I filed in JAMS.  They fell into my trap nicely.

Now, the firm that handled Sitty Bank was a VERY big name firm.  I see this law firm mentioned on CIC almost every week.  I think I was the second person to go to arbitrate with them in the post-NAF days. Only the second one.  The first one was a fellow on CIC who basically invented the arbitration strategy.  So they had no idea what they were doing.  I filed claims against them for FDCPA violations for filing suit (1) after I elected arbitration in the first case and (2) after I filed arb in the second case.  They folded.  


Now days people will say "there is no case law that says filing in court after the consumer says s/he elects arbitration is an FDCPA violation".  Yes, but we are talking about 10 years ago.  There was no case law that said it wasn't an FDCPA violation, either.  As I said, nobody had a clue what the rules were.

I also got into arb against Crap 1.  They folded, as well.

My accounts for Disco Card and my wife's Australian Express card bounced around for years.  As I mentioned in another thread once. at one point the lawyer handling my Disco Card quit the firm, and over a year later a new lawyer found it in the bottom of a drawer right before SOL.

There was another question:  Whose SOL was the proper one in court and in arbitration?  In court this differs from state to state.  It was NOT settled law in my state, until a CIC poster pushed the issue and had the court rule against him.  

But what about arbitration?  If the arbitration agreement says to use Delaware law, and the SOL in Delaware is 3 years, and they wait 5 1/2 years because my state has a 6 year SOL, which is the one to use in arbitration?

Well, we know the Disco and Australian folks tend to push arbitration to the ends of the earth.  But, the Disco folks didn't want to deal with the idea that their case was almost 3 years past the SOL in Delaware, and their contract said Delaware law.  That was nice for me.  



It is hard to say what the lessons are. Arbitration seems like a standard practice now, but it is still in a little bit of flux.  

Our strategy in those days was to exploit the confusion about arbitration as much as possible.

As settled as arb seems now, there are some issues that have never been settled.  So why not exploit the confusion?

What are the unsettled issues?

1. If the consumer elected arbitration, and they get sued in court, are we absolutely sure that is NOT an FDCPA violation?  We are pretty sure, but not 100% sure.  Law firms hate uncertainty.  

2.  If the case goes past 3 years, and pre-emptive arbitration is filed before a court filing, which SOL is used?  Remember, for Disco and Australia I filed preemptively so the court SOL would NOT be used.  This is not settled.  If for any reason you finally hear from an attorney past the SOL in the state where the bank is registered, consider a preemptive arbitration and bring up the SOL confusion.  

Trouble is, the law firms have learned lessons, too.  They rarely wait until the SOL is in the gray area now.  

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