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Steve Bucci, the Bankrate.com Debt AdviserBeware bogus 'debt elimination' companies

Dear Debt Adviser,
I keep getting e-mails about legal debt elimination. Could you advise if these kinds of e-mails are a scam or not?
-- Harry

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Dear Harry,
Thanks for your question. Many people who find themselves overwhelmed by debt seek any means available to ease their anxiety and to help eliminate their debt. Many organizations out there are willing to take advantage of their plight. Unfortunately, my advice about the claims made by the debt-elimination companies fall under the category of "if it sounds too good to be true, it probably is."

Debt-elimination companies claim that they can eliminate your debt and that you do not have to make any more payments with no repercussions. Sounds good, huh? Too good! The bottom line alleged by these companies is that the debt that you have incurred using credit cards is not legal debt. The murky debt-elimination process is said to be based on information from Title 15 United State Code -- section 1692, the Fair Debt Collections Practices Act -- section 1601, the Fair Credit Billing Act and the Uniform Commercial Code -- section 203.

Debt-elimination companies, sometimes for a steep fee ($2,995 for one company), will send you materials explaining what they assert is your legal right not to pay your debt. Many of them promise to support your debt-elimination process with "experts" that understand the laws that pertain to credit card companies issuing you credit.

What is missing from the Web sites and advertising of these companies is that if laws are in place that make it illegal for a credit card company to extend you credit, why are there billions of credit cards in circulation? If these debt-elimination companies have found out that it is illegal for credit card companies to extend credit to consumers, don't you think that it would have come to the attention of lawmakers who would then enforce this law?

The saying, "there is no free lunch," comes to my mind. For those people who have accumulated credit card debt and are enjoying the sofas, clothing, artwork and other possessions that they purchased using credit, the time comes when you must pay for what you bought. Just because you may have overextended yourself and are now having trouble making payments to your creditors, does not mean you do not owe the money.

My advice to those who are receiving spam e-mail from debt elimination companies is to delete the messages and continue to make good on your promise to your creditor that you will repay your balances as agreed. You'll not only sleep better, but as my dad used to say, "You'll be building character!"

For those having trouble making debt payments, legitimate help is available to repay your debt, but not to totally eliminate it.

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of Credit Repair Kit for Dummies. Visit MMI for additional debt advice or to ask a question of the Debt Adviser go to the "Ask the Experts", page to ask a debt question.

Bankrate.com's corrections policy -- Posted: Dec. 12, 2003
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