How Sovereign Citizens Try to Avoid Private Debt Collection Sovereign citizens employ a variety of schemes to frustrate the enforcement of valid loan obligations. Two of the most common involve: (1) challenging the validity of the original loan agreement because it binds only the strawman and not the “flesh-and-blood” person; and (2) attempting to discharge debt through pseudo-legal inscriptions, often referred to as “Accepted for Value” (A4V) schemes. Denying the Contract’s Validity A frequently used tactic is asserting that the borrower signed the agreement only as an agent for their strawman identity and therefore did not personally consent to the contract.8 Under this theory, only the fictional entity is bound by the loan. Some also argue that because all contracts are governed by the UCC, and because they are “de jure” citizens, all contracts are unenforceable against them.9 “Accepted for Value” (A4V) Schemes In A4V schemes, sovereign citizens attempt to “pay” debts using specific inscriptions, stamps or phrases that they believe activate their strawman’s Treasury account or serve as alternative contractual consideration.10 The most recognizable is “Accepted for Value,” but sovereign citizens deploy a wide range of pseudo‑legal phrases. When used, adherents believe that a binding contract is automatically created upon the lender’s receipt of the inscribed documents.11 Depending on their interpretation, sovereign citizens believe that this scheme results in one of two outcomes. First, adherents may believe that the inscribed document forces the lender to satisfy the debt by withdrawing funds from their strawman’s secret Treasury account.12 Alternatively, adherents believe that if these phrases are used in conjunction with postage stamps affixed to the document, the stamp itself becomes an adequate substitute consideration that satisfies the debt upon receipt.13 Neither of these schemes has any legal validity. Regardless, lenders should learn to recognize the indicators signifying when sovereign citizens are attempting to employ them so that the issue can be promptly escalated to legal counsel. Sovereign Citizen Indicators: What Lenders Should Watch For The good news is that sovereign citizens tend to announce themselves through distinctive markings, formats or inscriptions on documents. The following indicators are among (but not all of) the most common. Postage Stamps Affixed to Documents Affixing postage stamps to loan documents is one of the clearest red flags. Sovereign citizens (incorrectly) believe that affixing these stamps transforms their documents into protected “correspondence” and thus prevents any United States government from exercising jurisdiction over them.14 Sovereign citizens employ a variety of schemes to frustrate the enforcement of valid loan obligations. 19 NEBRASKA BANKER
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