Beware of Debt Elimination Scams
You may have heard the ads on the radio from companies promising to eliminate your debt quickly and for less than you owe. You may have even thought about calling the toll-free number or visiting the advertised website to sign up. But before you take the plunge, it is important to educate yourself and learn how these programs actually work.
Consumers advocates have repeatedly warned against debt elimination and for-profit debt consolidation firms. While non-profit debt consolidation firms to provide a valuable service, for-profit companies often deliver little of value. Even worse, the high fees they charge can leave consumers even more in debt, making digging out of the financial hole that much harder.
One popular approach the scammers use is a promise to declare your credit card debt null and void. You may receive an email from a so-called debt elimination firm offering to provide (for a fee of course) a certificate you can use to legally avoid the debt you owe. This claim is based on obscure legal theories that all debt is illegal, and the theories cited have not held up in court. You can provide all the certificates you want, but your creditors can still take you to court - and they will likely prevail.
If you really want to get out of debt, your best bet is to work with the credit card companies on your own. Credit card companies are smart, and they know they will get nothing if you end up filing bankruptcy. That means they may be willing to take less - sometimes much less - than the total amount you owe.
You may need to go through several layers of front-line employees and supervisors before you reach someone with the authority to discuss a settlement plan, but it will be worth it in the end. Be sure to get any agreement in writing, and do not start making the agreed upon payments until you have received the signed paperwork.
Falling for a debt elimination scam could leave you even poorer than before. Consumers fall for these phony debt elimination schemes every day, and consumer protection experts spend a lot of time helping those affected and warning others about the problem. If you receive an email from a company claiming they can eliminate all your debt, just delete it. If a debt elimination company calls you on the phone, do the smart thing and just hang up.