26 January 2006

Beware 'debt elimination' scams

From the "if it sounds too good to be true, it probably is" file, Bankrate has a Q&A on the latest debt elimination scam sweeping the country.

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."

If you get a solitication about magical ways to eliminate any debt, whether mortgage or credit card, assume it's a scam and walk away. There are only two methods to reducing debt: paying it off or bankruptcy. Anything else is rubbish.

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