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Out of Credit Card Debt - Without Filing Bankruptcy
By Mark Cella

To be out of credit card debt is your dream and you’re tired of the redundant advice to live within your means. Look no further.

Most people that give advice about how to get out of debt, have absolutely no clue why things are the way they are. None of them have ever looked to the source of the financial debt problem in this country, but they sure like to give advice about the superficial, getting out of credit card debt.

The superficial problem is simply too much debt due to overspending. Overspending is considered wastefulness, excessiveness, lavishness or reckless spending. Now, if you want out of credit card debt, it’s not likely that you bought yourself one too many Ferrari’s, or mink coats, is it? No!

What are they talking about?

All you might have bought with your credit cards is one television, maybe a stereo, or computer, some furniture, clothes and then food. All of which are necessities in this world. None are extravagances, or wasteful.

I mean, are you supposed to get by without your computer and be left in the stone-ages when it comes to information? I don’t think so.

Over the past 23 years I have done nothing but research money. How it works, who has it, how they got it and where it comes from. What changed my life and is about to change yours too is learning about how money is created. It is by far the most important aspect for anyone to learn who wants to get out of credit card debt.

Before you learn how to get out of credit card debt, I invite you to take a look at a history of money and debt. It will be worth your time to read.

The real problem is not your wastefulness, excessiveness, lavishness or reckless credit card spending. The current gross national debt is $7,940,401,262,636, so everybody wants out of credit card debt, but there is only $753 Billion in currency in the whole U.S. economy, so something doesn't add up, right?

Who funds the credit card and how the money is created. The answer to these questions will show you why you can be out of credit card debt fast and easy.

First in order to get out of credit card debt, we must start with the agreement or “contract” you intended to enter into with the credit card (or loan) issuer. You agreed to “borrow” money from them via the medium of a credit card (or loan check) and pay it back with the agreed upon interest. Thus they provide something of value and you provide something of value, easy enough right? WRONG!!!

Remember we’re dealing with reality not supposition, or speculation.

Out of Credit Card Debt - The Form

The form of the agreement (the credit card agreement) gives the appearance of one thing, the usage of the credit card seems to reinforce that thing, and the monthly receipt of the credit card statement seems to place it all beyond speculation.

As lawyers know however, there is a legal maxim (a self-evident truth) that says: “A THING SIMILAR IS NOT EXACTLY THE SAME.”

The form, the papers and items discussed above i.e. the agreement, the statements etc. are different from the substance of the agreement. The form is the appearance, while the substance is what really occurred.

Out of Credit Card Debt - The Substance

The important thing that many have realized in understanding the substanceis that the bank did not fulfill their end of the “agreement”. People who enter into this agreement with the bank do not receive a loan from the bank regardless of what they may think.

All (FDIC), federally insured banks must follow what are called the Generally Accepted Accounting Principles. How do we know this? It is written in the public statutes. It can be found at 12 USC Section 1831n(a)(2)(A). It reads as follows:

12 United States Code, Section 1831n – Accounting objective, standards, and requirements:
(a) In general

(1) Objectives

Accounting principles applicable to reports or statements required to be filed with Federal banking agencies by insured depository institutions should…

(A) result in financial statements and reports of condition that accurately reflect the capital of such institutions;
(B) facilitate effective supervision of the institutions; and
(C) facilitate prompt corrective action to resolve the institutions at the least cost to the insurance funds.

(2) Standards
(A) Uniform accounting principles consistent with GAAP Subject to the requirement of this chapter and any other provision of Federal law, the accounting principles applicable to reports or statements required to be filed with Federal banking agencies by all insured depository institutions shall be uniform and consistent with Generally Accepted Accounting Principles.

So, what do we learn from this law, as someone who wants out of credit card debt or any debt for that matter, that the banks have to follow?

1) That there are certain accounting principles that must be followed by (FDIC) insured banks and financial institutions.
2) That certain reports or statements must be filed with federal banking agencies by insured depository institutions.
3) That these reports and or financial statements must accurately reflect the capital of these institutions.
4) That the institution’s accounting principles shall be uniform and consistent with Generally Accepted Accounting Principles.

We have before us a copy of the Generally Accepted Accounting Principles (GAAP). This edition is a GAAP 2003 edition published by Wiley. It can be ordered new online for $75.00 or used for around $8.00.

Out of Credit Card Debt – Anything Accepted by a Bank for Deposit is Considered Cash

On page 41 under the section Cash and Cash equivalents the reader learns “ANYTHING ACCEPTED BY A BANK FOR DEPOSIT WOULD BE CONSIDERED AS CASH”. This is a crucial statement. Why? Because we challenge the banks based in part upon this clear statement; that they are owed nothing according to their own books!

Let’s look at the simple statement, “Anything accepted by a bank for deposit would be considered as cash”. You could take a Savings Bond to the bank, and they could exchange it for cash, or deposit the amount into your checking account.

Out of Credit Card Debt - Who Funded the Loan

The entire process works like this: Banks accept credit card agreements and promissory notes and deposit them and they are considered as cash to fund your account. So, the original agreement/promissory note that you signed added electronic dollars to the banks books and YOU FUNDED YOUR OWN LOAN.

So if you were approved by a credit card company for a credit card with a $5,000.00 credit limit, the agreement/promissory note is deposited into a transaction account under your name at that credit card company.

So, they never loose a dime even if the consumer maxed out the card and never pays them!!! But, not only do they not risk or loose a cent, they gained a full $5,000.00 because they received this from the original agreement that you signed.

If you never use the card they made $5,000.00 from your promissory note/credit card agreement alone! And, every time you use the credit card they make the exorbitant interest (which is never created) they charge on top of that.

In summary they make $5,000.00 when you are approved, plus all the interest which is usually three to 10 times what you charged!

You may be in disbelief if you've been trying to get out of credit card debt by making payments for years, and now you're reading this.

Out of Credit Card Debt - Federal Publications

The Federal Reserve has also been very clear in their circulars that banks do not really lend money.

To understand the significance of this revelation in their official circulars one example that could be cited is a reference in statutory law. For instance the Uniform Commercial Code (UCC), which governs all commercial law, {and virtually every state has adopted and codified it in their state statutes} reads in the section on commercial paper which includes promissory notes “Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this Article to the extent of the inconsistency.” UCC 3-102(c)

So, we can see that the circulars of the FED banks and the regulations of the Board of Governors of the FED have the power to override statutory law in commercial relations when there is a conflict between that law and the circular or regulation of the FED in a particular section.

That said, what have they said about banks lending money? I think two examples will suffice to prove the point, although many more could be offered.

Probably the most oft-quoted reference on the internet is the Federal Reserve publication, Modern Money Mechanics.

On page 6 it says in rather clear language, “Of course, they (banks) do not really pay out loans from the money they receive as deposits. If they did this no additional money would be created.”

So, the question that we would ask while looking at getting out of credit card debt is if they do not “really” pay out loans from the money that they receive as deposits, where do they get the money to “pay out loans”?

The FED tells us in no uncertain terms in the next sentence. “What they do when they make loans is to accept promissory notes in exchange for credits to the borrower’s transaction accounts.”

So an exchange occurred!!! Why does the credit card agreement and statement present it as a loan, and charge interest? Does the agreement ever mention that an “exchange” was happening?

The FED adds fuel to the argument in their publication, Two Faces of Debt. In this publication on page 19 the FED tells us that a “depositor’s balance… rises when the depository institution extends credit-either by granting a loan to or by buying securities from the depositor.

In exchange for the note or security, the lending or investing institution credits the depositors account or gives a check that can be deposited at yet another depository institution. In this case no one else looses a deposit… the money supply is increased. New money has been brought into existence.”

So, here again we see the word “exchange” being associated with the so called loan. Notice that the quote says clearly that a “depositor’s (YOU) balance… rises” when a depository institution extends credit by granting a loan or by buying securities from a depositor (evidence the agreement, promise to pay, or promissory note is deposited). How does that happen according to the circular? “In exchange for the note” the lending institution credits your account etc.

Then we are told something that proves the bank or financial institution really did not lend you their money as they implied or agreed. We are told that as a result of this transaction “no one loses a deposit” (thus no other person who had money deposited at the institution lost any deposit) that “the money supply increased”, and that “new money has been brought into existence”.

By now you should be feeling hope that there really is a way to get out of credit card debt, legally, lawfully, and ethically.

Out of Credit Card Debt – Non Consideration

How was the “new money” brought into existence? By the deposit of your agreement/promissory note. Now this is a crucial point because as any attorney knows, for an agreement or a contract to be valid both parties must provide what’s called “valuable consideration”. In other words each party must provide something of value in return for the thing of value that they receive.

Now we would ask the simple question: What did the bank lend that I should repay? If according to the FED, whose regulations they must follow:

1) the bank did not use others depositor’s money,
2) banks do not really pay out loans from this money,
3) they accept my agreement/promissory note in “exchange” for credits in a transaction (checking) account,
4) and they issue a check or wire transfer from this account.

What did they lend? The wire transfer, credit or check is issued from the deposit of the promissory note. Remember what GAAP says. Anything accepted by the bank as a deposit is considered as cash. This concept one must never forget: the promissory note is an asset. An asset is something that has value. It can be bought and sold.

This explains why the FED says “new money” is brought into existence with the deposit of your promissory note. It is “money” that was not in the bank or financial institution prior to the deposit of the promissory note.

Thus we are told in “Two Faces of Debt” page 19, “Such newly created funds are in addition to funds that all financial institutions provide their operation as intermediaries between savers and users of savings.”

These funds are in “addition” to their other funds. What does addition mean? It means to add. The agreement/promissory note is an increase of the financial institution’s funds! Thus from an economic standpoint you were far from getting a loan, you were making a deposit. And, what does the FED say about that? Again we read from page 19, “Two Faces of Debt” “A DEPOSIT CREATED THROUGH LENDING IS A DEBT THAT HAS TO BE PAID ON DEMAND OF THE DEPOSITOR, just the same as the debt rising from a customer’s deposit of checks or currency in a bank.”

This is very powerful, clear, and concise statement. What can we learn from it?

1) When a bank or financial institution makes a “loan” they incur debt.
2) This debt must be paid on demand of the depositor (of the promissory note).
3) It is the same as the debt the lending institution owes a person who deposits checks or currency or checks in a bank.

So when we deposit our paycheck or cash into the bank, or other financial institution, the institution has to record it as a debt owed to us on their books. So, it looks like you might already be out of credit card debt!

“Two Faces of Debt” page 19 puts it this way: “Again checkable deposits in commercial banks and savings institutions are debt-liabilities of these depository institutions to their depositors” As we have seen the promissory note is a checkable deposit because, “A deposit created through lending is a debt that has to be paid on demand of the depositor, just the same as the debt rising from a customer’s deposit of checks or currency in a bank.”

Out of Credit Card Debt - Contract Law

Next, in order to get out of credit card debt, we have Contract Law which is a very universal law that applies to everyone in the United States and around the globe. Contract law states that when an agreement is made between two parties, you must be given full disclosure of what is about to happen. An agreement is not valid if the other party holds back or doesn’t tell you something pertinent. They cannot mislead you in any way.

So the credit card company never explained to you what we have just explained to you that they were not loaning you anything for that credit card? And, that you were exchanging a promissory note which has a real cash value of $5,000 which was used to fund the supposed loan for $5,000. And, you were made to assume that they were loaning you other people’s money, and that’s not even close to the truth, they never told you the truth, and they blatantly hid the truth from you. Well, according to contract law, that agreement is null and void due to non-disclosure, because you were misinformed.

Now another major fact is that the clerk at the bank altered the original agreement with you by stamping the back of it with Pay to the Order of, which gave the promissory note a specific dollar value in cash. This single action alone constitutes Forgery which is the process of making or adapting objects or documents with the intention to deceive, and Fraud which is the crime or offense of deliberately deceiving another in order to damage them - usually, to obtain property or services from him unjustly.

So, you are already out of credit card debt because you funded your own loan and they committed several crimes in the transaction itself. Not to mention the extortion they committed against you with the continued threats of ruining your credit report. Now, being that they have control of all of our money, we must proceed cautiously when it comes to getting out of credit card debt as far as the cancellation of it is concerned.

Banks know what they have done, and are ready to wipe out the novice debt canceller. It's time for all of America to stand up and get out of credit card debt together. Once and for all.

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