A Dallas man, mired in the recession that has caught so many multi-property owners during the collapse of the sub-prime market in the US, has developed an interesting and profitable side line.

Side line scarcely does justice to his working day, he is fully employed – suing the companies that try to collect on the substantial debts that he owes.

In 2005, he owed more than $100,000, tied up in the now vilified sub-prime industry. With his creditors patience exhausted, and his debts handed over to, shall we say, muscular, credit collection agencies, he was close to panic. Then he discovered, not Smirnoff, but Debtorboard, an on-line forum of couch lawyers, well versed in the many laws designed to protect debtors in the US.

Armed with a tape recorder and sheafs of paper detailing the consumer rights laws, he settled down on his couch and waited for the next collector to call. A company called ADT Security was first into the Cunninham Fly Trap. They were trying to collect $450 owed for a security system he had cancelled when he first fell into debt.

“Can you garnish my wages if I 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.”

Bingo, the debt collectors had just violated Texan law which prohibits garnishing wages or putting a lien on his house. Two months later a successful lawsuit saw him with a $1,000 cheque, enough to pay the original debt and a profit.

Then he discovered that the firm had actually paid out $3,500, most of which went to the lawyer, so he decided to act for himself in future. Over the next four years, he successfully sued various of his creditors for misrepresenting the amount he owed – worth up to $1,000 a time, and for making pre-recorded and auto-dialled calls to his home – especially lucrative at $1,500 per call. He filed claims that agencies had failed to investigate his claim that his credit file contained inaccurate information, at $1,000 a go. Altogether he made 15 separate lawsuits without the aid of a lawyer and received settlements in excess of $20,000.

He has been so prolific, and successful that the credit agencies are now turning to a database to see whether Craig is on their list of accounts to collect – it could be cheaper to overlook the debt!

He wrote to the company running the database, and asked for a copy of his credit report. They responded, not with a copy of his credit report, but with a lawsuit of their own.

It alleged: “The defendant subscribes to and makes postings to a Web site in which consumers share information and promote litigation against the collection industry…The defendant has now conspired with others on the Internet to incite civil litigation against plaintiff for the exclusive purpose of extorting money from the plaintiff.”

Cunningham promptly pointed out that they had filed the lawsuit in the wrong venue, Atlanta, not Texas, and furthermore, since he had never threatened to sue them, they had no reason to sue him. The court agreed with him.

The original debt with Time Warner for $79.84 has now been through the hands of so many different collection agencies, with multiple violations along the line, that Cuningham is currently suing the latest one for a cool $200,000. If successful, it should wipe out his original debts and leave him with a tidy profit – and a reputation as a ‘debt-terrorist’.

It depends on how you define success. Debt collectors point to all the settlements they are forced to make because it’s cheaper than fighting a frivolous suit. To Cunningham and other similar litigants, any payment is a victory.

“Does if make sense to spend $10,000 to win this suit or pay the litigant $500 to settle? Depending on the situation, it becomes a business decision at some point.”

CMI, the latest firm to find themselves holding a ‘Cunningham Debt’ – the original Time Warner $79 – has now asked the Texas court for a protective order from Craig!

“Plaintiff Craig Cunningham (herein “Plaintiff”) has filed suit against a business, Credit Management, LP (herein “CMI”), and twenty-seven (27) of its employees in their individual capacities,” reads the motion for a protective order filed in December 2009. “Defendants move for a protective order to protect Defendants from the annoyance, oppression, undue burden and expense of objecting and responding to improper, repetitive and irrelevant discovery requests.”

Man bites Dog indeed.

h/t to Saul – Cub Reporter.

1
John Pickworth January 27, 2010 at 17:28

The man’s a hero in my book. Good for him.

2
Jeff January 27, 2010 at 17:48

What a scum bag. Borrows money buying properties renting them out mainly to the poor (he’s one of the BTL’ers mainly responsible for causing the property price explosion and pricing out the people he rents to). Then when he can’t pay he decides he’s too good for the system. What an absolute tw@t.

3
T. P. Fuller January 27, 2010 at 19:55

Jeff, yes and no. Yes he is a parasite, but he is also using to his own advantage the system devised by The Man so, no, he’s not a tw@t. Or if he is, he’s an intelligent and resourceful one.

Knowledge is power. Would that more of us knew how the system worked. Then it wouldn’t be so one-sided.

4
The Slogger January 27, 2010 at 19:58

Hard to come down from this fence…plagues, houses etc etc. Just one short anecdote.
I have two young chums with 3 kids in bother right now. The hubby discovered his boss was on the take. Hubby took long weekend off and came back Tuesday to discover he’d f**ked up £400,000 of media buying (he hadn’t).
The company and the bloke are bang to rights. But knowing hubby is sole breadwinner and they have more money, they are suing him for around a million quid……unless he agrees to etc etc etc.
So you can see why individuals do stuff corporates.
And yes, I’m on the case.
xx

5
Nannyknowsbest January 27, 2010 at 21:52

Works more or less the same in the UK.
No matter the circumstances of how a debt was incurred, the laws of contract still apply (otherwise they can not demand repayment – it’s a 2 way street). Laws must (and will) be applied in a civilised society and so many “lenders” sell the debts off to third parties. Unless one has entered into a contract with the third party involved, they have no lawful claim on the original debt. If they have paid off one’s debt, then (as I have) simply write them a letter of thanks (in response to their demand for money) and request a copy of the signed contract that you have with THEM (not the original company – they have been paid). Naturally, no such contract exists and, in those circumstances, no matter what they wish to think, merely because they have, on one’s behalf (and without being asked) settled the debt, unless they can produce a signed contract between you and THEM (the original contract is void – as it has been settled) – they can, to put it bluntly, bugger off.
They buy these debts at around 1 to 5% of the value – and then try and recover 100% of the original debt. 9 times out of 10, people get so scared (as they are NOT nice people) and pay up (or pay most of it). In fact, they can simply tell them to piss off and send them a letter of thanks for settling the original contract.
They don’t like it and send you lots of letters with lots of red ink but, at the end of the day, so long as you explain the law to them (in the correct words – so you don’t imply a contract), they are totally powerless to do anything. They work on the fact that most people will “fall for the scam” and pay up. Trust me, they don’t like it when they are asked for a copy of the contract (as I have many times now). So long as you explain that, should they send someone to make a “doorstep” collection (and explain the fact that you have the right to demand that they do not) that you will call the police and sue whoever they send, they decide to go away and irritate some more gullible fool.
To do this needs a working knowledge of one’s rights, the nerve to do it and the knowledge of how to phrase the “rebuttal” letters (templates are available on the Internet) and, so long as you stick to the lawful way and keep your nerve, these idiots will, on every occasion, simple write you off as too difficult and unprofitable to pursue.
If this sound harsh against credit providers, just remember, if you default, they will not lose a SINGLE penny – they will still actually make a profit (on what you have paid in the past) – as they risked not a penny of their own money – what they “lent” to you was yours in the first place and they jot only charge you interest, but they also want YOUR money back as well.
No wonder banks are so rich. They lend you your own money (they create it backed against YOUR credit note), charge you interest on it and then demand back your own money.
Have NO sympathy. Demand what is yours and stand up to the bully boys they employ to remove your lawful rights.

6
Adam Collyer January 27, 2010 at 22:53

Nannyknowsbest in this case doesn’t know best.

First of all, most debt contracts expressly include a clause allowing the lender to sell the debt on.

Second, banks do NOT lend you “your own money”. They lend you someone else’s. That someone else has deposited their money in the bank (i.e. lent it to the bank) in the knowledge that this is what the bank will do with the money. The bank pays interest on the deposit, and takes a higher level of interest on the loan. The difference pays their costs and their profit. Every defaulter represents a big loss for the bank, which they have to pass on to their other customers.

7
John Pickworth January 28, 2010 at 00:37

Just to back up my earlier comment…

I agree with what others have said above. These companies use extraordinary measures to collect often quite small debts. They cut no deals, show no favour or make allowances for you while bending the law to breaking point for their own ends. They are parasites, preying hardest on those least able or willing to resist.

A few years back, a certain very well known software proprietor instigated an action against yours truly. Out of nowhere and for no reason I found myself up against one of the world’s richest men and his father’s law firm of 1400 lawyers with offices around the world.

Its the old story of might is right. And in such circumstances, there usually are only two options: I could defend myself by employing my own impressive (and astronomically expensive) legal experts. Or I could concede to the complainant’s demands and roll-over, like so many had done before and sadly will do again in future.

Instead, I did something very unexpected. I studied the law (well the part relevant to this action) and fought back. I can’t tell you how many candles I burnt in the three months of hostilities, but it was an awful lot. I hardly slept, ate or had any social life. I spend weeks on research, evidence collection, writing submissions, printing and collating a stack of argument literally two feet high. But it was worth it.

Come the day, they didn’t know what hit them. I won.

There was never any doubt that I was in the right and the chancers were just trying their luck. Why wouldn’t they? The system is rigged in their favour and they have the means in both money and manpower to bring these actions, often quite profitably. In their position I’d probably do the same.

However, its only profitable while the little guy continues to cave in. Resist everything, no matter how trivial and you’ll soon see the pendulum swing away from them.

I didn’t gain anything but my good name and a wealth of experience that has served me well since. I was interviewed by the American and British press and German TV, still receive regular invites from lawyers over the pond asking how I managed to beat the biggest of the big but most of all I proved the little guy can win and set a legal precedent too.

And there’s the moral of the story. Its not about whether its right to fight back, using if necessary the same legal system being used against you, but that YOU can and SHOULD.