Debt consolidation scams often promise something for next to nothing.

The average American household had too many credit cards and too much debt. Of that there is no doubt. As a result of mismanaging money, more and more people were filing for personal bankruptcy, and their creditors were not getting paid. This led to Congress passing some sweeping legislation in 2005 that made it harder to file for debt relief through the courts.

Well, if you can’t have you debts wiped out by the courts, then you will just have to pay them, right? Right. But that’s not what one company is promising. The press release from this company (we won’t name them as we would hate to send any customers their way) says that an “alternative exists for people to walk away from 100% of...debt.”

Really? You can just walk away from your debt. That’s what they claim. They say that little known United States banking laws will allow you to walk away, completely, from any and all of your debt. No bankruptcy filing, credit counseling or debt consolidation plans are necessary.

So, what’s the story? They cite sections of the United States Code, the Fair Debt Collections Practices Act, the Fair Credit Billing Act and the Uniform Commercial Code, along with several “U.S. Supreme Court decisions” as the secret of their plan. None of the sections cited in their press release actually exist, we noted. They are just throwing titles of laws out there to sound impressive.

The plan, as they outline it, is that lending money at interest is actually prohibited by United States banking laws. That’s right; they claim that banks and credit card companies may not, under the law, legally lend you money or extend credit to you. That being the case, they add, the companies then have no right to collect, and you have no obligation to pay.

Furthermore, they claim that the United States Supreme court has ruled “time and again” that banking institutions have no authority to lend credit. Therefore, you need not pay.

That, in a nutshell is their plan. They claim that it is “legal, ethical, and moral.” We think if someone agrees to lend you money and you agree to pay it back, that deciding to not pay it back is hardly “legal, ethical, and moral.” Somehow, we suspect that the lawyers of your creditors will feel the same way, as will any judges you see in a courtroom.

The thing that amazes us the most about this scheme is that the company claims that following their plan will not hurt your credit report, as will enrolling in credit counseling. There is no reason why obtaining some credit counseling will necessarily have a negative impact on your credit report, but failing to pay your bills, on time and in full, certainly will.

If in doubt, just try it sometime. And remember, if it sounds too good to be true...

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