Legal Credit Card Debt Elimination!
"We will legally get rid of 100% of your unsecured debt."
"Student loans, signature loans, credit cards, gas cards and medical bills."
"This is not debt reduction, not debt consolidation, not refinancing, and not bankruptcy."
"This is not do-it-yourself debt elimination. We handle everything for you."
These are the claims that promote one of the fastest growing internet debt scams that exists today. Pretty bold, wouldn't you agree. And it all sounds so legitimate when they explain how it works.
The company claims that based on contract law, you can simply assign your debts over to them, taking you off the hook as far as paying them back. Voilà, legal credit card debt elimination. Well, it's not actually that simple. Here's a summary of how this credit scam "supposedly works".
Ah yes, the money. The cost of this debt relief is not cheap. $2,500 is the rumored amount, but it can vary per client apparently. There is also a fee levied for each account you wish eliminated. For each account that you would like eliminated you must also send an amount equivalent to the next month's minimum payment.
The scam is based on what is called "novation". Novation is a term
used in contract law where a party to an agreement is replaced by a new
party, or the contract itself is replaced with a new contract or an
Once the company has received the money form you, they proceed to send one final payment to each of your creditors with an amended contract. When the creditor receives this new contract and cashes the check, they have just agreed to be bound by the new contract. Or so the story goes. This is how they claim the novation takes place.
The "new" contract attempts to do a number of things. First, it replaces you as the debtor with the scam company. Second, it outlines new terms that the creditor must obey, least they suffer hefty monetary penalties ranging up to $2,500 per incident. One such ridiculous change is that they can no longer charge you interest. Another is that they cannot charge late fees. Still another is that they cannot make any negative charges on your credit score. And each time they violate these "new terms" the penalties (to the credit card companies, not you) continue to pile up. In fact, pretty soon the penalties outweigh the outstanding balances on your debts (err, the scam companies debts I should say).
At this point in the process, the creditors are given the choice to either dismiss the debt, or face paying the amount of the penalties in excess of the outstanding balance on the account. The scam company claims to have successfully "offset" every account that has been taken to court, thus achieving legal credit card debt elimination.
First, you can expect your credit report and credit score to be decimated, and not just for 6 - 12 months as the scammers claim. These black marks will stay on your file for the next seven and a half years.
Second, you can expect your accounts to eventually go to collections (which the scammers claim they deal with by disputing the debt and requiring "validation" of the debt). Sounds "all-legal", but again, it is just nonsense to suck you in.
Third, you can expect to end up in a lot more debt trouble than you originally had, face potential legal charges, and probably end up declaring bankruptcy.
What you cannot expect is any sort of legal credit card debt elimination.
The moral of the story?
Debt elimination is not easy. If you look
for the "easy" route, you will end up in more financial trouble than
you are in now, and potentially end up in legal trouble to boot. Some of the
debt elimination scams being sold today will actually land you in hot
water with the FBI. So, if you are struggling with excessive debts and
can't seem to get your head above water, legal credit card debt elimination is possible, just not by way of this type of scam. Instead, seek out the help of a
professional credit counselor or bankruptcy attorney.