Credit card debt illegal? Don't you believe it! -- Page 2

"Their ads might say that banks are not really lending you their own money or didn't disclose certain details to you when you applied for the credit card, therefore the credit card company's contract with you isn't legal," he explains. "That's just not true."

For a fee, these companies also say they'll show you how to force your credit card company into legal arbitration so you can get your debt fully discharged. "The truth is that if these kinds of loopholes existed, financial institutions would already have figured out how to close them," says consumer advocate Gerri Detweiler of UltimateCredit.com.

If you pick a fight with your credit card company and decide not to pay your debt, you might, indeed, end up in court.

"But your chance of getting your debt dismissed is close to zero," says Detweiller. "Your credit card contract probably includes a mandatory arbitration clause, and the credit card company gets to choose the arbitrator," she explains. "Those financial institutions will haul you into court in a second, and they will almost always win."

Detweiller says she is familiar with many consumers who have paid exorbitant fees to so-called debt elimination companies, along with legal fees for taking the credit card issuer to court -- and still ended owing every cent of their credit card debt. It's usually a no-win situation for the consumer.

Beware, too, says the FTC's Hodor, of companies who argue that you can send your credit card company a legal-sounding document such as a "Bond for Discharge of Debt" of "Bill of Exchange," along with a minimum debt payment. These companies may say that when your credit-card company accepts one of these documents and cashes your check, they've agreed to eliminate your debt. Not true, says Hodor. In fact, the federal Office of the Comptroller of the Currency, the entity that regulates national banks, has sent out several fraud alerts about this issue.

Keep in mind that these companies are markedly different from legitimate firms that offer debt consolidation or credit counseling services. The companies to watch out for, by contrast, often use phrases such as "totally eliminate debt" or argue that "credit card debt is actually illegal."

The bottom line: "Never, ever respond to spam or other unsolicited ads related to your debt," says Detweiller. "Companies who advertise this way are not going to be trusted financial partners."

Hodor agrees. If you receive e-mail promoting a debt-elimination program -- or if you have unknowingly been taken in by one of these schemes -- you should contact the FTC at its Web site, www.FTC.gov, or by calling 1-877-FTCHELP, he says. While the FTC can't help you get your money back, the agency may use your information in its law-enforcement efforts against suspicious companies. Hodor also counsels you to file a report with your local Better Business Bureau and your state's Attorney General's office.