Comment is free, but woo is sacred

So the Freeman on the Land movement seems pretty marginal. All that stuff about choosing whether statutes apply to you, and how debt isn’t real because they capitalised your name – everyone with a functioning brain can see that it’s nutty woo, right?

Well, it turns out that the Guardian has an open mind on these issues. At any rate, they’ve given a Comment Is Free platform to the not-in-any-way-a-loony-conspiracy-theorist Jon Witterick to push his GetOutOfDebtFree site.

The full quote from which the Guardian’s opinion site takes its name (and which is one of the foundation stones of the newspaper’s mission) is “Comment is free, but facts are sacred.” I couldn’t agree more.

So, some facts:

“After a bit of research, I realised the debt collectors buy debts for less than 10p in the pound, after the bank writes the debt off.”

Well, not all debt collectors buy debts. Almost all lenders attempt to collect their own debts first, and many (perhaps most) specialist debt collectors recover debt as agent for the original creditor.

After a time, creditors do write debts off, but that’s how they recognise bad debts for accounting purposes (that is, to show them as a provision or impairment in their accounts). It doesn’t mean that the debt is extinguished, although it’s reasonable to suppose that lenders will focus their efforts on more collectable debts.

Some of that bad debt may then be sold on to specialist debt collectors – that’s an obvious way of realising income to offset what would otherwise be a profit-reducing bad debt in that year’s accounts. depending on the age of the debt and how easy it is to collect (for example, whether it is secured or not), prices could range from 1p to 90p in the pound.

But Mr Witterick’s website promotes his methods as applying to all creditors and debt collectors, and his customers (followers? cult members?) use them in that way. Cue baffling demands that the original lender provide proof that the debt has been assigned to them, and more in that vein.

“I also found out that under the Bills of Exchange Act 1882, the debt collector is actually paying off our debt when they buy it.”

Er, did you? The Bills of Exchange Act defines a bill of exchange as:

“…an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer.”

Which is to say, it is a document by which Person A can require Person B to pay money to Person C at some future time. It is not relevant whether this is in settlement of an existing obligation that Person B owes to Person A, or whether Person A will settle with Person B after the order has been paid, or whether there is no settlement between them at all. (It will be obvious, I think, that this is the origin of our modern bank notes.)

A bill of exchange involves three parties, and has no mutuality of obligation between Person A and Person B. It is not a contract, which I imagine is one reason why it requires a statutory basis to have effect.

By contrast, a debt sale is an arrangement between two parties only, whereby Person A contractually assigns to Person C his legal right to collect a debt from Person B. The difference is that no order is required to be made to Person B, because the obligation to repay the money already exists.

Because the debt sale is a contractual arrangement between Person A and Person C, consideration is required to effect the assignment (unless done under deed, but in any event the right to collect has value that the buyer pays for). The price paid by the buyer is just that, and not a settlement of the original debt.

So the Bills of Exchange Act seems to be irrelevant to the collection and sale of consumer debts. Gosh, what a surprise.

“I also realised how debt collectors trick us into contracts with them, by asking us how much we could pay. When you agree to one pound a month, which costs more to administrate, they now have a contract with you, where none existed.”

So, to recap: either the debt collector is acting as agent for the original creditor, or the rights of the original creditor have been assigned to them. Either way, the relevant contract is the credit agreement under which you originally borrowed the money.

There is therefore no need for the debt collector to “trick” anyone into a new contract, because the old one is perfectly good enough to enforce all the way to court and beyond (they might well want to get you to make a token pay for the purposes of section 29(5) of the Limitation Act 1980, but that’s a different story).

I can’t helping pausing to note, however, that even if the original contract couldn’t be relied on, it’s not clear that an agreement to pay a pound a month would create a new contract in the absence of consideration on the part of the debt collector. Oh, and regulated consumer credit agreements (which this would presumably be in most cases) have to be made in writing.

“[Mary Elizabeth Croft] explained that fractional reserve banking is basically fraud, as the banks do not have the money they lend us.”

Well, yes, fractional reserve banking is odd when you try to concentrate on it. And yes, to an extent the system relies on confidence and people not thinking about it too hard.

But fraud? No, because it is not deception with a view to making a wrongful profit. And because it is expressly recognised as lawful behaviour. And… oh, what’s the point?

“Croft suggested sending the debt collectors letters with a list of questions, which if they could not answer, would render the debt void.”

GetOutOfDebtFree provides templates for these letters. The questions are along the lines of “Please provide validation of the debt: the actual accounting”, “Please provide a lawful contract” and “Prove that you have agency in this matter.”

Three things about this. First, GOODF actually recommends that you ignore the answers that the lender gives you, even if they do actually (for example) send a copy of your contract. That seems to make the “if” in the above quote somewhat redundant.

Second (and, well, duh), anybody can ask any number of questions that a lender can’t answer. Why’s my debt orange? Where’s my elephant? What’s the point of Eric Pickles?

And third, how would failing to answer even reasonable questions render a debt void, unless the obligation to answer them was an express contractual or statutory obligation on the creditor? Pretty much the only things that a creditor under a regulated consumer credit agreement needs to do are provide annual statements, send default and arrears notices, and provide a copy of the agreement on request or on a defended claim.

So, are we getting the picture yet?

For the rest of it: yes, let’s have fun with calls from debt collectors (but they are mostly normal people just like you, doing their best); yes, let’s look at how we do banking (but simply defaulting would affect normal people just like you as much or more than it would the bankers); and yes, by all means let’s occupy various parks and squares.

Oh yes, the Occupy movement. Turns out there’s another CiF piece up today, part of which (the final third) is written by “commonly known as dom” and purports to deal with “law”.

“Commonly known as dom” is another Freeman:

“The prison without bars is made by bits of paper. Bits of paper like your birth certificate. All registered names are Crown copyright. The legal definition of registration is transfer of title ownership, so anything that’s registered is handed over to the governing body; the thing itself is no longer yours. When you register a car, you’re agreeing to it not being yours – they send you back a form saying you’re the “registered keeper”. It’s a con. That’s why I say I’ve never had a name.”

That quote is (to use a technical legal term) bollocks. Names are not Crown copyright, registration is not transfer of title, and your car doesn’t belong to the Government.

And this:

“According to the law books, a “natural person” (or human being) is distinct from the “person” as a legal entity. All the statutes and acts are acting up on the “person”, and if you’re admitting to being a person, you are admitting to be a corporation that can be acted upon for commerce.”

Ahem. You are a person, you know. It’s how you were born. Unless you’re, y’know, a robot. Or an alien. OH MY GOD, ALIENS.

But Dominic (you don’t mind if I call you Dominic, do you?) is entitled to his view. It’s utter woo, but it’s his right to believe it.

But “educating” a protest movement, who frankly need all the genuine legal help they can get, in this risible shite? That’s not “lawful rebellion”, it’s irresponsible.

And it’s irresponsible for the Guardian to legitimise the Freeman woo by giving it CiF space. This isn’t comment, an arguable position, a political viewpoint. It’s legally and factually wrong, and (as I blogged last week) it gets the people who follow it into trouble.

Even worse, it’s a David Icke endorsed conspiracy theory. Doesn’t that sit rather uncomfortably, to say the least, in the newspaper that publishes Ben Goldacre’s Bad Science column?