Avoiding Credit Card Debt Elimination Scams


If you are struggling to get your financial life under control, the last thing you need is to fall victim to a credit card debt elimination scam. Unfortunately, such scams happen every day. You can make sure this doesn't happen to you by being on the lookout.

Examples of Debt Elimination Scams

A credit card debt elimination scam occurs when a company tells you it can get rid of your credit card debt. The scam comes in because the company cannot deliver on their promise. The simplest type of debt elimination scam is one where a company promises you it is going to get rid of your credit card debt and then just doesn't do anything at all. It may charge you fees to "negotiate" with creditors and then end up being unsuccessful, or it may just take your money and disappear.

More Complex Scams

More complex scams also exist. One major type of scam occurs when a company is not upfront about what it is actually going to do for you. A credit card debt elimination company may tell you that it is going to settle your debt for an amount less than what you owe and that you need to stop sending your monthly payments to your creditors and start sending them to the company directly. What the representatives don't tell you is that they are going to withhold payments from your creditors and let you fall behind. Once you enter into a default state, the creditors are going to be willing to work with you, in many cases, to settle debt and to allow you to make a lump sum payment because they want to get something.

The credit card debt elimination company can then keep the money they've been taking from you month after month and still get that lump sum payment from you to give to the creditor. You may think that the company has done something great and slashed your debt, allowing you to settle for much less than you owe. The reality is that your credit will be severely damaged by their actions and that you could have done a similar thing yourself without having to pay the third party.

Consolidation Cons

Another common type of debt elimination scam is one wherein a company gets you to take a consolidation loan, allegedly to lower your monthly payments and make it easier for you to pay off your debt. These loans often have very high interest rates and may just stretch out the time it takes you to pay back your debt so you'll be paying interest for a very long time and lining the company's pockets.

Protect Yourself Against Scammers

Avoiding a credit card debt elimination scam can be a challenge if you are seeking help for debt you can't handle on your own. Your best option to make sure you don't get scammed is to work only with clearly reputable agencies. There are agencies like the National Association of Certified Credit Counselors who oversee and accredit counseling services to ensure that consumers have a reliable place to turn to.

Further, before declaring bankruptcy, states require debtors to undergo mandatory credit counseling with an approved agency. Even if you aren't declaring bankruptcy, you can contact the bankruptcy court in your area to get a list of the counselors who have been approved for credit counseling by the government. These counselors are legitimate and vetted, so you won't have to worry about being scammed. Once you find credit counselor, ask a lot of questions before signing on, and remember the old adage that if something seems too good to be true, it probably is.

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Avoiding Credit Card Debt Elimination Scams