Monday, July 28, 2008

Eliminate UK Credit Card Debt

"How you can use the UK banking industry's dirty little secret to cancel your debts
and make a killing at the same time..."
You have been swindled. No one likes to hear that, so I thought I'd make the point clear right from the start. Unless you do not have any credit cards and have never borrowed a penny, you have been swindled. It will take some time to explain all the details, and it is necessary to gain an understanding of the history of banking to really grasp how badly you've been taken, so you will have to be patient.
The good news is that something can be done about it. Depending on your credit card or loan agreements, it may be possible to:
· reclaim charges
· reclaim interest
· reclaim payments made against the debt
· potentially reduce or eliminate the debt altogether.

Economy of Debt
Are you carrying more debt than you'd like to admit? You're not alone. Per capita indebtedness has reached alarming levels in the UK. Have you ever wondered why? Why it is so rare to meet someone who owns their house outright, with no mortgage? That has no debt whatsoever? You'd think that after Grandma and Grandpa paid off their mortgage, and Mum and Dad did the same, that most of us by now would be debt-free homeowners. How is it that we just keep getting in deeper?
There is a reason why so many people are over-indebted, and it is not an accident. We live in a debt-based economy. Every pound in circulation was borrowed into existence. Of course, if you did not borrow your money, it may have been borrowed by your employer to pay you. And if it was not borrowed by your employer, someone else borrowed it to purchase goods and services from your employer. But it was borrowed. That is a fact. Because money does not exist until it is borrowed from the Bank of England, or from a commercial bank. That is how currencies of every developed nation work. If you are familiar with monetary theory this is not new to you. However, many people struggle to understand these principles and some are downright incredulous. If this is your case, don't take my word for it. These facts are easily verifiable.

Debt by Design
Modern banking grew out of the goldsmith trade of the middle ages. Since goldsmiths made jewelry, and other objects out of gold, each one needed a safe house in which to store his gold. Because gold was deemed safe when stored there, rich people would deposit their gold with a goldsmith who would give them a receipt in return. These receipts were easier to carry around than the gold itself, and began to circulate as a medium of exchange. This was the precursor to modern paper money. Goldsmiths discovered that few of these receipts were ever returned by anyone to reclaim the gold. They realised that they could in fact put more receipts into circulation than they had gold on deposit. They could literally create money out of nothing and become very wealthy. But even when goldsmiths did not resort to trickery, they could still create money inadvertently. Consider Mr Goldsmith, the day he opens up shop for the first time. He has no gold as yet. Mr Jones comes and deposits one gold coin. Mr Goldsmith gives him a receipt in return. Mr Smith comes in and borrows the gold coin, and uses it to buy a horse from Mr Phillips. Mr Phillips deposits the coin with Mr Goldsmith who gives him a receipt in return. How many receipts are in circulation? And how many coins on deposit? You see, even before central banks existed, the creation of money was difficult to control. Today the practice of having more notes in circulation than there is money on deposit is called fractional reserve banking.
In 1694 the Bank of England, the first and mother of all central banks, was created by William Paterson, a Scottish trader of dubious background, but respected in London's financial circles. He devised the cunning scheme which allowed the cash-strapped government to borrow money from the country's rich landowners. However, because it effectively institutionalised the concept of fractional reserve, it was able to lend to the Crown £1.2 million although it only had £750,000 in gold on deposit. The Bank thereby created money out of nothing, and loaned it to the Crown at 8% compound interest, to the benefit of the Bank's shareholders, not the state or the citizenry.
Today, pounds, euros and dollars alike still come into existence this way, although there is nary an ounce of gold to back any of them. A dollar, euro or yen simply does not exist until it is borrowed. If this does not cause you alarm then you simply do not understand. Through this scam, the state becomes indebted, then taxes you to pay the interest. Have you ever wondered where the interest goes? You may be wondering, that since money is literally created out of nothing, why does the government borrow it? Why don't they create it themselves? Good question, I'm glad you asked. There is no good reason why a government would borrow money into existence rather than create it without debt. The rationale in the United Kingdom is that the Bank of England is independent of the government, and therefore free from political pressures of any ruling party. This is like saying we can't trust the police so we'll give the job to the mafia. But even if the rationale where true, why does the state borrow money from private banks? Why should the state tax the population in order to pay interest to private banks on money that was created from nothing and at no expense? Could it not have created the money itself at no expense to its citizens? The fact is that the system was designed to benefit a few at the expense of the many. That is a fact, not a conspiracy theory. The men who put the machine in motion are long dead. The machine now is hurtling forward, with us aboard, headed for oblivion, and no one seems to know how to stop it. What are the consequences for you? Does any of this concern you at all? Isn't this just politics and macroeconomics for the bankers and politicos to worry about? Well, no it is not. First, it does concern you. Secondly, there are a number of things that you can do about it.

Ever Increasing Interest
Let's imagine for a moment that there is no money. Just let's make believe. And you are the first person to go to the bank to get money. You borrow ten thousand pounds. This money is freshly created out of thin air by a loan officer who typed "10000" into her computer. Presto! Ten grand in your account. And to make the study simpler, let's suppose that no one else borrows any money. Your ten grand is the only money in circulation. You go to pay the loan back one month later. The interest is one percent per month. You now owe £10,000 in principal plus £100 interest. But there is only £10,000 in circulation. Where are you going to get the other £100 to pay the interest? There is only one way. You have to borrow it because there is no other way for pounds to exist. What, borrow money to pay the interest? How will I get the money to pay the interest on the interest? Well, by borrowing, of course.
You must understand that this cannot go on forever, borrowing to pay the interest. Yet that is what your government is doing. That is what society is doing. As individuals, we are not necessarily borrowing to pay the interest, but collectively that is precisely what we are doing. It doesn't take a financial genius to realise that the total interest outstanding is increasing exponentially, and that ultimately the whole thing will hit the wall. And it doesn't take a PhD in psychology to figure out that the people responsible for this scam are either very stupid (unlikely) or very dishonest (worth consideration).
Now someone will likely say, Can't we all work hard and create wealth and pay off all the debts? No, we can't. Because no debt means no money. If there were no debt there would be no money because for every unit of currency in circulation, one unit of currency is owed to the central bank or to a commercial bank. For every unit of currency that is paid back to the lender, there is one less unit of currency in circulation. It may take a while for this to soak in. For many people it is just too far-fetched for them to grasp all at once. All of a sudden it will hit you. Maybe in the middle of the night. Maybe as you are walking down the street. Like a bolt of lightning, a flash will occur, and you will stop dead in your tracks. You will likely say something like "Oh my goodness, is that what's really happening?" Yes, Virginia that is what is really happening.
The intended side effect of this perverse debt money system is that virtually all of the real wealth in the world must ultimately belong to the financial institutions, and the elite that own them. It is mathematical certainty and cannot be otherwise. When money is lent, only the principle is created, not the interest. The money to pay the interest can only be created by yet another loan for which no allowance is made for the interest. It is a never ending spiral. The money that is lent to pay the interest must be secured with homes, land, houses, businesses. During a credit contraction there is not enough money in circulation to pay the interest. Defaults occur. Property is seized. The banks are getting richer and richer and the people are getting deeper and deeper into debt. You do not need to be a conspiracy theorist to see that this system was spawned in hell.
Consider this quote:
"We [the lenders] own it all...all of it. The business out there? ... You [borrowers] just run these businesses for us. You guys run them for us, the financial institutions."
This anonymous banker was quoted in The Millionaire Mind by Thomas J Stanley. He spoke a truth known by every banker.

Money For Nothing
Let's get back to our money that was created out of nothing by the commercial banks. In the UK, the Bank of England is the lender of last resort which is to say they don't lend (create) money as a matter of course. They only do it in extreme situations. Commercial banks create money by lending up to 100% of what they have on deposit (ie. 0% reserve requirement). But there is an important point you must understand: although your bank may loan out 100% of what it has on deposit, it must have something on deposit. Most people think that banks simply use the money deposited by their customers to loan out to other customers. They don't. They keep it on reserve to satisfy treasury requirements. Deposits alone would be insufficient to meet the demands of the marketplace, with all of the large loans that are made to corporations and governments. Much more money is needed, even with fractional reserve banking, to meet the demand for money. Think of it. How much cash (not securities or other assets) do you have on deposit? Now, how big is your mortgage? If you are like most people you owe ten times more on your mortgage than you have cash on deposit. How on earth can these deposits be enough to provide for the nation's mortgages? Well, you may be thinking, maybe businesses have more cash than debt. Sorry, but the average business also has ten times more debt than cash. In fact few people have any deposits at all because as soon as there is too much cash in the bank it is generally used to acquire assets that appreciate over time. It does not take a financial genius to conclude that much more money is available as loans than what is on deposit.
The banks can only profit if they lend. More profit requires more lending. Now their operations are already obscenely profitable, given that they lend out the same money many times over. But wouldn't it be nice if they could get deposits interest-free? Then they could lend this free money out many times and their profit margin would technically be infinite. But of course every one knows that they can't get money for free. Well, almost everyone. I for one don't know that, and in a moment you won't, either.
But before we get there I'd like you to look closely at a £10 bank note. What does it say? I promise to pay the bearer on demand the sum of ten pounds. You need to understand that money is simply a promise to pay. This comes from the days when a bank note was a promise to pay the equivalent in gold or silver coins swhen presented at the bank. But there is no gold or silver now. So if you take your promise to pay (aka bank note) to a bank and ask them to pay it, what will they give you? Another promise to pay! Because money is just a promise to pay. Nothing more.
Now, suppose you were to go into a bank, open a brand new account and deposit a ten pound note into the account. Let's examine exactly what happens. First, an account is created in your name. The balance is zero. Next you give a £10 note to the cashier who writes the amount of the deposit on a deposit slip. The note is put in the till, and later into the bank's vault. A corresponding entry is made in the computer to show that your balance is £10. What I want you to notice is that the £10 is not physically deposited into your account. There is no connection between the physical piece of paper with £10 written on it and your account. The £10 note (promise to pay £10) is deposited in the bank's vault as an asset to guarantee the value of £10 in your account.
Now ask yourself, who owns the £10 note? And who owns the £10 in the account? You own the money in the account because it is backed by your asset, the £10 note.
Taking out a "loan" is no different. Your loan application for £1000 is an a promise to pay £1000 just like the £10 note is a promise to pay £10. The bank puts it in the vault, and credits your bank account with £1000. Now ask yourself the following questions: Who's asset is in the bank's vault? Who is promising to pay? You are promising to pay £1000 to the bank, therefore it is your asset. Now since your asset is there to guarantee the £1000 in your account who's money is the £1000? It is your money.
If the bank had loaned you depositor's funds, or if they had loaned you their own asset this would not be the case. But they did not loan you something they already had before you entered the bank. They loaned you your own promise to pay which was converted into legal tender.
Remember the first example where you deposited a £10 note into your new account? What if you withdrew that money and the bank charged you interest on it? And what if they demanded that you return it to them? And what if they threatened to take you to court and force the sale of your home if you did not return your own money to them? If they really did that you would call them criminals and extortionists. And you would be right.

Well, that is exactly what the banks and credit card companies do when they "loan" you money. You think this sounds crazy? Welcome to the club.

You May Be Victim of Fraud
Now for the dirty secret. Did they tell you that they were using your asset to generate profits that they do not share with you? Did they ask your permission? One requirement of contract law is full disclosure. This means that both parties to a contract must fully disclose all pertinent information to the other. Failure to do so is de facto breach of contract at best, and fraud at worst. So if you consider yourself bound by contract to your creditor, you are not. This may be why they do not in fact require you to sign any contract at all (a credit card application generally does not meet the minimum requirements of a legal contract). If you need more proof that no enforceable contract exists between you and your credit card company, ask yourself how it is that they periodically send you a notice that their terms and conditions have changed. Can one party to a contract unilaterally change the terms of the contract without consulting the other party? The fact is that your bank or credit card company has committed all of the following against you:

False Advertising
Contrary to their claims, they do not lend you any of their own or their depositor's money.

Fraud, Forgery and Intent to Deceive
Altering a signed document after the signature and without the knowledge of the signatory in order to change the document's value is fraud and forgery.

Deliberate Theft By Deception
Having altered your promissory note, the bank now deposits it and thereby creates money to be used in its own profitable ventures, without sharing the profits with you, the original depositor.

Racketeering And Money Laundering
This is any act which conceals the source of an asset which was produced as a result of illegal activity, such as bogus accounting. The term does not only apply do drug dealers.

Mail Fraud and Wire Fraud
Of course all of these fraudulent activities are perpetrated via mail and telephone communications which brings them under further specific criminal laws in certain jurisdictions.

Extortion and Blackmail
Extortion is a criminal offence which consists of obtaining money from someone by threats of doing them harm whether physical or otherwise. They do this every time they make a threat of wrongful legal action against you. Blackmail is a specific type of extortion where the threatened harm involves tarnishing the victim's reputation, which they do when they threaten to damage your credit rating.

Lack of Contract Consideration
A contract is a balanced document where the rights and obligations of both parties are considered equal. In consideration of the money deposited in your account, you deposited a promissory note with the bank. When you pay off the loan, they do not return the value of your asset. They keep it indefinitely! In other words, they do not live up to the spirit of the contract.

Lack of Contract Disclosure
None of the above points were ever explained to you when you entered into this agreement with the bank. As we have previously pointed out, full disclosure is a basic requirement of contract law.

Violation of Property Rights
Your promissory note is your asset. You have rights associated with it. If someone uses it for profit without your consent, your property rights are not being respected.

Third Party Interlopers Have No Rights
Most high street banks and name brand credit card companies are careful about their reputations. They do not want to be seen as grinding the little guy into the dust. Like a gentleman gangster, they get someone else to do it. When they have determined that there is little chance of recovering the debt, they "sell" it on to a third party. This is entirely different from the practice of engaging a third party to recover the debt which is still with the original creditor. When the creditor "sells" the debt, they take a small payment, sometimes pennies on the pound, from a debt recovery company. The latter are often vicious and unscrupulous, operating at the limits of the law and beyond. If this happens to you, you may get a call from them informing you that if you don't pay up right away they will apply to the courts to put a charge on your house and force its sale. This alone is enough to cause most people to panic. Then they will try to arrange a secured loan from another lender to get you the money to pay them to avoid losing your home. Tragically, this works all too often.
Let's take a step back for a moment. When you take out a loan against your home, you are warned in writing over and over, and reminded verbally that your home is at risk and you may lose it if you do not maintain payments. This is required by consumer credit law to protect the borrower from rash decisions and predatory lenders. Did you receive any such warning when you filled out a credit card application? Don't you think it a bit bizarre that a third party interloper can buy the right to put you out of your home for a few hundred pounds because of an unsecured debt? What about full disclosure? Remember that full disclosure is a requirement of any contract. Without it the contract is not valid, and cannot be enforced.
If you are fighting with a third party debt collector I have good news for you. It is the best thing that could happen to you! They have zero rights, you owe them nothing and you are nearly home and dry. What exactly happens when a debt is turned over to a third party? The original creditor will tell you that they "sold" the debt and that the new creditor is now the "legal owner" of the debt. Hogwash I say. For them to have sold the debt, two conditions would have to be met:
1. The debt would have to be backed up by a legally binding contract between you and the creditor
2. The contract would have to have a clause allowing them to do this, or else you would have to sign an addendum to the agreement allowing them to do this.
Now we have already established that no legally binding agreement exists between you and the creditor, so how can they sell the debt? And you certainly did not grant them the right to do this after the debt was contracted. The third party did not buy your debt. They bought the opportunity to scare you into giving them some money. The original creditor has accepted a small sum of money as full settlement of any claim they allegedly had against you. So they can no longer chase you for money. The third party never bought the debt, cannot prove that they are bona fide creditors, and hence don't have a leg to stand on. To sum it up, the original creditor has accepted payment in full, and the third party bought nothing more than an opportunity to scare some money out of you. They got what they paid for. The books are balanced, and everyone can go home.
But, third party interlopers are often tenacious, vicious and not even entirely legal. You absolutely need to know how to deal with them.

What Can Be Done?
Many, but not all credit card agreements are unenforceable. But the banks are arrogant. You can write to them over and over pointing out their errors and even explaining which laws they are violating and they will simply ignore whatever you tell them. But when confronted with the facts in a letter sent to them by a solicitor, the banks will adjust their stance. They will not as a rule litigate as they know that they are dealing with the legal profession. If they do try to litigate, their own solicitors will likely advise them not to as they have no chance of winning.
If your loan or credit card agreement is an illegal contract, more often than not it is possible to reclaim charges, interest and payments from the bank. It is also potentially possible to have the debt canceled outright.
You can learn more about how to eliminate credit card debt at

Sounds Appealing But...

Isn't this unethical?
Many people, when confronted with all of this information about banks and debt have trouble assimilating it. They immediately revert to their old way of thinking which they were taught since they were little. If you borrow something, you must pay it back. I absolutely agree, if you use the word borrow in the time-honoured sense of the word. That is, if you loan me your coat, I have one more coat and you have one less coat than before. That is real borrowing. If I don't give it back, your finances would be damaged to the price of one coat.
But that is not what is happening here. When you take out a "loan" the bank does not give you something they already had. They do not have less of something than before. The plain fact is that you do not owe them anything. If you did they would be able to establish this in court. They can't. If it looks like a duck, waddles like a duck and quacks like a duck, it is probably a duck. If after weeks or even months, the bank cannot produce a single shred of evidence that you owe them so much as one penny, and for the most part are unwilling to press the issue in court, it is a fair estimate that you do not in fact owe them anything. They are crooks. The modern banking cartel is without question the most evil and repressive scam ever perpetrated upon humanity. I am tempted to say they are only a little better than drug dealers but that would be unfair. To the drug dealers, I mean.

If everyone does what you say, won't the system collapse?
Yes. That is what we want. Then our government will have to abolish fractional reserve banking and create legitimate money without debt. When this happens, the banking cartel will lose its power. Taxes will decrease because government will not have such high levels of debt to maintain. Prosperity will therefore increase. People will earn more. Consumer debt will return to pre-credit card levels even while we enjoy a higher standard of living.

It sounds too easy. It can't be possible to just cancel a debt.
It is possible and it is being done every day. We are conditioned to think that life is a struggle. Anything worth having must be terribly difficult to obtain. When we are confronted with a means of reaching an objective that is far quicker and easier than what we have become accustomed to, we tend to dismiss it as nonsense. Most of the time we are right. From time to time we are wrong.

Won't they take me to court or something? What about my credit rating?
Read up on consumer credit law in the UK. This is not a police state. Laws are strongly in favour of the consumer. You get lots of warning before legal action is taken. Once you dispute a debt the creditor cannot even take legal action or file a default notice until the dispute is resolved. Don't take my word for it. If this concerns you, read up on it. Even if your credit file is already damaged, once you have legally won against the banks, the credit reference agencies will be obliged to delete the defaults from your file.

About the Author:

Peter Adamson is an independent business consultant based in the South of England. His web site helps UK residents eliminate credit card debt

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