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Unformatted text preview: Page 1 of8 WWWWWWW m fiSSUiIvfiq-{E’S DEGREES / Associate at Arts in Business Associate of Fart: in Health Care Administration “as; E MfiETER’S {)EGREES Master of: Business Adminisiralion Master oF Arts in Education Master of Information Systems associate of Arts in Information Technology litigale shawl escHELoa’s oEsaErs v Bachelor oi: Science in Business,'l'-‘ianagement — E H Bachelor of Science in Criminal Justice Administration Bathelor 0F Science in Management Better Off Deadbeat: Craig Cunningham Has a Simple Solution for Getting Bill Collectors Off His Back. He Sues Them. By Kimberly Thorpe published: January 21, so to Soldiers; 3 free education awaifi The secret to getting highly discounted cruise tickets Unlike his neighbors' homes, Craig Cunningham's house in Northeast Dallas looks abandoned. The grass is dried out. The concrete slab under the front door is lopsided and cracked. The green exterior has faded to a toxic—looking shade. Yellow Pages pile up near the front door, and the black mailbox is stuffed full. Maybe the home has been foreclosed on. That wouldn't be a surprise in this economy. H a] Samples -- But no, that's not the case. Inside, the 29—year—old Cunningham hunkers his Craig Cunningham says no one ‘ . . : . V . . offered hurtingsmallatimeinvestors 67ioot~2—inch lrame on a dumpy couch. His heavy arms extend from his ‘ k.- .. .' W]. : . . _ 1‘“ mm “’“‘”“““mb“l°m 1‘“ é SldCS, palms up, so two Chihuahuas, Angel and Chuay, can curl under them. he landed deep m debl."l‘h:1tmade him mad, so he decided to get even. l Although it's 10 am. on a weekday, he's wearing slippers. Janelle Montenegro ' He leans forward to lift some paperwork out of a plastic tub on the cotter: g table. The phone rings, and he answers with a soft voice. It's just a friend, and E soon he hangs up. He's waiting for a particular type of phone call—one from a E representative of a debt collection agency or a credit card company, whom g he'll try to ensnare like a Venus fly trap. It's not unlikely that Cunningham's next call will be from a bill collector, since he's between jobs—except for i being in the Army Reserve—and owes $100,000 in debts. i l While most Americans with unpaid bills dread the collector‘s call, ‘ Cunningham sees them as lucrative opportunities. Many collection and credit ‘ card companies, intentionally or not, violate little—known consumer rights ‘ ML 2‘ anmorofabmk-On laws, and Cunningham's favorite pastime is catching them doing so and then fightingbillcoilemm's. SEB’SthEidEH suing them. In fact, it's a profitable side job. that consumers have a moral ; obligation to pay their creditors is a “W “Mad by land“ E Call it ironic, but the only house on the block that appears to be the Hal Samples foreclosed end to some sad financial story is in fact the home of one of the ' ' g debt collection industry's emerging and persistent threats. Cunningham calls g himself a private attorney general—someone who files private lawsuits in the l public interest. Debt collectors call him a credit terrorist. Patrick Lunsford, who edits InsideARM, a trade magazine for the debt collection industry, knows the term. "There is a sub—group out there that does It 5 their system. 1 didn t make the rules. t‘m just learning what the rules http://www.dallasobserver.com/content/printVersion/ l 653 972 1/26/2010 Page 2 of8 I actually advise people on how to bait [collectors]? he says. "That's something are? I that really gets under the skin of, well, obviously, collectors." 1 Cunningham beats the debt collectors at their own game. lie turns their money—makin g practice into a financial liability. He is a regular guy who has become a radical enemy of the banking system. , In 2005, two foreclosures pushed Cunningham near financial ruin. Like : many Americans, he fell enchanted by the siren's song of easy credit and 3 borrowed more than $100,000 to bet on risky, high~yielding investments, such as stock in the now vilified subprime mortgage industry. Then, while stationed with the Army in El Paso, he attempted to become an absentee 5 __ _ i landlord and got zero-percen tmdown subprime mortgages to buy low—income week's cover image. foureplexes in Houston and Dallas. With the interest earned on his high— ~WWWWW yielding stocks he was paying back his loweinterest credit card debt; now, he was using the mortgages to borrow even more. Then, the bottom fell out. Investors like Cunningham fell the fastest. He sold his Houston homes, but his Dallas preperties were foreclosed on. The collection calls started. He was running seared. Desperation took him online in a search of anything that could save him from his own $100,000 in bad choices. One afternoon while sitting on his couch in his El Paso home, he found a way to fight back. He stumbled across hundreds of other distraught consumers like himself on credit message boards, each with some different version of the same story of bad choices and greed. And, he found a new way to deal with his debt: He could hide behind the law. His new online friends poin ted him to a number of federal and state statutes protecting consumers like him against overly aggressive and abusive debt collectors and a credit system stacked against the little guy. If you knew your rights, he learned on the message boards, you were very likely to catch a collector violating them. Then you could sue. Cunningham armed himself with this knowledge, and the next time a debt collector called, the trap was set. It didn't take long. Cunningham had canceled a home alarm service with ADT Security after two months, and the company had billed him a $450 early termination fee, which he disputed. ADT sent his account to Equinox Financial Management Solutions, a third—party debt collector. The collection agency sent him a letter asking that he call back immediately. IIe dialed, armed with a voice recorder. "Can you garnish my wages ifI don't pay?" he asked. "Yes," the voice on the other end of the line said. "Can you put a lien on my house?" "Yes-ll Wrong answers. Turns out, Texas consumer rights laws are some of the most consumer—friendly in the country. And according to a federal consumer protection law, the F air Debt Collection Practices Act (FDCPA), debt collectors are prohibited from threatening legal action that would violate state laws. In this case, garnishing wages or putting a lien on Cunningham's house would violate the Texas Debt Collection Act. http://www.dallasobserver.com/content/printVersion/1653 972 1/2 61201 O Page 3 of8 Cunningham knew he had a good enough case to file a lawsuit against the debt collection agency, and for his first lawsuit, he decided to enlist the help of a lawyer. Two months later, he had a check in his hand for $1,000. "it‘s like discovering fire," says Cunningham, thumbing through the stack of lawsuit papers on his table. He immediately started devouring as much information as he could about the three chief federal laws that protect consumers from collectors: the Fair Debt Collection Practices Act, the Fair Credit Reporting Act {FCRAJ and the Telephone Consumer Protection Act (TCPA). in the next four years, Cunningham accused debt collectors of misrepresenting the amount he owed (an FDCPA violation that entitles a consumer to collect up to $1,000). He sued over prerecorded and auto—dialed calls to his cellular phone (a TCPA violation worth up to $1,500 per call). He also filed complaints that agencies failed to investigate his claims that his credit file contains inaccurate information, a breach of the Fair Credit Reporting Act worth up to $1,000 per violation. All told, he tiled 15 other lawsuits in federal court without the help of a lawyer, earning himself settlements totaling more than 820,000. "Most people hear about the abuses that debt collectors do, but you just didn't hear about the second part of it, where people sue the collectors," he says. Cunningham is one of‘thousands oi hounded debtors who are trading in their paralyzing fears and learning to stand up for themselves. Americans as a whole owe some $2.5 trillion in consumer debt, according to the Federal Reserve, a figure that doesn't include home mortgages. Nearly four in five Americans have credit cards and half carry a balance, according to the Obama administration. In 2008, the Federal Trade Commission, the nation's consumer protection agency, received more than 78,000 complaints against third—party debt collectors, 8,000 more than in 20 07, and early numbers for 2009 indicate the growth will double. While the FT C gets the bulk of consumer complaints, today more consumers are fighting back with their own lawsuits than ever before. in 2009, nearly 10,000 cases under FDCi’A, FCRA or TCPA statutes were filed around the country, mostly in federal courts. That's a 50 percent increase from 2008, and an 83 percent growth from 2007. A cottage industry has sprung up to counter the flood of cases. Two new companies now offer the credit and collection industries databases of repeat plaintiffs filing under the FDCPA. The companies, FDCPA Case Listing Service LLC and WebRecon, offer something akin to a background check for collection agencies. F or example, if an agency received a delinquent account belonging to Cunningham, it could run his name through a database and learn he's a repeat litigant; then the agency could either close his account or sue him first. Back in his dim living room, Cunningham returns to the pile of paperwork on the table. His soft voice gets bolder when he recounts his war stories with the collection industry. His 15 lawsuits include one tiled in federal court against Alliance One, a third—party agency collecting on behalf of Verizon. Alliance One added a $50 collection fee and misrepresented the debt he owed Verizon, he says, which is an unfair practice under FDCPA. Another lawsuit was over the collection of an outstanding bill from Time Warner. The collection agency, Advantage Cable Services, failed to post a surety bond required by the state of Texas in order to collect debts here. Plus, after telling them to stop calling his cellular phone with automated calls, they continued, so he sued and won around $3, 500, the industry standard for many consumer rights violations. (Collection agencies frequently settle such lawsuits because that's cheaper than taking them to trial.) llis debt with Time Warner hasn’t gone away, and he's in the middle of his biggest FDCPA violation lawsuit ever, demanding upward of $200,000 from the current collection agency. Debtors, either because they feel morally obligated or because they don't know their Options, get http://www.dallasobscrver.com/contcntfprinthrsion/l 6 53 972 11261201 0 ‘-.. Page 4 of8 backed into a corner by their creditors and believe they have to repay their debts, he says. Not so with Cunningham. "I don't have to do anything but stay black and die," he says, a small, smug smile on his lips. Cunnin ham wasn't alwavs such a stickler. g . As a kid growing up in Detroit, family time meant gathering around the living room table to play stock market board games. His mother was a registered nurse, and his father worked for 25 years as a computer engineer for Ford. Vt-lhen he was 15, Cunningham met his "first millionaire," as he tells it, still wide—eyed. This high school teacher grew wealthy off the then—booming real estate market of the mid '90s. "He accomplished it through business and not sports," he says. "F or me, that was where the light first went on." Cunningham, a high school athlete, dreamed of making millions playing pro football, but he was accepted to US. Military Academy at West Point, where a degree would give him a more grounded back—up plan. The economics major also sought out an additional perk unique to West Point: stipends and absurdly low—interest loans. In his junior year, in 2002, Cunningham took out the maximum amount for a loan and dumped the $25,000 into the booming stock market. "Everybody was making easy money," he recalls, and the young cadet wanted a shot at making even more. He spent hours on his dial~up Internet connection learning money—making strategies that capitalized on the cheap and easy credit of the times. By Googling "credit help" or "increase credit score," he landed on message boards on which posters shared how—to tips to boost his credit score and dupe major banks and credit card companies into giving him cards with credit limits around $10,000 and $20,000 at low interest rates. He'd borrow from the cards, invest the money in stocks with payouts higher than his interest rate and pay back the debt with the profits. Cunningham learned on these boards that the credit card companies, banks and the credit bureaus worked together to determine not only your credit score but how much credit to extend you and at what interest rate. Cunningham had no problem spending all the money anyone would loan him, but he needed to pay off some of the accrued debt to maintain his credit score. He knew his military loan did not get reported to any of the three major credit bureaus, liquifax, Experian and ’l‘ransUnion. So, by paying off his credit card debt with money from that loan, he artificially maintained his credit score and continued to be approved for high credit. Sounds fishy, but Cunningham didn't feel that he was taking advantage of the system, at least not anymore than the next guy or the brokers and bankers at the time. "It's their system," says Cunningham. "i didn't make the rules. I'm just learning what the rules are." Cunningham now had more than $100,000 in credit card debt, but he had a lot of money coming in as well. He was a big—time shareholder in one sub—prime lending company, Nova Star Financial, and for three years in a row he saw dividends as high as 20 percent for his investment. Any money he was making went right back into the system. Those good times, of course, wouldn't last. Not wanting to out on the easy money in real estate buying and selling, he bought two low—income four—plexes in Dallas in 200 5, using a mortgage company for the loan. He put no money down, but the interest rate was high. Then he got burned. The four~plex's seller wasn't completely honest about the occupancy of the properties. Cunningham's scheme disintegrated within six months. He was scrambling to make the mortgage payments at the high interest rate without any tenants. He knew it wouldn't be long until he couldn't make the payments and he would be foreclosed on. Somehow, he didn't despair. http :f/www.dallasobservcr. com/"content-’pnntVersi on/l 65 3 972 1/2 6.12m 0 Page 5 of 8 "i remember one day I just got pissed," Cunningham says. "I'm running around trying to keep the ship afloat, and the banks don't care." Cunningham had called the bank as well as the FBI to report the mortgage fraud committed by the seller, but nobody pursued his case. "The regulators, the FBI, they don‘t care. So, why shouldl care?" he says. The Dallas properties were foreclosed, and his obsessively maintained credit score seemed wrecked. Cunningham returned to the online credit board for help. This time, however, he wasn't looking to add an artificial shine to his credit score, he was looking for a way out of the ashes. Cunningham discovered a whole other world of consumcrvgenerated knowledge. This was a rogue group of disgruntled consumers who were trying to themselves and their credit by filing lawsuits when the collection industry screwed up the mechanics of debt reporting and collection. What he found was an instrument not of repair or reconciliation, but of vengeance. "All the conventional wisdom, all the right people say, 'Pay your bills on time and work with your creditors,”' Cunningham says, recalling his thoughts at the time. Yet he had discovered a new set of people who posted their credit reports on line and their successful lawsuits, showing how much money they won in settlements that simultaneously removed a bad debt from their credit report. "I said, 'Maybe there's another way.’ Again, just revolution. 1 never even thought about it." The knowledge on these boards originated from consumers testing the boundaries of the credit system through their own experiences. The nature of this information, from the beginning, was a mixture of anarchistic tendencies, vengeance and greed. Now the wisdom of the boards has been distilled into an c—book published in January. Debtsmanship was written by Steven Katz, a former New York debt collector turned consumer advocate, who now lives in Phoenix. In 2005, Katz founded a message board called "Debtorboards," with the slogan "Sue your creditor and win!" Katz doesn't believe that people are morally obligated to payback their debts. That notion was invented by debt collectors as a way to beat people into submission, he says. "Bill collectors would love for you to send them a check and then explain to your kids because you have the moral obligation to pay your debt they're not eating this week," he says. "But they don't see the moral obligation to feed your children or yourself. "People are brainwashed to think that paying a credit card is more important than paying for the necessities of life," Kata "lfyou're in a position where you have to make a choice, my argument is food, clothing and shelter come first... Nobody ever went to hell for not paying a debt." "Fight back" is the take-away message from a visit to Debtorboards, which is intended to help consumers who wish to file lawsuits without the help of lawyers. Dchtorboards outlines steps consumers can take to deal with bothersome debt collectors. F or example, if a debt collector is only bothering you, you could send them a letter or sue them. However, if you're so far in debt that you see no way out but bankruptcy, then you can check out the board‘s "frustrating the skip tracer" technique. There, you‘ll find tips on how to run and hide from a collector. Another Debtorboards user is 29—year—old Daniel Smith, who lives with his fiance outside of Seattle, Washington. Early in 2009, he tried to obtain financing for a home, but was turned down by Bank of America. He soon discovered that an old girlfriend had put his name on her bank account before she fell into massive debt. He wrote angry letters to the bank, but nothing changed. He sat down at his computer and typed in "Bank of America" and "F air Debt Collection Act" and soon landed on Debtorboards. "I spent hours upon hours upon hours on there," Smith says. "The big epiphany is I'm a little guy but I've got a voice and I'm going to use it." http://www.dallasohserver. corn/content/printVersioru'l 65 3 972 1/2 6/20 1 O Page 6 of8 Like Cunningham, Smith now armed himself with voice recorders and began keeping meticulous financial files. His file cabinet grew quickly. "I mean there's nothing I don‘t document now and that's probably the best thing a consumer can do." Smith is an Army vet, an EMT, and a project manager for a construction company. He doesn't advocate stiffing the original creditor on the bill. In fact, Smith will often pay the original creditor, but still go after the violating collection agency. "The standard line from collection agencies is always, 'Oh, gosh, no, we never violate.'...For the most part, the reality of it is you can sit down and find violation in almost every collection attempt made in America." Cunningham insists that the court system ignores lawsuits over frivolous violations. His cases, he claims, are built on true screw—ups. Cunningham won his first lawsuit, after all, after a collection company threatened to garnish his wages and put a lien on his house, both violatio...
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