Hi,
I've been using btcjam for a while and of course I've had some default loans (who hasn't).
I too am whaiting for a response from Tulkas on two important questions:
1) How do I convert this official piece of paper into actual recovered bitcoins in my wallet? Do I need to send a copy of the arbitration award to some legal entity somewhere?
2) Now that I have been officially given the debtors' identity information as part of the arbitration process, can I contact them without violating BTCJam's Terms of Service?
I think maybe it's time to stop waiting for a response from btcjam en try to take legal actions.
I've got some questions and ideas. First one: I think it's a good idea to centralize all of the arbitrated loans in one place, a website, sorted by identity, country, etc. That way, we know which people are big debtors and in which country's they are.
Second, I'm looking for someone with juridical knowledge or valuable connections to stand up and look for the possibilities to collect the money through a collection agency who is willing to try and collect bitcoins.
First question: Am I making major thinking errors? Is this idea ridiculous because of certain things I'm forgetting?
Second: who is willing and able to make an easy website for collecting arbitration award? I'm thinking of a simple form where everybody can upload their arbitration award and fill out name en details of the parties?
Please let me know what you guys think.
I am a lawyer so I can shed some light here. Arb award is binding save if there is an error of law or when the arbitrator acted wrongly in law. This is the basis to challenge the Arb award. As I have not seen the loan contract between you and the borrower, I can't make specific comment. Typically, loan contract requires notice, the contract will spell out how notice is given ie personally or by registered mail or etc including the identity of the borrower, spell out exactly who is the arbitrator. There is also the issue of jurisdiction challenge, legality of contract etc. BTW although there is no legal qualifications to be an arbitrator (ie anyone can say he or she is one by doing some course), in some countries like Australia, Malaysia, Singapore, HK etc, they are mostly retired lawyers or engineers (in construction claims where most of the work is done in Arb awards) and former judges. They certainly charges more than USD 200 to do a case. i may be mistaken in the US though as I do not practise there. Having got your "award", you need to enforce it, so in most cases, you will find yourself back in Court to get a judgment (the borrower may challenge again). If you get a judgment by default (ie borrower failed to show up), the borrower can also challenge this. In short, getting an award is the easy part as in most credit related cases, the lender always wins (there is a reason for this which is why the loan contract is important) but be aware there are legislation that protects the borrower such as charging criminal interest, unethical practices etc all these can be brought up as defence to kill your award. If everything is done nicely from loan contracts to arb award, then you have nothing to fear but Judges have discretion to hear the Arb award or the entire case. The lawyers will say that the Arb committed such and such mistakes-procedural fairness (ie not getting a response from borrower before deciding against him, or lack of notice or inconclusiveness of value of loan, wrong in law is my favourite where the Arb failed to reason based on law and facts, failed to consider a particular law or applied wrongly hence error in law). I acted for banks and defendants before so I am aware of the issues raised here.
So obviously when you go to court, the case is not as easy as paying USD 200 to get an award. And even if there is no challenge you will still need to enforce which is the toughest part. Banks are notorious for getting a judgment and sits on the enforcement (usually this can be renewed) until you are ripped for picking.
There are other avenues, like small claims court which is DIY, which is different from state to state and depending on where the borrower is, you need to file a claim in the jurisdiction of the borrower to get redress. If you file in your own jurisdiction then the process may be challenged etc (forum of convenience). As to the use of collector, well unless there is a reasonable amount for them to collect, they may not want to do this. Collectors usually work on % but an Arb award is just a paper and you still need to get a judgment to enforce it. Collectors will not do this for you unless you pay them as well and they usually use a law firm. Garnishee etc are specific ways to get your funds back again you need a court order to do this after you get your judgment. Is another extra step even for small claims court.
As to the suggestion of a "Shame" website, you need to be careful as Arb awards usually contain a privacy/confidential clause, ie unlike a judgment which is open unless order otherwise. If there is none then is viable. As I said, I have no idea what your loan contract states and what the Arb agreement between you and the named Arb agency said but do read them again.
Personally, I think lending BTC is a good idea as an alternative market (the bread and butter of banks in competition). My view is that exchanges or middleman like BTCJam should not be involved in how the customers interact with each other, they should just be like a classified. The minute they take BTC, it means they have a responsibility to ensure their clients are dealt fairly and above-board, this means they need to vet the clients (a costly expense you can ask lending tree etc) and to educate them of their rights and liabilities. I am intrigued though that when it comes to the black market, apparently those guys could enforce their illegal contracts. (Honour amongst thieves ?) I have not look at how those deals are done and settle though. I do not have any clients coming in and ask me to enforce against a drug lord for failing to deliver their product ? And guessing by the infamous Silk-Road fiasco, there must be some self-regulation amongst drug lords to ensure clients get the drugs ?
There was this coloredcoin idea which want to build a loan contract on top of the BTC coin (so everyone can see as a public registry), I am currently reading on this. In my view as a borrower, you cannot be anonymous as a proper contract needs to have your identification verified. To enforce the lender's interest, one can only look to the law. While one can reduce the risk of default by seeking reliance on reputation and better contractual agreements, they cannot substitute the need to enforce payments when a default occurs. The only solution that I can think (and which had been exploited by banks in the past) is the need for insurance/guarantee for all loans. Similarly if Visa/MC etc could reduce the frauds, they would be able to reduce the charges but why should they since there is no competition.
Otherwise, you should only lend to people you know or at least a member of the lenders have knowledge of the borrower and can vouch for them. This is what typically goes on with loan syndication where a lead bank acts on behalf of the borrower to syndicate the loan amongst lenders who relied on the lead bank's reputation and diligence. So it may morph into social-lending-BTC instead of peer to peer lending. Closely linked to this is to spread the loan across several time period, instead of one lump sum. Say where there are 4 parties (A,B,C,D) in a social group, then they can bid (by auction) for the right to borrow by the highest bid %. Once a party (say A) gets a loan, he will need to repay the others plus interest in the next auction. Next auction only B,C,D can bid and the winner (say B) will get funds from C,D and from A (full amount ie loan plus interest). In the next auction, C,D will bid and the winner will get funds from A,B (loan plus interest) and C (loan). Since D is left, he will collect all loans plus interest from A,B,C so effectively he is overall lender (indeterminable at the outset). Borrowers are actually paying instalments (A being the first). This system means you lend funds within your social group (ie people you have some contact with) as opposed to strangers. Nobody has to know who the borrower (at the material time) other than they are part of the social group. Obviously the minute the borrower defaults, he will be announced and is likely he is within your jurisdiction. You can also invest and borrow at the same time by bidding. I cant see any problem with lending to acquaintances or friends, as it is likely they will value friendship higher than a stranger and you have social pressure on your side (ie defaulter is likely to lose all his friends-lenders) to recover the loan. Thanks and those interested in my idea above, please feel free to PM me.
Poll
