'debt elimination' scams
I was contacted for a debt elimination of my credit cards
by disputing them. Have you ever heard of this before? These people
claim that credit cards put a monetary value on my name and use
MY name as an asset for their company, etc. Is this true? Please
help me find out the truth.
Yes, I have heard of this before. I've even answered a very similar
question in this column before. But I have to tell you that eliminating
debt is kind of like losing weight by not eating for two weeks.
Firstly, it doesn't work and secondly, you get unintended consequences
from trying, like injuring your health. The only lasting way to
do it is by balancing your caloric intake against how many calories
you burn (eating less and exercising more). Same thing with debt
-- you have to earn more and spend less if you really want to eliminate
debt from your life. There really are no quick fixes for either
Of course, the scams abound, and
you've run across one. One is that credit card lending is really
illegal, so if you stop paying them and they take you to court,
you'll win with the secret, and expensive, legal strategy you will
be sold. Yours is a variation on that theme -- it's a scam, pure
and simple. They probably want a big upfront fee. Don't pay it.
A similar scam was circulating three years ago in the mortgage arena,
where companies wanted you to believe that by waving their special
piece of paper at your lender, you could *poof* make your mortgage
disappear. At that time, government agencies issued a flurry of
warnings. To quote the U.S.
Treasury, such schemes "are worthless" and "using
such fictitious instruments with the intent to discharge valid debts
may be subject to criminal prosecution."
And, as the FBI
said, "The perpetrators of these schemes offer to take advantage
of 'loopholes in the system' that will eliminate your entire mortgage
for an upfront fee. Don't believe it. There are no loopholes."
I see by your letter and others
that this scam has now spread from mortgages to credit cards. The
answer is the same: It's bunk.
As for the extension of credit
not being legal, if this were true do you really think the financial
institutions would continue to extend credit? Some companies pitch
the same line about your federal income taxes. It's all rubbish.
If there were actual laws being broken, it would be all over your
morning news, not just coming to you via junk mail or spam e-mail.
My advice is to be very careful
when strangers approach you with offers. They could well be identity
thieves. Ignore these claims and work on getting yourself out of
debt the old-fashioned way. Take a good, hard look at your income
and expenses and look for ways to either increase the income or
decrease the expenses until you can lighten your debt load. If you
need help, check out the credit card calculators
at Bankrate. They can tell you how much you'll need to pay to get
out of debt by a certain date or vice versa. If you feel the need
to talk to someone, help is available through reputable credit counseling
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 click
here to ask a debt question.