Debt Elimination Scams
Getting out of debt is the goal of many consumers. While a promise to help you wipe out all your debts may seem like a dream come true, beware of schemes and claims that might just add to your financial woes.
For an upfront fee of $2,500 or more, an unscrupulous individual or company may offer you a certificate to present to your bank, claiming that this will eliminate your obligation to repay your mortgage, credit cards or other debts. The certificates look real and often resemble bankers’ acceptance certificates, a method of payment between banks.
Sometimes there is an additional charge of 15 percent of the amount of debt involved. To cover this large sum, you are encouraged to take out a second mortgage to cover the fee for wiping out your first mortgage and other debts.
Web sites, e-mails and hotel ballroom seminars have been used to promote this scam and create many new victims. The promoters, questioning the authority of the Federal Reserve and the legitimacy of the United States dollar, may claim that the Declaration of Independence validates their approach. They may even present “official” documents, such as court rulings, to support their claims.
Besides the $2,500 or more you paid in fees, you could lose much more. Thinking you no longer have debts, you stop paying your bills. However, one late payment can mean a lower credit rating for you, as well as higher interest rates. Eventually, you could be harassed by collection agencies and even end up having your house foreclosed or your car repossessed.
If you think you have been a victim of this scheme, you can file a complaint with the Governor's Office of Consumer Protection.