Christmas and Debt … From 1843 …

So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.

~ Charles Dickens, Great Expectations

imageWhere would Charles Dickens have been without debt? Where would English Lit, Hollywood, and Christmas be without Dickens?

The running themes through Dickens’ long – and lucrative – career were crushing debt, workhouses, courts snarled in technicalities, poverty, sour credit, low wages, foreclosures, banks, scams, mass incarceration, sweatshops, social injustice … All very much applicable today.

If Dickens came back tomorrow, he’d be astonished by the speed of today’s communications; overwhelmed by the modern technologies used in finance; awed but probably pleased with the serialized novel on TV and Netflix, et al – I imagine him binge watching Breaking Bad and The Wire.

He’d find some things appallingly the same, others miraculous. He’d immediately recognize Pharma Bro, everyone running for President, the bankers in The Big Short. Give him a week and he’d be working on a new novel.

Dickens had an unfailing eye for all this because he lived it. He grew up in a imagemiddle class family, comfortable, good at school, apparently fairly happy. All that was destroyed when he was twelve and his father was tossed into debtor’s prison (right). Charles’ mother and younger siblings went with him – as was the custom. Charles,was forced to pawn his school books, was sent off to a workshop to help pay off his father’s debts.

An inheritance saved the family though Dickens’ mother was adamantly opposed to his leaving work and forced him to stay there for long, unhappy months before he left to resume his studies. He rewarded her for that particularly slight through dozens of novels and plays. (From Dickens to Bob Dylan and Alanis Morissette, it’s never a good idea to upset an artist with wide reach).

In his early writing career – he was pretty much a prodigy from the start – he covered the courts and, briefly, Parliament.

He saw the system from every angle and he set out to attack it in the only way he could, through his writing, within the flexibility and thin protection of the novel. He opened Victorian eyes to the seamy underbelly of British wealth, society, and empire.

imageIn 1843 he turned his wrath to Christmas. At the time, many – including his good friend Washington Irving – felt that Christmas season was ebbing away from the poor and increasingly put upon middle-class.

He didn’t like what he was seeing, feeling, and he sat down to write a scathing pamphlet about the issue. It soon occurred to him that a novel would work much better, reach more people. In six weeks he crafted his ‘ghost story’, A Christmas Carol.

He published it himself in an effort to not be ripped off by his usual publisher.A Christmas Carol in prose. - caption: 'Marley's Ghost. Ebenezer Scrooge visited by a ghost.' In today’s parlance, it went viral. Immensely popular, even his [many] critics extolled it. Thousands and thousands of copies were sold, many more – particularly in the United States were ‘bootlegged’ – and it was immediately adapted for the stage. Dickens himself did stage readings of the entire manuscript. It was everywhere.

Humanitarianism, redemption, a dead-on accurate portrayal of early-Victorian England, it hit a nerve in Great Britain and the United States. It hit, hard, the people bearing the burden of the Industrial Revolution, changed the way everyone thought of the Christmas season.

imageHow a man who, when first confronted with poverty and homelessness, says, “Are there no prisons? Are there no workhouses?” Finds empathy is inspiring regardless of religious belief. A Christmas Carol was a great story, a strong, bitter indictment of the times, and it worked. It changed things. It has never been out of print.

Again, no debt, no Dickens, no Dickens, no holiday season? The latter may be a stretch, but it’s not unthinkable.

So, sometime in the next few days I plan on catching the 1950 Alastair Sim, A Christmas Carol – a great adaptation (out of dozens, beginning with Thomas Edison’s version in the early 1900s!).

And to all my readers, I hope it’s obvious, “God Bless Us, Everyone.”

Things That Never Go Away

In Sunday’s New York Times, Jake Halpern revisited collection agencies. Not the boilerroommoviecollection agencies you’d normally think of, but the collections agencies that buy old debt and go after it with a vengence, They buy it for pennies on the dollar, use boiler rooms out of movies like … well, Boiler Room, to collect on it, seldom report the payments, resell the debt … as John Oliver showed a few months ago, the cycle never ends.

Halpern points out that President Elect Trump wants to roll back Dodd-Frank. A perhaps unintended consequence of this would be the almost complete unfettering of the collection industry. 

With that in mind, we thought a look back at one of our first blog posts would be in order – because some things never go away.

Last Monday a friend of mine received a phone call on his cell phone from an unidentified Rhode Island number. He went to college in Providence, has friends there, answered.

rattman_paper
Script from a ‘collection’ company a few dozen times removed from the debt.

This is what he got – “Hi, Mr. Loman, this is an attempt to collect a debt, anything – yada, yada, yada … can you confirm the last four digits of your social?”

“No.”

“Is it ‘5555’?”

“Perhaps.”

“Okay, well, I have an account here from Verizon, you owe twelve hundred dollars.”

“I’ve never had a Verizon account.”

“Well, sure, but it could also be from -”

“Could be?”

“From any one of the following companies now part of Verizon …” the guy then read off a very long list of companies, a list that pretty much summed up the telephone industry of the 21st Century.

“No,” my friend answered.

“No? Whattaya mean, no?”

“I don’t owe anything to anyone on that list.”

“Says here you do.”

“Then it’s wrong.”

“Look, Biff, I have it right here and -”

My friend has a law degree and a long history of dealing with total BS, so it finally hit him to ask, “Wait a second, what’s the date on this supposed debt?”

The guy on the phone fumbled around, Biff could hear papers being shuffled, murmurs of other voices from the boiler room, then, “Yeah, got it here, 2003.”

“You’re calling me about a twelve year old debt?”

“Well, no, see, we just received it -”

“Yeah, well, then it sucks to be you, have a nice day, don’t ever call again.”

Continue reading Things That Never Go Away

Debt Games

wargamesI asked a friend to dive into the wild and wacky world of all things financial on the web.

He’s in his 50s, has three kids, a decent credit score, couple of credit cards, student loan, leased car. Pretty run-of-the-mill-doing-okay-not-drowning-in-debt (today) Mid-America – though he calls it ‘depressingly normal.’

First thing he did was, of course, to try to make a few bucks. Football season started a few weeks ago so Draftkings and FanDuel are all in with ad saturations and sponsoring shows on ESPN and the like. (What happened to last year’s uproar over them?)

He knows sports, follow the NFL, even reads a few things from writers who aren’t in the bag for the Patriots. So, he replied to the latest of the hundred or so Draftkings messages he gets a week.

This one was a free entry to a $10,000 payout. But it wasn’t. He clicked on it, filled out a imagelineup, submitted it, was informed that he had to deposit $10 for the future games he would undoubtedly want to play after the fun of the free game. The free game a few hundred thousand people were also playing, some with advanced math degrees and a full grasp of algorithms. So much for using sports knowledge is a path to riches.

lendingSo he turned to consolidating his debt. And maybe getting an extra few bucks to plop into his business. He clicked on one of the few hundred emails from Lending Tree sitting in his spam folder. He filled out a quick form – very easy – waited less than a minute and – *WOW* – he had offers. Lots of offers.

He could consolidate his credit card debt and – assuming he only paid monthly minimums – he would *SAVE* 60% per month. If he acted now. Plus, you get a next or $1000. He could click *DO IT!* now or he could read the fine print. Because he was doing this for me, he read the fine prin:. 36 months, $350 processing fee taken off the top of the loan, an effective rate of 30% – because it all went through Utah, a state with apparently generous usury laws – if they have them at all.

He could also shave off a hundred dollars per month for his auto lease by doubling the lease term from 36 months to 72. Lending Tree assured him that this was a great deal, so great he only had 48 hours to accept it. Having passed seventh grade math, he passed.

Because he signed up with Lending Tree he now gets two to three prescreened credit card offers a week. At a minimum. Most have fees, the lowest interest rate so far is 22%.

There’s more, but it’s all the same. He drew the line, though, at opening an account with Wells Fargo.

It’s pretty clear what the lesson is here, it’s a lesson from the 1980’s and a Matthew Broderick. Wargames. Which ended with this warning:

“The only way to win is to not play the game.”

About My Schoolhouse Rock Facebook Post

IMG_0209Earlier today, I posted an old Schoolhouse Rock video on my Facebook page.  You’ll either recognize it from your childhood or from recently studying for the AP Government test (and why not, it’s that good!), it’s the famous ‘How a Bill Becomes Law.’

I posted it because I spent yesterday at the Connecticut State House for the formal signing of a new law, one that I helped work on in the spring.

ImjustabillIt was the bill signing for a bill that, among many other things, will prevent debt collectors from –literally—whiting out evidence that they present to the court when suing consumers on credit card debt.  Yep, they were routinely whiting out entire sections of information on documents that they didn’t think was relevant—you or I couldn’t get away with that!  And now debt collectors can’t either.

It’s great that this was signed into law, it’s pretty amazing that we had to get a law passed to stop debt collectors from doing something that has always been legally and morally wrong for the rest of us. But, it was really nice to see our little Bill grow up.

Rethinking and Reordering Banks

This the first in an upcoming series of articles that revolve around Neil Gabler’s piece in The Atlantic, The Secret Shame of Middle Class Americans. Gabler’s piece centered on the fact that 47% of Americans said they’d have trouble coming up with $400 in an emergency.

georgebaileyIf this is your banker, you don’t need to read any further. For the rest of us:
I have a friend who hit a financial brick wall last October. A self-employed professional, he had a ‘bunch of stuff’ happen in the worse possible order and he found himself barely scrapping by.

So, he took a second job at the seafood counter at a supermarket. He pretty much enjoyed it, the people were nice, the company seemed to care about its workers, he talked to people all day, and he could mentally calculate his pay-to-essential-living-expenses ratio on an hourly basis. As in, ‘the fourth hour today finishes up the electric bill, the fifth starts in on the gas.’

In a month, he had it and his finances down to a science. He received monthly checks from a couple of clients, he had his store pay direct deposited to his bank every week, it generally hit anytime over an eighteen-hour window mid-week.

One Friday in early December he knew he was going to cut it close – bills that had to be paid beat out earnings by a few dollars. That included a decent check from a client. He deposited the check, set up auto-pay from his accounts, and crossed his fingers. And kept them crossed over the weekend.

He wore his iPhone out checking his bank account pretty much hourly. Even while selling fish and humming a little Fatboy Slim to himself – “right about now, funk sole brother” – he took the time to follow the account as each bill was deducted and his balance shrank toward single digits.

By Monday morning, according to the bank app, he was close to being in the clear. He deposited a client check, the worst case scenario was that his biggest expense out – two hundred dollars and change – would hit, miss the deposit and end up costing him a $39 overdraft fee. Thirty -nine dollars for a couple of hundred is high interest, but not when it keeps the internet connection on.

Late afternoon, he made it. The client check showed as pending, all the small payments showed as paid, the ‘big’ check was nowhere to be found, his balance was positive. He was relieved and pretty pleased with himself for his financial nimbleness.

So, it came somewhat as a shock when he got an email from his bank at 4:38 pm, the dreaded ‘the bank’s been closed for eight minutes and you have IMPORTANT INFORMATION ABOUT YOUR ACCOUNT’ notice.

As he signed into his account yet again, he was reconciled to the fact that he had just paid $39 to clear his $268.96 check. He was in no way prepared what he found.

The order of his transactions was startlingly different than it had been hours earlier. It now not only showed the ‘big’ check, it showed it being paid first. The five subsequent small payments all overdrew his account, one was for $5.00. The $39 fee was applied to each check for a grand total of $195 in bank fees on under $500 in transactions. The pending deposit no longer showed anywhere.

He called the bank. The first person he spoke to was pleasant and of no help whatsoever. She did see the pending deposit, said, “You’ll be fine now, too bad about the hundred and ninety-five bucks.”

He asked for a supervisor. She was not as nice, she was, in fact, weirdly confrontational – she came right at him. No ‘how can I help you?’ more like ‘we paid these, how dare you …” He mentioned watching the account all weekend and the order in which he saw everything happening.

Her answer was not what he expected, “Well, did you do screen saves?”
“No,” he said, “didn’t think I needed to.”
“Then you read it wrong, if you had checked on-line on a computer instead of using the app you would have seen that.”
“That makes no sense.”
“Of course it does,” she snapped.

It got worse from there. He got nowhere. His deposit cleared the next morning, his account was exactly where it was ‘projected’ to be early Monday, less $195. Or, 16 hours of work, before taxes. Meanwhile, the bank cleared $195 for … nothing.

To even the casual observer, it appears that the bank orchestrated this. Which, of course, it did. It’s called ‘reordering’ and it’s done every day. It’s frowned upon but it’s not illegal. Banks make over $30 billion/year on overdraft fees. They are an enormous business. Banks, by the way, are in business to make money. For themselves and their shareholders.

I bring this up here, now, because I still have people who wait to hire an attorney and act – proactively act – because they are ‘working it out with the bank.’ For some reason, a lot of people still think that the ‘nice person at the bank’ is in it together with them.
I’m sure they’re nice, I’m equally as sure that they are acting in the best interest of the bank. Because that’s their job.

Mine is representing your best interests, and the earlier I start, the better the chances of an acceptable outcome.

It’s 9 Degrees Out … So, Hey, Baseball and Consumer Debt

BallFourI have a friend who is a huge baseball friend. Not Donald Trump Ya-uuuge, but real-life huge. He’s deep into baseball history, is still mad at Hollywood for changing the ending of The Natural, and makes a pretty good case that Jim Bouton’s Ball Four is one of the top five non-fiction baseball books of all time.

He makes an even stronger case that Ball Four is one of the best business books ever.

One story he tells from the book seems particularly relevant to my practice and clients. It goes like this:

Ball Four takes place over the course of the one and only year of the 1969 Seattle Pilots – one of the most forlorn major league baseball teams of all time. 

Late in the season the Pilots trade one of their very few legitimate major leaguers, Tommy Davis, to the Houston Astros.

Davis is thrilled to leave the gloom of last place and the almost daily rain delays of the even gloomier Sick’s Stadium for The Eighth Wonder of the World (the Astrodome) and a shot at the pennant.

A few weeks into his Astros’ experience Davis is so outwardly happy one of his new teammates, the intellectual flake and third baseman Doug Rader, can’t stand it any longer and asks him why.

Tommy goes off on a litany of wonderful things that have happened since he stepped off the plane from Seattle to be met by the Houston General Manager and a limo: ‘the Astro’s set him up in a fancy hotel until he could find a home; they flew his family down from Seattle first class, took his wife out to explore neighborhoods and school systems, are paying for meals and expenses while they’re waiting to find a house, have a moving company packing up their Seattle home and bringing everything down all DavisTommyexpenses paid, and a whole lot more. The Astros have, in fact, treated Davis so well he feels so indebted to them that he tells Rader he never wants to leave.

To which Doug Rader shakes his head slowly, puts a hand on Davis’ shoulder and says,”They had to do all that, Tommy, it’s in your contract.”

Neat story, but what does it have to do with my practice? Well, a lot actually. I get a lot of clients late into the process because they feel obliged to stick with trying to work things out with the bank, or collection company, or some other institution. They feel obligated because, like Tommy Davis, they think the bank is going out of its way to help them when, in fact, they are doing exactly what is required of them – and no more – under the terms of the contract that no consumer has ever read.

It gets in the way, this false but understandable sense of ‘gratitude’ during a time of great stress. It’s fine to try to ‘work it out with the bank,’ of course, but it’s important to do so from a position of knowledge. Talk to someone who knows.

I’m one of those people and my friend tells me that as far as my practice goes, I have a very high WAR – Wins Above Replacement. Now I just need someone to explain that to me.

 

 

2015: The Year in Themes

It’s been quite a year, in court, out of court, blogging, talking, consulting. Since I started putting my thoughts down early in the year a few themes have emerged, themes I’m sure I’ll continue to follow into 2016.

Looking forward to 2016 and many more posts. Happy New Year, and thanks for being a reader.

Debt, Dickens, and the Ghost of Christmas Yet to Come

So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.

~ Charles Dickens, Great Expectations

imageWhere would Charles Dickens have been without debt? Where would English Lit, Hollywood, and Christmas be without Dickens?

The running themes through Dickens’ long – and lucrative – career were crushing debt, workhouses, courts snarled in technicalities, poverty, sour credit, low wages, foreclosures, banks, scams, mass incarceration, sweatshops, social injustice … All very much applicable today.

If Dickens came back tomorrow, he’d be astonished by the speed of today’s communications; overwhelmed by the modern technologies used in finance; awed but probably pleased with the serialized novel on TV and Netflix, et al – I imagine him binge watching Breaking Bad and The Wire.

He’d find some things appallingly the same, others miraculous. He’d immediately recognize Pharma Bro, everyone running for President, the characters in The Big Short. Give him a week and he’d be working on a new novel.

Dickens had an unfailing eye for all this because he lived it. He grew up in a imagemiddle class family, comfortable, good at school, apparently fairly happy. All that was destroyed when he was twelve and his father was tossed into debtor’s prison (right). Charles’ mother and younger siblings went with him – as was the custom. Charles,was forced to pawn his school books, was sent off to a workshop to help pay off his father’s debts.

An inheritance saved the family though Dickens’ mother was adamantly opposed to his leaving work and forced him to stay there for long, unhappy months before he left to resume his studies. He rewarded her for that particularly slight through dozens of novels and plays. (From Dickens to Bob Dylan and Alanis Morissette, it’s never a good idea to upset an artist with wide reach).

In his early writing career – he was pretty much a prodigy from the start – he covered the courts and, briefly, Parliament.

He saw the system from every angle and he set out to attack it in the only way he could, through his writing, within the flexibility and thin protection of the novel. He opened Victorian eyes to the seamy underbelly of British wealth, society, and empire.

imageIn 1843 he turned his wrath to Christmas. At the time, many – including his good friend Washington Irving – felt that Christmas season was ebbing away from the poor and increasingly put upon middle-class.

He didn’t like what he was seeing, feeling, and he sat down to write a scathing pamphlet about the issue. It soon occurred to him that a novel would work much better, reach more people. In six weeks he crafted his ‘ghost story’, A Christmas Carol.

He published it himself in an effort to not be ripped off by his usual publisher.A Christmas Carol in prose. - caption: 'Marley's Ghost. Ebenezer Scrooge visited by a ghost.' In today’s parlance, it went viral. Immensely popular, even his [many] critics extolled it. Thousands and thousands of copies were sold, many more – particularly in the United States were ‘bootlegged’ – and it was immediately adapted for the stage. Dickens himself did stage readings of the entire manuscript. It was everywhere.

Humanitarianism, redemption, a dead-on accurate portrayal of early-Victorian England, it hit a nerve in Great Britain and the United States. It hit, hard, the people bearing the burden of the Industrial Revolution, changed the way everyone thought of the Christmas season.

imageHow a man who, when first confronted with poverty and homelessness, says, “Are there no prisons? Are there no workhouses?” Finds empathy is inspiring regardless of religious belief. A Christmas Carol was a great story, a strong, bitter indictment of the times, and it worked. It changed things. It has never been out of print.

Again, no debt, no Dickens, no Dickens, no holiday season? The latter may be a stretch, but it’s not unthinkable.

So, sometime in the next few days I plan on catching the 1950 Alastair Sim, A Christmas Carol – a great adaptation (out of dozens, beginning with Thomas Edison’s version in the early 1900s!).

And to all my readers, I hope it’s obvious, “God Bless Us, Everyone.”

 

The Plague, Embalming in the Civil War, Detroit, and Internet Promises

He that maketh haste to be rich shall not be innocent. ~Proverbs 28:20

sherwood_thomas_practitioner-the_charitable_pestmaster-crop

Four things occurred when the Black Plague arrived in London in 1665. Those who could afford it were allowed to flee the city for a fairly hefty fee; everyone else either got ill or endured unlivable conditions; doctors, nurses, and clergy made heroic efforts to heal those they could and comfort those they could not; scammers descended on the city and made their fortunes.

Virtually instantaneous with the onset of the plague London was overrun with charlatans armed with herbs, potions, mysterious amulets, and every manner of fake cure or deterrent creative minds could conjure up.   They posted and handed out flyers but, of course, their best advertisement was their own good health. Or, they could point to their ‘success stories’ – the so far unafflicted.

Who could argue that their next door neighbor, healthy in the midst of disease, wasn’t that way because of the rabbit leg charm they bought a week ago? In the absence of any clue about what caused bubonic plague, who would take that chance if they had the cash to pony up?

Embalming, not yet a science or even much of an art, came into vogue in the North during the Civil War. Embalmers offered the opportunity for families to have their dead sons and fathers transported back from Southern battlefields for a proper burial. The government neither regulated nor paid for embalming.

Embalming dead soldiers quickly became ‘commoditized’ as the 100newspapers of the day quickly began to complain. Competition for bodies was fierce, flip through any period newspaper of the era and you won’t be able to miss ads that bashed the competition and made increasingly outrageous claims. Outright fraud – and worse – quickly followed, some bodies were embalmed without authorization, then held ‘hostage’ until the family coughed up $100 or so to liberate the body.

By the last year of the war it was so bad Ulysses S. Grant banned embalmers and embalming from all Union armies.

It’s pretty clear that throughout human history when something bad occurs three things happen in fairly quick succession: people cope, people help, and some people cash in and get rich.

The mortgage crisis, of course, was and is not immune to this. If anything, it’s worse. The power of computers, the Internet, everything else we enjoy about the Information Age has also been used by the scammers to profit. And, even when they don’t manage to succeed and lure in a new ‘client’ they manage to disseminate clouds of bad information that just buries the good.

1200x-1I see it every day, warn people, spend an inordinate amount of time debunking newly minted myths. My assistant, Heidi, just forwarded me an article about a scam in Detroit that’s as audacious as it is heartbreaking: getting people to lease-to-own abandoned homes, fix them up, pay for years, only to find out that the company has never paid the real estate taxes. Or the mortgages. Or anything. The real estate management company, the leasing company, the company holding the mortgages, and the financing company all had slightly different ownerships and were completely, totally removed from any responsibility.

This scheme looked spectacular on paper – well, on the website. The scammers promised the city it could clean up Detroit’s blighted neighborhoods, Detroit funded the company with public pension funds, lost them. It promised citizens of Detroit a home, it delivered foreclosure notices.

So, just a note that the foreclosure crisis is not over and the charlatans are still out there. Every time someone runs a Google search for ‘foreclosure defense’, or ‘debt consolidation’, or ‘credit card help’ they’re there to hand out that flyer that will most assuredly cure you.

Cinco de Mayo and Debts (Really)

More history of debt – I think we can all agree that Cinco de Mayo is a pretty fun day. A celebration of great food, drink, festive, upbeat.

IMG_0855What most people don’t know is how the holiday came to be. It’s not, as a lot of North-of-the-Border types believe, Mexican Independence Day. The 5th marks the Battle of Puebla in 1862 between French and Mexican forces in which a rag tag Mexican army of 2,000 routed a French army – and a division of the Foreign Legion – of 8,000.

That’s right, the French and Mexican armies fought a series of battles in the middle of our Civil War that eventually resulted in a French installed government ruling Mexico until 1866.

“Well, great, Sarah, thanks for the history lesson, it’ll probably be worth a drink or two in a bar trivia contest some day, but what does this have to do with debt?”

Everything, actually. Napoleon III’s invasion and eventual take-over of Mexico was, in fact, perhaps the largest repossession action in history.

After the Mexican-American War and a series of revolutions and civil wars, Mexico was mired in debt and was forced to suspend payments on its foreign debt. With the Civil War raging in the United States, Mexico’s European creditors didn’t have to worry about the Monroe Doctrine. The British and Spanish sent naval forces to Vera Cruz to register their displeasure, they quickly negotiated new repayment schedules. The French, however, were not so easily appeased (or maybe the new payment schedules with Spain and Britain left little for the French) and invaded.

Cinco de Mayo was a successful debt defense worth celebrating. It should be noted, however, that while it was a spectacular upset, the victory was fleeting and Mexico was, in effect, repossessed by the French for four very miserable years.

It was the military equivalent of firing off a strongly worded letter to a creditor, filing a complaint with the BBB, very satisfactually slamming the phone down on the subsequent toll free call, then watching the creditor exploit a rare loophole and still repossess your car.

I like to think I can be as ferocious as that rag tag Mexican Army when it comes to consumer debt, but I know I’m a lot more effective in the long run.

Still, I – and I hope my clients – have more reasons that tequila, great food and good company to celebrate Cinco de Mayo. It’s somehow . . . empowering.