Beware of Debt Elimination Scams

by : Roland Jefferson

You're up to your eyeballs in debt. Credit cards, student loans, mortgage and car payments, you name it. Then one day you get an email introducing you to the wonders of debt elimination. For a fee, usually around $2500, the company will send you a certificate to present to creditors which will declare your debt null and void.

Debt elimination sounds just a little too good to be true, doesn't it? It is. These "Declaration of Voidance" and "Bond for Discharge of Debt" certificates are based on obscure legal theories that have no legal standing in the United States. Basically, debt elimination companies claim to believe that all debt is illegal, and that therefore a debt need not be paid. Unfortunately, the United States government and the Supreme Court disagree, so sending a creditor a certificate from a debt elimination company will not rid you of your debt.

The best thing to do if you get an email from a debt elimination company is delete it. If you fall for the scam, you'll find yourself out a hefty upfront fee - and still in debt.

Are There Any Legitimate Debt Elimination Strategies?

Yes, there are two legitimate debt elimination strategies. The first is to pay off the debt. The second is to claim Chapter 7 Bankruptcy.

Paying off your debts may sound intimidating at first, but if you go at it methodically, you'll be surprised how fast the debt disappears. The first thing to do is sit down and list all your debts and their interest rates. Then select one debt you especially want to get rid of (e.g., a $2000 credit card debt). Make the minimum payments on all your other debts, but make every effort to send in some extra money each month on the debt you want to get rid of.

For instance, if you work overtime and get an unexpected $100 one month, that money should go to repayment of the credit card debt. When you've paid off the first debt on your list, select another to target, and so forth. This type of debt elimination is not nearly as easy as sending in a certificate, but it does work.

Finally, if you are truly overwhelmed by debt with no way to keep your head above water, talk to an attorney about filing for Chapter 7 Bankruptcy. Laws vary from state to state, but in this type of bankruptcy, you generally get to keep certain, protected pieces of property such as your house, your car, and a certain amount in personal belongings. The rest of your property is sold and goes toward paying off your debts. Note that some debts, such as student loans, back child support, or court-ordered restitutions cannot be discharged by a bankruptcy.

Many Americans today worry about the amount of debt they are carrying, which makes them perfect targets for scams like debt elimination. If you are worried about your debt, discuss your options with a legitimate financial counselor. Don't get taken in by con men that promise the moon and the stars but deliver nothing.