Drug testing

The Credit Card Debt Termination Scam

"Legally terminate credit card debt! You can be debt-free in 4-6 months!" Advertisements like this are for a new type of program that has spread via the Internet over the past few years. It's called "Credit Card Debt Termination," and victims are paying $1,000s for this bogus service. One victim I spoke with lost more than $15,000! In this article, I'll review the principles behind this program and explain exactly why it's a scam to be avoided.

First, let's get our definitions straight. The scheme I'm describing here should not be confused with Debt Consolidation or Debt Settlement (also known as Debt Negotiation), both of which are legitimate and ethical methods for debt resolution. The easiest way to distinguish the Credit Card Debt Termination scam from other valid programs is based on the central claim that you really don't owe any money!

With Debt Consolidation, you pay back all of your debt balances. With Debt Settlement, you pay back a lower amount (usually around 50%) while the creditor agrees to forgive the remaining balance. However, with the bogus Credit Card Debt Termination program, promoters claim that you won't need to pay anything at all (except their outrageous fees, naturally). They make the surprising claim that you can legally wipe away your debts simply by using their super-duper magic documents. Based on some legal mumbo-jumbo, the claim is made that you really didn't borrow any money from your creditors!

In order to understand this scam, a little background is necessary. Remember the tax protest movement back in the 1970s? People were claiming that the IRS tax collection system was unconstitutional, and based on their misinterpretation of the tax code, they refused to pay taxes. The IRS came down hard on the tax protest movement, and through the court system, they blew holes in all the legal arguments put forth by the protesters. The Credit Card Debt Termination scam is a lot like the tax protest movement. In fact, among collection professionals, it's called the "monetary protest movement."

Just like the tax protest movement, there is a common theme that runs through all of the promotional materials issued by the monetary protestors. The basic idea is that our Federal Reserve monetary system and generally accepted accounting principles (GAAP) do not permit banks to loan out their own money. Therefore, according to their interpretation, the credit card banks are the ones running the scam on the American public.

Stay with me here, because the logic is pretty strange. If a bank cannot lend its own money, how does a credit card bank extend credit? The claim here is that your credit card agreement itself becomes a form of money (known as a promissory note) the moment you sign it. The idea is that the bank "deposits" your agreement as an asset on their books, and then any credit you use is offset as a liability against that asset. In other words, the core concept here is that you literally borrowed your own money from the credit card bank.

So let's say your balance with ABC Credit Card Bank is $10,000, which you borrowed against the card to make everyday purchases. The scam promoters say all you need to do is notify the bank that you want your original "deposit" back. However, you will permit the bank to offset the amount you borrowed against the amount you have on "deposit." Presto! You don't owe the balance anymore!

Now, as you can imagine, the banks don't take kindly to such tactics. Many of the consumers using this technique are getting sued by their creditors. But the scammers have more tricks available, as if the "smoke and mirrors" financial nonsense wasn't enough. One of their techniques is the use of bogus "arbitration" forums. Arbitration is of course a legitimate system that allows businesses and individuals to resolve disputes without going to court. What do the scammers do? They coach people on how to set up a fake arbitration forum, for the express purpose of making a dispute against their creditors! Naturally, the creditors will not send representatives to some non-existent arbitration forum, so the consumer gets to rubber-stamp their own arbitration award. If they get sued in a regular court, they present their bogus award to the judge in the hopes that the creditor's lawsuit will be dismissed.

There are other techniques used by promoters of this scheme, but the key point to remember is the central claim that your credit card debt does not really exist. Of course, it's all nonsense based on a misinterpretation of our monetary system, and if you step back and think about for a minute, the truth seems pretty obvious. What these scammers are saying is that the entire $700 billion credit card industry is operating on an illegal basis! Even if the legal theory used by the promoters were true (which it isn't), do you think for a moment the government would allow this giant industry to go under? That's exactly what would happen if the promoter's claims were proven true and used on a widespread basis.

The Federal Trade Commission, which has jurisdiction here, hasn't stomped on these con artists yet, but it's only a matter of time. Unfortunately, in the meanwhile, consumers are being bilked out of millions of dollars for a worthless program that will only get them into deep trouble with their creditors. If you are approached by someone offering to wipe away your debts using this system, I strongly recommend you run in the other direction while you hold on tightly to your wallet or purse.

Remember, you can eliminate your debts if you take a disciplined approach to your finances, make a budget and stick to it, and don't use your credit cards unless you can pay off new balances in full each month.

Good luck in your financial future!

Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation's largest debt settlement firms, he is the author of the Debt Elimination Success Seminar?, a five-hour audio-CD course that teaches consumers how to choose between debt program options based on their financial situation. The course focuses on comprehensive instruction in do-it-yourself debt negotiation & settlement designed to save $1,000s. Personal coaching and follow-up support is included. Achieves the same results as professional firms for a tiny fraction of the cost. http://www.zipdebt.com/article2

limousine chicago service
In The News:

Eight Ways to Consolidate Debt

Next to winning the lottery, a debt consolidation loan is... Read More

Credit Card Debt & the Unfairness of the Universal Default Clause

Let's look at a real world example: A woman purchased... Read More

Bankruptcy 101

Bankruptcy still remains a mystery in the eyes of many... Read More

Reduce Your Debt

Do you want to reduce your debt? Having trouble paying... Read More

Student Loans Can?t Be Swept Away Through Bankruptcy

Bankruptcy is in the news these days, as Congress has... Read More

Stop Debt Collectors

Can you stop debt collectors ? . . .You better... Read More

What Are The Benefits and Consequences Of Getting Rid Of Debt The Easy Way

We have all experienced getting so far in debt we... Read More

Debt Elimination 1

If you have multiple debts, you may well be wishing... Read More

Bankruptcy Your Best Bet?

Filing bankruptcy is a common practice among the U.S. Over... Read More

New Bankruptcy Legislation May Make it Harder to Find an Attorney

The recently passed Bankruptcy Abuse prevention and Consumer Protection Act... Read More

Take Careful Consideration Before Filing Bankruptcy

Filing bankruptcy is not fun! It is a last resort... Read More

How to Reduce Your Debt in 5 Easy Steps

If you have incurred substantial personal debt, consider these options:... Read More

Personal Debt Reduction Practices

Personal debt reduction practices, the steps people take to relieve... Read More

Debt Recovery Can be Easy

OK, so you are up to your head in debt.... Read More

Five Hot Tips To Get Out Of Debt Forever

The financial and psychological burden of being in debt causes... Read More

Life on a Debt Management Program

Signing up for a debt management program is easy; it's... Read More

Debt Elimination Is The Key to Financial Freedom

If you want financial freedom, the first thing that you... Read More

Is There Any Way To Get Out Of Debt?

In this era where we are bombarded daily with commercials... Read More

Bank Like a Banker

The business of banking has changed dramatically over the last... Read More

How to Get Triple A Credit in 25 Days

Good credit is everyone's dream. A wise use of credit... Read More

Five Major Ways to Save Money

There are two main roads to improving your personal finances:... Read More

Creating A Realistic Budget

Budgeting -- ooh, what a scary word! If you want... Read More

Debt Collectors; And what you can do to Get Them Out of your Life

FTC opinion letter on validation Section 809(a) of the FDCPA,... Read More

The Road to Debt Relief

Living with debt is not something someone hopes for, but... Read More

Debt is The Master of Souls

Wholeness requires separation. In order for you to experience yourself... Read More

commercial lighting fulham induction lighting Pete's produce ..