Some financial scams may boil down to just stealing your money

With interest rates rising and the credit card companies raising their minimum monthly payments, more and more consumers are finding themselves having trouble with debt. The average American household has nearly 20 debit and credit cards, with an average of $500 charged on each one. It’s not a pretty sight, and the 2005 Bankruptcy Abuse and Consumer Protection Act makes it harder than ever for consumers to have their debts wiped out by the courts. What this means is that more and more consumers are feeling trapped and are seeking professional help in order to get out from their burden of debt.

That’s fine; seeking professional help for financial problems is a good idea. There are hundreds of honest companies out there that will help you with credit counseling and debt management programs. With a bit of diligence, you can find a company to help you. What you don’t want to do is be caught in a scam, and one of the most prominent right now is the so-called “debt elimination scam.”

With debt elimination, companies are promising not only to get you out of debt, but to do it by making your debt go away.

How can a company simply “eliminate” your debt? The companies claim that they can literally make it go away overnight. They will charge you high fees, perhaps $5000 or so, for their “service” and once you pay them, they will offer this advice - do not pay your bills. That’s right; that is their advice. Their explanation is a long list of arcane readings about Federal law and whether or not credit card companies are actually permitted under the law to “lend” you money and whether or not your credit card debt actually constitutes a loan.

What happens if you take this advice? Lots of things, and they are all bad. Interest will continue to accrue on your debts. Late fees will pile up. Your interest rates will be increased. Eventually, your creditors will sue you, and you will have to hire an attorney to defend you in court as you present your “case” about how you really don’t owe all of that money because the loans are not legal.

And then the judge will rule that the debts are legal, that you do owe the money, and the fees and the interest and the lawyer bills. And your credit score is ruined, and you may have to file for bankruptcy.

But the company that gave you this advice still has your $5000. Debt elimination scams are a bad idea, and it doesn’t work any more than the “mystery shopper” scams that are making the rounds.

What you need to do instead is find a reputable credit counseling company that can help you manage your debt, pay off your bills legally, and manage your money so that you don’t have this problem again. Good companies are not hard to find. You might even know someone who can recommend one. Just ask around.

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