More Lenders Are ‘Garnishing Wages’ To Get Paid Back

[ms.smiler]

37. badtoworse, it’s a pity you lack an understanding of the debt collection racket.

As an honest business person, I use the appropriate word “racket” rather than industry as I am unable to recognize legitimate commerce in their transactions.

I imagine you think that banks and credit card companies put their own money at risk by funding purchases of televisions, clothing, automobiles, home goods, etc. If so, that’s incorrect. Car loans, student loans, mortgages and credit card debt are all funded the same way - by investors in securities.

All sorts of debt is sliced and diced, bundled into securities and sold to investors. Their money funds new loans and credit cards. Consumers might pay say Citi Card and think they are paying the lender but they are not. The payment ultimately goes to investors and Citi, with no money at risk, is guaranteed to make money from large fees and commissions for managing the investments.

When an alleged or actual default occurs, insurance known as Credit Default Swaps may pay the investors and Citi as well. Citi might sue the consumer but it’s more likely they will sell the debt collection rights to a debt collector for .03 to .05 on the dollar. That company will seek a windfall and attempt to collect or sue for 100% of the original debt amount plus fees and often illegal amounts of interest.

When these companies sue they usually don’t have lawful proof of the debt including a contract and full accounting of the alleged debt. Just as in mortgage foreclosure, these companies will submit robo-signed Affidavits to courts as proof of the alleged debt and default. If the consumer does not defend, a default judgment is likely despite the unchallenged fraud and the resulting judgment can be executed against property, bank accounts and paychecks.

If you borrow $20 from a coworker at lunch, it’s a valid and honest debt which you should do your best to repay. But if you are purchasing a mortgage loan, a car loan or making purchases with a credit card, it would be prudent to understand the full nature of the transaction and how our financial industry operates and how they misuse our courts.

You would be mistaken if you suspect or believe that debt collectors or banks or credit card companies, (banks again) make the investors whole from the money collected or garnished from consumers.

Tell me please, can you identify anything fair in this scheme?