You're paying your bills online one night and those nastycredit card statements are making you ill. "If only there was some wayto get rid of them," you daydream.
PING. As if the advertisers were reading your mind up pops ane-mail that reads something like this:
"Legally cancel your credit card debt! Totally! Terminated!Completely legal! If you are in over your head in DEBT to credit cardcompanies, we can help you. Student loans or tax liens? Discharge thesedebts quickly, painlessly, legally and without damaging your creditrating!"
"Naah -- can't be," you think. Or could it? Should you lookinto it?
Absolutely not, say credit and legal experts. These kinds ofspam and Web ads are just the latest versions of a long-running scheme.Companies promise they'll help you fight the legality of your creditcard debt (or mortgage, student loan, tax bill or other debt) for a"small fee," which often is several thousand dollars.
The icing on the cake is that some companies even tell youthey'll charge their service fee to your credit card, and then wipe outthat debt for you, too.
With the proposed new bankruptcy law on the verge of approval,it will become far more difficult for consumers to qualify forbankruptcy protection -- a development that is almost certain to sendmore and more consumers scurrying for other answers. The notion thatthrough some obscure law there might be a quick and legal way out ofdebt will no doubt lure people with credit card problems into thesescams.
"Quite frankly, many of these ads and Web sites looklegitimate and sound very good," says Bill Hodor, staff attorney forthe Federal Trade Commission. "But if a promise sounds too good to betrue, it usually is. As a consumer, you really have to be skeptical ofthese ads."Hodor says the companies behind these schemes use a variety oftactics to convince consumers that it's possible to erase huge amountsof debt. The so-called legal basis for how this mysteriousdebt-elimination process can work is said to be based on Title 15United States Code, Section 1692; the Fair Debt Collections PracticesAct, Section 1601; the Fair Credit Billing Act; and the UniformCommercial Code, Section 203. But the ads never say exactly what it isabout those laws that render credit card debt illegal. "Their ads might say that banks are not really lending youtheir own money or didn't disclose certain details to you when youapplied for the credit card, therefore the credit card company'scontract with you isn't legal," he explains. "That's just not true."For a fee, these companies also say they'll show you how toforce your credit card company into legal arbitration so you can getyour debt fully discharged. "The truth is that if these kinds ofloopholes existed, financial institutions would already have figuredout how to close them," says consumer advocate Gerri Detweiler of UltimateCredit.com.
If you pick a fight with your credit card company and decidenot to pay your debt, you might, indeed, end up in court."But your chance of getting your debt dismissed is close tozero," says Detweiller. "Your credit card contract probably includes amandatory arbitration clause, and the credit card company gets tochoose the arbitrator," she explains. "Those financial institutionswill haul you into court in a second, and they will almost always win."Detweiller says she is familiar with many consumers who havepaid exorbitant fees to so-called debt elimination companies, alongwith legal fees for taking the credit card issuer to court -- and stillended owing every cent of their credit card debt. It's usually a no-winsituation for the consumer.Beware, too, says the FTC's Hodor, of companies who argue thatyou can send your credit card company a legal-sounding document such asa "Bond for Discharge of Debt" of "Bill of Exchange," along with aminimum debt payment. These companies may say that when yourcredit-card company accepts one of these documents and cashes yourcheck, they've agreed to eliminate your debt. Not true, says Hodor. Infact, the federal Office of the Comptroller of the Currency, the entitythat regulates national banks, has sent out several fraud alerts aboutthis issue.
Keep in mind that these companies are markedly different fromlegitimate firms that offer debt consolidation or credit counselingservices. The companies to watch out for, by contrast, often usephrases such as "totally eliminate debt" or argue that "credit carddebt is actually illegal."The bottom line: "Never, ever respond to spam or otherunsolicited ads related to your debt," says Detweiller. "Companies whoadvertise this way are not going to be trusted financial partners."Hodor agrees. If you receive e-mail promoting adebt-elimination program -- or if you have unknowingly been taken in byone of these schemes -- you should contact the FTC at its Web site, www.FTC.gov,or by calling 1-877-FTCHELP, he says. While the FTC can't help you getyour money back, the agency may use your information in itslaw-enforcement efforts against suspicious companies. Hodor alsocounsels you to file a report with your local BetterBusiness Bureau and your state's Attorney General's office.Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
Source: Money & Work
