Be Careful with Debt Elimination Scams
When most people finally reach their wits end with their credit card debt, they are willing to do just about anything to get out from underneath this gigantic burden. The problem here is that there are many scams out there looking to take what is left of your money and leave you in even worse financial shape then you started in. Let’s take a look at a few of these less than honest programs and see what can be done to avoid them.
One of the most popular scams out there right now is called “debt elimination.†This is actually a scam that was used for mortgages years ago and it has been re-written to fit credit card debt, instead. You will be given a line, most likely on the Internet, claiming that your credit card debt can be flushed away like magic because there is a legal loophole you can use in court proving that your credit card debt in illegal. They require you to pay an outrageous fee, usually hundreds of dollars, for a short e-Book or pamphlet describing their strategy. Once you fork over the money for their “advice,†you are told to stop paying all of your credit cards and let the card companies take you to court. Once you do, you are promised that all you have to do is utter this magic phrase in front of the judge, your case will be dismissed and your credit card debt will be gone forever. It is safe to say, however, that if you follow this advice, the only thing gone forever will be your good credit rating. It is a scam, pure and simple, and unfortunately, it isn’t the only one out there.
Another popular scam is one that takes advantage of people who are seeking legitimate, honest help. The vast majority of credit counseling services are legitimate. They work with your credit card companies to lower your interest rates, eliminate your card fees and even significantly reduce your owed balances on your cards. But there are other counseling services out there that will simply sit back, collect their fee and pass on the money you send them to your credit card companies so you only end up making minimum payments. While there is nothing inherently illegal about what they are doing, they aren’t helping you get out of debt. You can send in minimum payments perfectly well yourself, without having to pay their fee. If your credit counselor isn’t trying to help you get out of debt by working with your card companies to get you relief, find another counselor.
Our final scam comes in the form of a ring of the phone. One of the most common is a company that guarantees you a low interest credit card with a fixed rate, the one promised is usually under 5 percent, for you to transfer all of your balances over to so you can pay them off. The fee is around $300 (sometimes more) but before you can hang up the phone, they ask you to get your credit card statements and look at how much you pay every month in interest. Once you figure it out, you realize their fee isn’t so bad after all, assuming they deliver on their promise. What you get instead is a list of low interest cards you can apply for on your own. That’s right, $300 for a list that you could research on the Internet in ten minutes. Avoid this phone call like The Plague.