Debt Elimination Scams

They'll Hurt Your Wallet, Your Credit And Might Land You In Jail

One of the most prevalent debt elimination scams that is being "sold" these days involves a similar logic, for lack of a better word, to the "income tax is unconstitutional" argument that came before it.

The income tax scam asserted that the government had no legal authority to collect income taxes, and that if you paid taxes it was a voluntary thing. Therefore, all you had to do was not "volunteer" your taxes and voilà, you didn't have to pay any income tax. And I have some land in Florida that... well, I'm sure you get the picture.

Sounds ridiculous right? How could anyone be so stupid as to fall for such nonsense! Well, don't kid yourself. The hucksters and con artists that perpetrate these frauds are very convincing salespeople.

One Of The Most Popular Debt Elimination Scams

Enter one of the most popular debt elimination scams "floating" around these days. The basis of the scam is that hey, you know that money you borrowed on your credit card, or borrowed to buy your house or car? Well, the lenders have no legal authority to lend you that money and therefore, you don't have to pay it back. Some scammers take it a step further saying things like "credit card lending is illegal", or that the credit card companies are using your identity as a company asset and therefore you are "even".

But no matter what the "spin" is on these debt removal scams, it usually ends with you out about $2,500 to $3,000 of your cash in exchange for an official looking document that you take to your bank or credit card lender. This document lets them know that you do not legally owe them money. After delivering the document, you are instructed to stop paying your debts.

Of course at this point all sorts of nasty things start to happen...

  • your car is repossessed
  • your house may go into foreclosure
  • your FICO score plummets causing the interest rates on your debts to skyrocket
  • your credit report becomes a mess
  • and last but not least, you may have the FBI breathing down your neck

I am not sure which of those scenarios scares you the most, but I wouldn't want to face any of them.

Now, if you are still of the opinion that "it can't hurt to try" keep in mind that the powers that be, most notably the Federal Reserve, do not take this type of thing lightly. Along with the federal agency that regulates banks, they have instructed any bankers to forward the details of any of their customers who try and pull these debt elimination scams, to the FBI. These alerts, when received by the Feds are taken as seriously as reports of money laundering and terrorism. And, oh yeah. Your "ignorance" to what you were doing is no defense.

Of course the perpetrators of these debt elimination scams claim their schemes are all backed by successful court cases and no less than the Declaration Of Independence. Hey, I told you these guys were good... scammers. To this day though, no one has been able to produce a single court case to support these claims. But why let facts get in the way of a good scam.

Not All Debt Settlement Programs Are Debt Elimination Scams

One of the real shames is that these scams end up painting the entire legitimate debt settlement industry with the same brush. Another shame is that the "victims" in this, ie. the people who fell for these scams, could likely have received legitimate debt help by simply entering a reputable debt settlement program.